2024-12-04
Bond yields are primarily driven by macroeconomic factors such as inflation and economic growth. Given their impact on inflation and the economy, the U.S. dollar and oil prices are frequently well correlated with bond yields. Therefore, bond traders often take their cue from the dollar and oil markets. The dollar (blue), as graphed on the …
Read More »2024-12-03
Based on early Black Friday sales estimates, sales were strong, but shoppers were much more inclined to take advantage of online sales than go to the malls and stores in person. Mastercard SpendingPulse estimates that in store sales only grew by 0.7% from last year, while online sales rose by nearly 15%. Facteus, another data …
Read More »2024-12-02
New home sales fell by 17.30% in October, marking the most significant monthly decline in ten years, as shown in the graph on the left below. Furthermore, the supply of new homes on the market rose from 7.7 to 9.5 months. Not surprisingly, building permits fell by 0.4% following a 3.1% decline last month due …
Read More »2024-11-27
In a recent Commentary- MicroStrategy Is A Leveraged ETF In Disguise – we discussed the company’s business model, which revolves almost entirely around highly speculative bitcoin and leverage. To wit: So, what is MicroStrategy? It’s a leveraged Bitcoin fund disguised as a non-profit technology company. Regarding leverage and speculation, we also recently discussed the surging …
Read More »2024-11-26
Donald Trump nominated seasoned hedge fund manager Scott Bessent as the next Treasury Secretary. While the Treasury Secretary has many responsibilities, debt management is one of the most important. Therefore, given the recent scrutiny the bond market has been paying to high deficits and associated debt, Scott Bessent appears to be a timely appointment. Bessent …
Read More »2024-11-25
Since the election, Bitcoin has risen nearly 50%. While Bitcoin investors are licking their chops, believing the magnificent rally will continue, they need to realize that Bitcoin is entering a period of pronounced seasonal volatility. The graph below from Sentimentrader shows that the recent performance has tracked the typical performance for the time of year. …
Read More »2024-11-22
Wall Street’s poster child for AI is Nvidia. With an overwhelming market share in AI chip design, Nvidia is up over 200% year to date and a whopping 2680% over the last five years. Driving the price surge are incredible earnings, revenue growth, massive profit margins, and promising outlooks. Since 2020, Nvidia’s sales have increased …
Read More »2024-11-21
Yesterday’s Commentary shared Walmart’s outstanding earnings report and reviewed its surging share price from a technical basis. Despite being a head-to-head competitor of Walmart, Target is heading down a completely different path. Walmart beat EPS and revenue expectations easily, while Target was short. Target reported EPS of $1.85, well below estimates of $2.30. Unlike Walmart, …
Read More »2024-11-20
Walmart’s (WMT) shares opened higher as its earnings report surpassed expectations. EPS and revenues beat expectations. Moreover, the company increased its sales guidance for next year by a full percent. As its latest earnings report reminded us, Walmart is doing very well financially. Furthermore, its share price has surged, reflecting the company’s health.
