For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of these nonthreatening rationalizations trace back [...]
The fallout in liquidity and funding markets (subscription required) has been mostly suggested at the junk bond bubble. Prices have fallen, and many precipitously, while yields have risen. But those are not the only negative factors being exhibited. If the issuance figures are anywhere close to correct, then increasingly junk obligors are being totally shut out at any price. Worse [...]
For an economy that is supposed to be on the verge of overheating, or at least moving decisively in that direction, there are an inordinate number of indications of a cyclical stall and termination rather than some beginning (or ripening). I’m not referring exclusively to economic indications, either, such as the Federal Reserve’s own industrial production figure that just showed [...]
To illustrate just how badly Monday’s selloff (and yesterday’s late day reversal) seems to have shaken core confidence in the overriding narrative (ALL IS WELL!) you need only view the drastic reversal on what stock prices supposedly mean. With QE’s producing little or no tangible economic benefit, certainly nothing specific with which its proponents can easily point to, they have [...]
Having now passed the anniversary of the “rising dollar”, it is interesting to see the related and continued effects on the stock bubble(s). As should be obvious by now, stock buybacks, funded via corporate bonds and loosely categorized C&I loans, are responsible for the post-QE3 nearly uninterrupted rise. Repurchases are forming a separate “liquidity” conduit, indirect leverage if you will, [...]
For policymakers a sense of timing doesn’t appear to be among the highest qualities demanded. That certainly applies to almost every economic proclamation that has come out of any central bank globally, as they both fail to ever see forming recession and always proclaim recoveries that don’t happen to exist. It’s not just a matter of jumping the gun, it [...]
It is often very easy to fixate on the S&P 500 as if it were the only current proxy of the broad universe of stocks. Like the Dow Jones Industrial Average before it, the 500 has attained synonymy with stocks as it is the most widely publicized and recognized value. But just like the DJIA, the index has its own [...]
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