The United States consumes much of its GDP; China does not. The result is Yin and Yang. On net, China produces and the US consumes. Treasury Secretary Scott Bessent put it this way last week at a Senate hearing – “China has a singular opportunity to stabilize its economy by shifting away from excess production towards greater consumption.” That is the rallying cry for tariffs and trade negotiations. And while the US government seems to blame it all on China, it is also true that the US h… View More
Back during the Financial Panic of 2008, clickbait media kept screaming “Hyperinflation.” This theme was consistently pushed back against, and argued that inflation would not accelerate. Yes, Quantitative Easing and zero percent interest rates, which Ben Bernanke invented at the time, massively increased the size of the Fed’s balance sheet and boosted cash deposits and reserves at banks as the Fed printed money to buy debt – Treasury bonds, mortgages and other assets. So why didn’t th… View More
As the dust settles after a volatile first five months of the year, investors are biased to buy risk assets. Record or near-record highs are frequently recorded in various markets, including equities, credit, real estate, gold, etc. There is no shortage of investor liquidity. Summary Equities increased (S&P 500 1.90%) last week, offsetting some of the prior week's loss. Highlights included lots of tariff crosscurrents and NVIDIA'S earnings. Best Sectors were real estate (2.75%) and tec… View More
The big discussion last week among investors was about the deficit and the impact on bond yields of the One Big Beautiful Bill (OBBB). A long-tail Treasury auction threw gasoline on this debate, which was already combustible. It has been noted that once net interest costs exceed 14 percent of tax revenue, bond markets pay attention to US fiscal policy. Interest costs are currently at 18 percent of tax revenue. Adding to this pressure is that Treasury will need to flood the market with debt issu… View More
With the first quarter earnings season nearly complete, earnings growth surprised to the upside, coming in at approximately 14%, well above the 8% expected at the start of the season. Revenue growth also exceeded expectations, coming in just under 5%. Despite concerns about tariffs during the quarter, corporate profits continued to advance. This marks the third time in the past four quarters that earnings have grown double-digit, suggesting that corporations remain in solid shape overall, even … View More