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February 5, 2024
Payrolls beat even the highest estimate in Bloomberg's survey of economists. Revisions to past months were also the highest in a couple years. As a result, traders now see a March rate cut as unlikely.
Today's topics include what's happening in commercial real estate?, El-Erian says Fed has a messaging problem, money market funds cross the $6t mark, deciphering what's ahead for markets, dot-com era comparison getting stronger, regional bank concerns, finding solutions to Red Sea shipping issues, bond market drawdown, and AI & market efficiency.
Through much of the QE era, dividend yields outpaced T-bill yields. This has not been true over the last year and a half, however.
The euro turned 25 on January 1. Where does it now stand in terms of a global currency?
For the last few decades we have been in a low interest rate environment where deficit spending would not cause major issues. However, a 40-year high in inflation prompted the Fed to tighten monetary policy at a fast pace. Higher rates mean the cost of servicing U.S. debt will follow higher.
We have argued in the past that Cathie Wood and the ARK ETFs, headlined by ARK Innovation (ARKK), were arguably the most important manager/complex on Wall Street. After their outstanding performance in 2020, these funds have drastically underperformed.
How big are the Fed's holdings of bonds, notes, bills, TIPS, MBS, agencies, and FRNs in relation the outstanding market?
A long-term look at the dollar/pound exchange rate
Some interesting charts from our recent posts
Money continues to flow into money market funds. Banks are left with the option of raising deposit rates, which squeezes margins, or watching customers walk out the door.