vault

2024 Predictions: DeSantis Wins, Fed Funds up 50 BPS, 10-Year at 4.75%, S&P up 7%

January 2, 2024

The stock market will once again climb the wall of worry, and the S&P 500 will finish up 7%.  There will be no recession, because the job market is so strong, and AI excitement counters any fear.  Inflation comes down…

Read More

“They are in very good shape,” says Brian Moynihan on the U.S. consumer.  “They have money in their accounts; they’re employed, and their wages are growing.”

December 21, 2023

BofA runs the largest consumer banking business in the country.  Between November of 2022 and November of 2023, customer spending was up about 4.5% with December projected to be about the same.  With unemployment at about 3.9%, the consumer is…

Read More

A few years of higher for longer could be good for the economies’ soul. If the Fed lowers rates, it’ll recharge the buying frenzy and real estate inflation it should want to cool.

December 18, 2023

In the Midwest, rents are up about 40% just within the last few years.  The job market is strong.  Yes, stimulus money has largely been spent, but jobs are plentiful, so tenants can affordably pay the higher rent.  There aren’t…

Read More

The FOMC statement basically says economic activity is good but not great.  They are in wait-and-see mode.  So if the economy is resilient, why lower rates?

December 15, 2023

Since the early 1980s, rates have been on a downward path.  However, debt growth has accelerated as well, and in 2020, a new trend upwards may have emerged. Could the fiscal stimulus and $4 trillion debt issuance in 2020 have…

Read More

Dan Wang of Hang Seng Bank says that, in China, deflation will intensify in 2024 and residential home prices will continue to go down.

December 12, 2023

Income will slow down and people will postpone consumption, as they expect declining prices.  For unskilled labor, it’s relatively easy to get a job.    However, higher skilled jobs are more difficult to find, as these job openings have decreased over…

Read More

1970s and 80s apartment buildings in 2021 and early 2022, not ideally located, were selling at 3.5% cap rates, says Lee Everett of Waterton. He says “dark days” lie ahead in multifamily.

December 7, 2023

In Q4 of 2021, over 150B of capital transacted in apartments.  In all of 2021, almost $400B sold.  The next biggest record was 2019 which was about $190B. Mr. Everett says 700,000 renter households formed in 2021 which was 2.5X…

Read More

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. 

December 5, 2023
Read More

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?

December 5, 2023

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…

Read More

Former Dallas Fed Pres. Richard Fisher: “The real question for me is not the Fed here; it’s the auction schedule of how much and who is gonna digest over $800B in offerings of the Treasury… in the first quarter (of 2024).”

December 2, 2023

The U.S. is refinancing over half the Treasury debt over the next 3 years which has a current cost of carry between 2-3%.  The new debt, at the current rates, will double the cost of carry.  “We’ll have to see…

Read More

“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.

November 27, 2023

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…

Read More