It just ain’t that bad – part 2

As the economic data continue to indicate that “it just ain’t that bad,” I want to remind readers of our single most important macro insight so far in 2023. Back on 13-Feb, when December fed fund futures were still projecting a rate below 5%, I penned a note entitled...

It just ain’t that bad 

The message from the FOMC dot plot last week was straightforward — it just ain’t that bad. The recession that was forecast for the second half of the year has been taken out. The unemployment rate, which had been forecast to rise to 4.5% by year end, is now heading...

The Victory Skip

Here are three market facts: The dollar is strong. Commodities are weak. Treasury term premiums are low. Now, to be sure, all these facts are indicative of strength in overall Fed inflation-fighting credibility. And if we add to this list that 1yr and 10yr inflation...

Are we just reversing a massive adverse supply shock?

I know that a lot of folks have been hunkered down in their respective “war rooms” pretending that this debt ceiling story has been, or will soon become, a major driver of market price action. Well, spoiler alert, there is no fundamental/macro story here. This is a...

Dear Jay

My last market commentary, "Armageddon Fail," was published way back on April 12th. And to be completely honest, I haven't had much new to say on the macro front since then. More importantly, though, the financial markets haven't had much new to say either. For six...

Armegeddon Fail

On that fateful Sunday evening, just one month ago, when the Fed announced its new 13(3) funding facilities in order to stem the fallout from the SIVB and SBNY failures, I ended my note to clients with the following paragraph: In the near term, the road will surely be...

Stagnant stresses

As promised, here are a few quick thoughts on the Fed balance sheet release from earlier this afternoon. The bottom line is that expansion was a much more modest ~$100b relative to last week's ~$300b. More importantly though, the net change in the combination of...

Is rate vol a canary in the coal mine?

It's been a wild couple of weeks. The second and third largest bank failures in US history have come and gone. The first-ever G-SIB was fully resolved without a hitch. The Fed's balance sheet swelled by over $300B in a matter of just a few days. And the FOMC continued...

The Pivot and Financial Instability Redux

Given that the weekly balance sheet report from the Fed just came out this evening showing a whopping ~$300b EXPANSION, I thought it would be useful to bring back a piece I wrote just over four months ago. The framework outlined in this piece best describes how I...
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