Category Archives: Uncategorized

Maybe the Market’s Forecast is More “Banking Crisis Avoided” Than “Deep Recession Ahead?”

The market is betting the Fed will have to cur rates by September-December 2023. We don’t (yet) know if the market is pricing in a fast drop in other economic sectors.  Many commentators (and the Fed’s own projections) expect a … Continue reading

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Why “Higher For Longer” = “The Fed Calling In an Airstrike on Its Own Positions”

For devotees of the (missing and suspected dead) Phillips Curve cargo cult, the Fed can’t stop raising rates until we see major unemployment.  I do not share their faith in the defunct Phillips Curve or an all-powerful Fed.  I agree … Continue reading

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Will The Fed Destroy Banking And CRE To Get The Unemployment Everyone Is Looking For?

A lot of people expect the Fed to keep raising rates to drive “the economy” into a recession.  They don’t give much thought to the route we’d take to get there;  What sub-sectors of the economy are (or are not) … Continue reading

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Is the Market Expecting a Recession? Or The Fed Heading off a Bank (and Real Estate) Crisis?

Markets now see a a 97.6% chance of a Fed rate cut by September 2023.   Market consensus is “the Fed will have to cut rates because we will have a recession.” But what if we get a rate cut … Continue reading

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A Fed/Treasury Compact? If So, Rate Rises are Mostly Done. The Logic Of Mutual Assured Destruction.

This was supposed to go out Tuesday night, but the power went out here.  It still holds pretty well.  Addendum:  The Fed did raise rates 25 bps, but made noises about slowing down etc…. In “potential bar fight” terms, the … Continue reading

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Crash or Growth Ahead? Assets Probably Can’t Squirm Out of Taking Damage Either Way…

Looking ahead, we probably face either (mild) inflation or debt deflation.*  Both leading to the same place.  Losses on assets. * [Debt Deflation] = deflation, causing people to default on their consumer loans and mortgages. Bank assets fall because of … Continue reading

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Why are We Risking Catastrophe To Avert a Non-Crisis?

We risk another 2008-style crisis.   Is that really preferable to 3%-4% inflation for a year or two longer than we’d like?  Even that is a false choice – ignoring all the other tools we have to fight inflation (that … Continue reading

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“Higher For Longer” Is Now “Not Much Higher, Then We Cut.” The Fed Won’t Kill Its Children.

What a weekend to be locked out of your own blog account! A bit of a grab bag of thoughts here – sorry for some repetition…. Silicon Valley Bank has taken us from from “higher [rates] for longer” to “not … Continue reading

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What if the Ukraine War Ends Sooner vs Later? Energy Edition.

I am not an energy expert by any means.  Nor am I a Ukraine expert.  So why not look at them both?  🙂  At least I can ask some relevant questions even if I can’t fully answer them. I believe … Continue reading

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What is the Sound of One Fed Clapping? A Zen Koan re: Economy & Markets.

This excellent Axios piece (pasted in below) gives us our Zen koan for the day. Investors hang on every last word out of the Fed. The real economy doesn’t give a sh*t Which is… “reality?” As a bonus, one of … Continue reading

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