10-year Japanese government bond yields continue to trade near their 0.50% yield curve control ceiling. Despite a 30-year high in inflation and rising wages, the Bank of Japan remains in a decades-long fight against deflation. With the BoJ's new leadership under Kazuo Ueda, a shift in policy is possible.
A look at the size of various markets compared to the U.S. economy
Today's topics include raising the debt ceiling, are we out of the woods?, stocks versus cash, sticky inflation, First Republic teetering, the battle inside the Fed over wage gains, small caps face pessimism, job switchers vs. job stayers, a new era in PE, shadow banks, and Summers on the Fed's 2% inflation goal
Today's topics include CDS spreads continue to widen, do earnings surprises matter?, First Republic, Druckenmiller bets against the dollar, quant funds, the history of options trading, and car dealerships' role in higher inflation
First Republic’s earnings report yesterday was a disaster, which is why the stock is crashing to a new low. The Street was thinking they were going to show a $40 billion deposit outflow. Instead they report a $70 billion NET outflow. Net means after the $30 billion that the 11 banks (led by Dimon at… Continue reading Quick comment about Credit Suisse and First Republic
The T-bill yield curve continues to be an important metric to watch. The distortion in the shortest maturities is a result of buying, not selling of bills around the debt ceiling's X-date. This is more about deposits leaving banks for money market funds than concerns over a potential default.
Today's topics include Are U.S. CDS markets useful?, ChatGPT dominates the stock market, critiquing the new 1-day vix measure, the changing consumption basket, retail wants a piece of higher rates, the Fed dials back its swaps auctions, European exchanges vs. U.S. exchanges, the cost of fear, the state of globalization, potential solutions to bank runs in a fractional reserve system, a history of shale oil, and housing's supply/demand imbalance
The current state of the economy, the level of inflation, and what the Federal Reserve is communicating to markets are irrelevant. Instead, the million dollar question is, "what will be the impact of the bank walk on lending and the economy?" We believe a continued flight of deposits will create a significant economic drag later this year.
Q1 2023 earnings reports are underway. S&P 500 operating earnings are expected to decline in early 2023, with a rebound later in the year. Tracking expectations can give insight into the broader macro picture.