Read More »2024-11-19
Many investors consider a decline of 20% or more to be a bear market. We can debate the merit of the random 20% figure, but according to that definition, gold miners, down 25% from its peak on October 22, are in a bear market. We have noted numerous times in the last month or so …
Read More »2024-11-18
At the last FOMC meeting, Jerome Powell was asked if they were concerned that inflation expectations are “de-anchoring, or put another way, are anchoring at a slightly higher level?” His answer specifically referenced the 5×5 forward inflation expected rate. He could have used many data points to answer the question. However, the fact that he …
Read More »2024-11-15
2% CPI is a headline you won’t find in today’s Wall Street Journal. The reason is that official inflation gauges, such as CPI, are in the mid to upper 2% range. Last Wednesday, for instance, the year-over-year CPI rate clocked in at 2.6%. We claim inflation is at 2% because we know that 40% of …
Read More »2024-11-13
While the “Trump rally” appears to have just begun, one of its initial hallmarks is that investors want beta. Beta is a measure of the volatility of a stock versus the broader market, most often the S&P 500. For instance, a stock with a beta of 1.50 implies that based on prior trading, investors should …
Read More »2024-11-12
On the campaign trail, Donald Trump favored the crypto industry, including appointing “crypto-friendly” regulators. Moreover, one of the plans he mentioned several times was the creation of a federal strategic reserve of crypto assets. Trump’s decisive victory, along with the Republican sweep of Congress, makes it even more likely the crypto industry and related cryptocurrencies …
Read More »2024-11-11
Super Micro Computer Inc. (SMCI) was the market’s darling only six months ago. Amazingly, Its stock, had risen 3x in just the first three months of 2024. Consequently, S&P Global announced its addition to the S&P 500 Index. The announcement is annotated below with a box in early March. Furthermore, the circle, which coincides with …
Read More »2024-11-08
As expected yesterday, the Fed cut the Fed Funds rate. With the expected 25bps rate cut, the new range for Fed Funds is 4.50-4.75%. The redlined second paragraph below, regarding inflation, is the only meaningful change to the FOMC statement. We think the Fed made the change to present a more hawkish stance. Furthermore, it …
Read More »2024-11-07
After Tuesday night’s initial election results started to point to increasing odds of a Trump victory, bond yields began to rise sharply, as shown below. The surge in rates was not a sudden move. Over the past month, betting odds favoring a second Trump term and bond yields rose in unison. The narrative emerging from …
Read More »2024-11-06
Some gold and Bitcoin bugs claim the U.S. dollar is being inflated away and that our politicians and the Fed are abusing its status as the world’s reserve currency. While the narrative may sound logical, the fact of the matter is that the opposite is occurring. Despite growing de-dollarization narratives in traditional and social media, …
Read More »2024-11-05
The number of residential construction workers has almost doubled since the aftermath of the financial crisis and housing bust. The graph below on the left shows that after a brief hiccup during the early days of the pandemic, the number of jobs in residential construction continued to rise despite higher interest rates. Moreover, the job …
Read More »2024-11-04
With election eve upon us, we thought it would be helpful to share market based presidential election polls along with Greg Valliere’s final thoughts. The graph on the top left shows the price of Trump Media & Technology Group (DJT), which runs Truth Social Media. Truth will be a clear beneficiary if Trump wins and …
Read More »2024-11-01
It’s too early for the Fed to claim the infamous “mission accomplished” for inflation. However, yesterday’s PCE price index is now within the Fed’s mission accomplished range. The PCE price gauge rose 0.2% monthly and 2.1% year over year. That yearly rate is down 0.2% from last month and 0.6% over the previous six months. …
Read More »2024-10-31
The last two Halloweens capped off a few frightful months for bondholders. However, as we share below, 10-year bond yields reversed course on Halloween in 2022 and 2023. Will 2024’s harrowing October for bondholders end with Halloween’s ghosts and goblins? Accordingly, will November be better for bonds as it has been for the last two …
Read More »2024-10-30
Many events could roil the markets over the next two weeks and/or send them surging. Accordingly, it’s worth summarizing the political, monetary, and economic schedule to prepare for market turbulence. The intense schedule kicked off yesterday with the JOLTs report and Google earnings. Today is the ADP jobs report and Microsoft and Meta earnings. Thursday …
Read More »2021-11-17
“Crypto’s Crash,” says some financial news headlines. The reality is Bitcoin, Ethereum and others are down about 10-15% in the last few days. The word “crash” may seem appropriate to describe the sharp decline, except 10%+ moves in a matter of days is the norm, not the exception for crypto.
Read More »2021-10-21
$BITO, the first Bitcoin ETF was issued Tuesday morning. The ETF provides retail investors their first true access to Bitcoin without having to open up a crypto wallet account. BITO tracks bitcoin futures and is expected to track the cryptocurrency much closer than the Grayscale Trust (GBTC).
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