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

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

In the last week we have seen major moves in the stock market (which most people notice) and, subsequently, the bond market (which most people don’t). Most of these moves are due to concern over how the virus outbreak in China will affect the world economy. Why, you may wonder, would a virus affect the economy? The virus itself...Read More

This is the way the expansion ends, “not with a bang but a whimper.”[1] Though T.S. Eliot’s oft-quoted poem isn’t actually about our economic expansion, its final line does ring true in this case.  As we mentioned in our last letter, this interest rate cycle has been a wimp itself, so it is no surprise we...Read More

Business cycles are a normal part of the economic machine. A period of expansion is followed by a period of stagnation or contraction. The current expansion of 121 months far surpasses most other expansion periods, besides that of the 1990s (120 months). The average length of an economic expansion between 1945 and 2009 was just...Read More

Thirteen has always been an evocative number.  To this day, an estimated 85% of tall buildings don’t label the 13th floor as such, to prevent problems with superstitions or luck.  And now we find ourselves, thirteen years out from the last time the Treasury yield curve inverted, back in the same position.   Prior to...Read More

You may have noticed an increase in stock market activity over the last week.  Since last Friday we’ve seen several major swings in equities in both directions, with the ultimate result being a 10% correction in stock prices.  Some (ourselves included) would say this is long overdue, considering what seemed to be an endless rally...Read More