2022 has not started off smoothly in financial markets. Many factors have combined to produce volatility across all asset classes. The surge in inflation, driven by supply chain issues and the reopening of the economy, sent bonds into a selloff. Bond prices move in the opposite direction from yields, so bond interest rates have been...Read More

Inflation is the talk of the town right now, and it sure seems to be enjoying its time in the limelight after many years sitting out. But how worried should we be? The Consumer Price Index (CPI), a measure of the prices we are paying for goods and services, was up 4.2% in April from...Read More

If you don’t like volatility – in politics, the economy, or life in general – 2020 is not the year for you. Surprisingly, though, recent volatility in the stock market has been decreasing. Volatility is generally measured by the VIX index, which uses real-time S&P 500 index bid/ask quotes. As you might imagine, the VIX...Read More

In a world where the ten year Treasury note yields 0.6% it is hard to remember the time of decent fixed income yields.  Who would have thought we’d look back at the previous decade of low interest rates and think “those were the good old days.” Turns out, yield is as hard to come by...Read More

The Situation Now seems as good a time as any to take a break from virus news and economic projections, so let’s talk about LIBOR. The London Interbank Offered Rate (LIBOR) has long been the benchmark on which collateralized mortgage obligations (CMOs) are based. This benchmark rate is used for more than just CMOs. Many...Read More

We’re halfway through another week of lockdowns and quarantines, and it seems some portion of the population is entertaining themselves by buying stocks.  The optimism in the stock market over the last three weeks leaves many of us scratching our heads.  No matter the news (today we learned that the U.S. economy shrank by an annualized 4.8%...Read More

Who could have imagined a scenario where weekly unemployment applications exceeded 6 million and the stock market yawned?  We are now in the second week in a row of these numbers.  For reference, the week of March 15 had 282,000 initial jobless claims (versus, again, this week’s 6,606,000). These kinds of extremes have become commonplace over the last several...Read More

This week we crossed the line from simple stock market selloff to complete financial market panic. Stocks kept dropping with even the usual bargain hunters staying away. The rush for cash started, which means even U.S. Treasury bonds were being sold. Surprising? Yes. Alarming? No. This initial stage of panic will pass. U.S. Treasuries remain the safest investment option...Read More

According to my last two letters, it seems I’ve managed to be both right and wrong at the same time. In early February, as the coronavirus was starting to make itself globally significant, I mentioned that it might just be the sort of “major disruption” that could set the U.S. economy on a downhill slide...Read More

Never underestimate the ability of the stock market to overreact.  As we enter the week with news of further spread of the Chinese coronavirus, it seems the Dow Jones Industrial Average and S&P 500 are going to attempt to get halfway to a correction in just one day.  A stock market correction is defined as a drop of 10%...Read More