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Recession, no recession, inflation, deflation – interest rates should be the same or higher throughout 2024, because Federal Debt to GDP is 120% now, and Econ 101 graphs should actually be applicable now.  The inexorable rise of interest rates. 

By Pucklore | December 5, 2023 | Comments Off on Recession, no recession, inflation, deflation – interest rates should be the same or higher throughout 2024, because Federal Debt to GDP is 120% now, and Econ 101 graphs should actually be applicable now.  The inexorable rise of interest rates. 

Jim Grant and Jim Bianco discuss the bear market in bonds which began in 2020.  Mr. Bianco’s conviction is a 5.5% 10-Year in 2024.  Could a Lis Truss moment hit the U.S. whereby bond markets enforce fiscal discipline that government themselves will not?

By Pucklore | December 5, 2023 | Comments Off on Jim Grant and Jim Bianco discuss the bear market in bonds which began in 2020.  Mr. Bianco’s conviction is a 5.5% 10-Year in 2024.  Could a Lis Truss moment hit the U.S. whereby bond markets enforce fiscal discipline that government themselves will not?

Mr. Bianco reiterates the prior 13 years of interest rates were anomalous to which Mr. Grant adds that 5-6% is about the nation’s long run average.  Interest rates still haven’t gone high enough to “murder” anything – they will, just…

“Interest rates have at least tended over the past 150 years to rise and fall in generational length intervals….  There is nothing scientific about this….  If the historical form holds, the greatest bond bull market might be succeeded by a bear market of some duration and power,” says Jim Grant.

By Pucklore | November 27, 2023 | Comments Off on “Interest rates have at least tended over the past 150 years to rise and fall in generational length intervals….  There is nothing scientific about this….  If the historical form holds, the greatest bond bull market might be succeeded by a bear market of some duration and power,” says Jim Grant.

Mr. Grant isn’t seeing “higher for longer.”  He is seeing “higher for much, much, much, much longer.”  He is also concerned about the “antique phrase” Public Credit of which Alexander Hamilton wrote about in 1791.  The U.S. is potentially issuing…

Richmond Fed President Thomas Barkin says, “I see inflation being stubborn.”  More than half of the respondents at his chamber of commerce small business meeting say they will be raising prices to higher than pre-Covid levels. 

By Pucklore | November 26, 2023 | Comments Off on Richmond Fed President Thomas Barkin says, “I see inflation being stubborn.”  More than half of the respondents at his chamber of commerce small business meeting say they will be raising prices to higher than pre-Covid levels. 

Mr. Barkin, “doesn’t think this is a big time for forward guidance on rates,” seemingly implying that rate cut projections are misguided.  He thinks rates will run higher for longer and says there is a lot of wage pressure in…

A conservative 10% cap rate after targeted CapEx of 10% of the purchase price with an equity bump of around 15% on a theoretical resale.  Not the glory days of yore….

By Pucklore | November 19, 2023 | Comments Off on A conservative 10% cap rate after targeted CapEx of 10% of the purchase price with an equity bump of around 15% on a theoretical resale.  Not the glory days of yore….

But this is the new reality of Midwest home buying, and this, after a long, difficult search. It’s better than a T-Bill.  If business loans are 7.25%, the margins are too thin, so just use cash. If the 10-Year went…

“But, ultimately, I think we’re going to make new higher yields in the first half of 2024,” says Jim Bianco, with the fair value for the 10-Year Treasury between 5.5%-6%.

By Pucklore | November 18, 2023 | Comments Off on “But, ultimately, I think we’re going to make new higher yields in the first half of 2024,” says Jim Bianco, with the fair value for the 10-Year Treasury between 5.5%-6%.

Consumers aren’t yet concerned about having to re-trench financially.  The job market still seems plentiful.  With a 10-Year at 5.5%, that would bring mortgage rates to about 8.5%-9%, so that might start different discussions about a larger retrenchment in the…

Over 70% of all U.S. residential housing stock is owned by those 50 years and older says Meredith Whitney.  And 86% of the “avocado toast” generation (18-38) does not own a home.

By Pucklore | November 10, 2023 | Comments Off on Over 70% of all U.S. residential housing stock is owned by those 50 years and older says Meredith Whitney.  And 86% of the “avocado toast” generation (18-38) does not own a home.

Over $21T of home equity has been created over the last decade.  Most of this gain has accrued to older generations who own their homes free and clear.  So a 40% drawdown in home prices to pre-pandemic levels over many…

When Jamie Dimon looks over the horizon, he sees sticky inflation.  “I don’t see anything that is future disinflationary.”  Mr. Dimon also thinks that quantitative tightening will eventually “rattle the markets.”

By Pucklore | November 2, 2023 | Comments Off on When Jamie Dimon looks over the horizon, he sees sticky inflation.  “I don’t see anything that is future disinflationary.”  Mr. Dimon also thinks that quantitative tightening will eventually “rattle the markets.”

The Fed will more than likely need to raise rates again.  10-year bond yields should rise.  The size of the deficits, quantitative tightening, and nations selling will add to the supply.  However, he doesn’t think we’ll have a “Volcker Recession”…

“The daily borrowing for the next 90 days… $8.66B a day – a day!”  Next years’ projections are even higher.  “This is driving the yield curve,” says Richard Fisher. Fiscal policy is driving rates higher.

By Pucklore | November 1, 2023 | Comments Off on “The daily borrowing for the next 90 days… $8.66B a day – a day!”  Next years’ projections are even higher.  “This is driving the yield curve,” says Richard Fisher. Fiscal policy is driving rates higher.

Mr. Fisher doesn’t think there is a clearing mechanism for the market when there is so much borrowing.  As long as the fiscal authorities are out of control, we will live in a 5% world.  “They (the Fed) can work…

Leon Cooperman reiterates his conviction that interest rates will go higher, and the S&P 500 (at 19 times earnings) is too high.  He is concerned that the wealthy won’t be able to handle the deficit at 8%.  Even a 6% bond yield isn’t exciting.

By Pucklore | October 30, 2023 | Comments Off on Leon Cooperman reiterates his conviction that interest rates will go higher, and the S&P 500 (at 19 times earnings) is too high.  He is concerned that the wealthy won’t be able to handle the deficit at 8%.  Even a 6% bond yield isn’t exciting.

Mr. Cooperman still thinks the market is going nowhere for a very long time and reiterates the story of the Pharoah’s dream interpreted as having 7 prosperous years followed by 7 lean years.  We’ve pulled forward a lot of fiscal…

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