Blame the Fed: Asset Prices are Falling The Federal Reserve has been tightening monetary policy for nearly two years now and it is having a direct impact on global asset prices. Stock-, oil-, and real estate-prices, and even cryptocurrencies, are on a rapid decline, yet few people seem to understand why. Since the Great Financial … Read more
Much to the market’s surprise, Treasury yields are slowly falling despite a huge supply of Treasury bonds hitting the market from the massive fiscal deficits our country is running. The average investor sees this supply and interprets it to mean interest rates must go higher. Investors should look at lending demand, or businesses and consumers … Read more
After a big 3-day rally in equities, Treasury yields finally reacted by falling in overnight trading. Equity investors are hopeful the Fed will pause, and a trade deal will be struck this weekend. Pending home sales fell -2.6% MoM in October after analysts were expecting a +0.5% MoM gain. This brings the year-over-year rate of … Read more
Stocks leaped higher as global stocks moved higher on hope the U.S.-Chinese trade war will soon be resolved and that the Fed will turn dovish. After the API reported higher crude inventories, investors were hoping the government data would show a much smaller build. They were wrong. According to the Department of Energy, crude inventories … Read more
U.S. equities got off to a strong start on news that President Trump may enact tariffs on imported vehicles as early as next week and that he is likely to proceed with increasing the tariff on Chinese imports from 10% to 25% in January. How exactly such news is bullish is beyond me. Fed Vice … Read more
Cyber Monday came early to the stock market, as the major indices quickly reversed all losses going back to Tuesday of last week. Investors are hopeful the Fed will become dovish, the trade skirmish with China will end at the G-20 meeting and that OPEC will cut production. Stock prices shot higher on above-average trading … Read more
The Forces that Drive the U.S. Dollar The U.S. dollar is one of the most misunderstood forces in our monetary system and while most experts have an opinion on the direction of the dollar, very few understand the driving forces behind it. The relative strength or weakness of the dollar has far-reaching implications on the … Read more
Black Friday came to the stock market as investors eagerly bought stocks in early trading, but by market close, all major indices except for the Russell 2000 closed lower. Treasury yields fell to a prior area of support and the short-sellers defended on very weak volume. Eurozone flash PMIs are showing signs that the Eurozone … Read more
Durable Goods orders fell -4.4% MoM, but when stripping out the volatile defense spending, orders were up +0.1% MoM. Crude oil inventories came in higher-than-expected at with a +4.85-million-barrel build. With refinery maintenance season ending, many believe the inventory levels will fall. U.S. production remains at record high levels. The final data from October’s University … Read more
The margin calls went out early this morning as Futures and Forex (currency) traders got hit with delinquency notices. An insider reported that traders were selling their winners to buy their losers. Should stocks fail to rally, retail investors will get hit with margin calls tonight. Housing starts increased 1.5% MoM after September’s starts were … Read more