There has been a lot of angst over the last couple of weeks about a potential banking crisis. There have been 4 failures so far: Silvergate, Silicon Valley Bank, Signature Bank, and Credit Suisse. The first of these hasn't been mentioned much because it was primarily associated with lending in the crypto market and, as far as I know, there [...]
A bank's assets triple over a few years when interest rates are low. The bank invests those assets in long-term, higher-yielding municipal bonds with little credit risk. Inflation flares up and interest rates rise, reducing the value of the municipal bonds and funding dries up. Regulators become concerned that the failure of this bank could damage public confidence in the [...]
Last week started with investors focused on Jerome Powell's testimony before Congress and any hints about future monetary policy. During the course of two days of testimony, which was deemed more hawkish than expected, the market priced in another rate hike and pushed out the possibility of a rate cut all the way to January 2024. The week ended with [...]
With the 1-year Treasury bill paying 5%, why would anyone take the risk of owning stocks? - Everyone It is a good question and I can't tell you what investors will do this year or how stocks will perform, but history says it isn't the level of rates that matters for stock returns. Believe it or not, it isn't even [...]
I think everyone can agree that stocks and bonds sold off last year because interest rates rose. You might get some argument about why rates rose but the fact they did is sufficient to explain the drop in stocks and bonds. It doesn't matter if you think rates went up because the Fed raised their target rate on Fed funds [...]
The hardest thing about investing is the patience it requires. Markets can and do go through long periods of stagnation that test every investor's commitment to their strategy. The last year has been a tough one for investors but the frustration actually extends back further than just 2022. The total return of the S&P 500 since June 1, 2021 is [...]
As I sit here writing this Sunday afternoon, the US has just shot down a third UFO in the last 3 days in addition to the Chinese "weather" balloon last week. I have no insight into what these things might be but I do wonder if we haven't declared war on the National Weather Service. The federal government has become [...]
The inflation report last week was met with a big sigh of relief by investors. Stocks and bonds rallied as the Fed's Whip Inflation Now project seems to be finally bearing some fruit. In reality, inflation peaked months ago but the Fed hadn't really caught on yet - they're a little slow - and the market has been fearing that [...]
What's your outlook for this year? I've heard that question repeatedly over the last month and if you're reading this hoping I'll let you have a peek at my crystal ball, you're going to be disappointed. Because I don't have a crystal ball and neither, I hasten to add, does anyone else in this business. So, no, I don't know [...]
Note: This will be my last full commentary for 2022. I will spend the month of December on research for next year, visiting with family, and taking some much-needed time off. I will still be watching markets, as will all the other members of the Alhambra team and if something happens which requires me to communicate, I'll certainly do that. [...]
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