201607.22
5
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The Narrative of Energy Inventories

While there is a direct relationship between the steepness of contango in the oil futures curve and the amount of crude siphoned from the market to storage, it is not an immediate one. When crude prices originally collapsed starting in late 2014, twisting the WTI curve from backwardation to so far permanent contango (of varying…

201607.19
0
1

Baseline Tendencies

With no clear direction from any of the Asian influences, it isn’t surprising to see more listlessness in everything from stocks to bonds. The Dow was up, the NASDAQ down, and the S&P 500 somewhere in between. The 10-year UST that had looked primed for receding back into the 1.60’s (for yield) bounced back to…

201607.13
1
0

(Un)Welcome Back ‘Dollar’

On June 3, the May payroll report was released shocking convention by its “unexpected” weakness. It was, and so far remains, the worst headline number since 2009. Because the suggestion of a far weaker labor market than policymakers have been claiming undermined their whole economic narrative, “markets” immediately reversed course and bid as if there…

201607.12
7
0

The Hope Trade Returns Though Severely Stunted As It Should Be

All it takes are the words “record high” and all economic or financial sins are forgiven and forgotten. The financial media cannot contain themselves whenever they get the chance to use the term, adding qualifications like “soar” and “sharply” to make sure everyone gets the message. Context need not apply because stocks are supposed to…

201607.11
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Woe To Seasonality

So much of the basis for monetary policy was put in place in the 1960’s study of the 1930’s. It has become commonplace simply to assume 21st century tactics as being directly lifted from the start of the Great Depression. One of the causes of that calamity was certainly restrictive money supply, but any dereliction…

201607.08
7
0

Bi-Weekly Economic Review: Confusion Reigns

Economic Reports Scorecard The response to the much better than expected employment report today is quite interesting although not in a good way. Stocks will surely get most of the attention, assuming they continue to trade higher by the end of the day (they did), but other markets – bonds and gold – are not…

201606.26
5
0

Bi-Weekly Economic Review

Economic Reports Scorecard While everyone was focused on the potentially negative impact of Brexit, the Census Bureau was reporting evidence of actual economic weakness in the form of the durable goods report. The report was weak pretty much across the board but the weakness in autos is particularly concerning. The auto industry, along with construction,…

201606.13
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Global Asset Allocation Update

The risk budgets are unchanged again this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. I struggled more with this decision than any in recent memory but in the end there just isn’t sufficient evidence to make a change. Raising or lowering the allocation to risk assets…

201606.10
4
0

Bi-Weekly Economic Review

Economic Reports Scorecard Concern about recession is growing again as formerly strong portions of the economy turn down. The last two weeks brought reports of new weakness in the labor market, continued slowing in construction and renewed weakness in manufacturing. Auto sales were also weak based on the reports from individual manufacturers. The state of…