High Stakes in the Liquidity Game

Posted on Opinions

Global dollar liquidity surged in 2020 with the Fed’s $120B monthly bond buying program flushing the system with enormous sums of cash that facilitated the fastest post-recession gain in equities since WWII. All this liquidity needed to find a home and it did out the risk curve where investors remained giddy, paying a premium for […]

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Fed Tapering and Higher Real Yields

Posted on Opinions

The chart gives us a different way to view potential market adjustments once Fed tapering gets underway. It demonstrates the US needs a whole lot of financing owing to bulging fiscal and external account deficits (Twin Deficits) which together have surged to almost 18% of GDP. This demand for financing would have typically forced an […]

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The Best Of All Possible Worlds

Posted on Perspectives

• The compression of yields, inflation expectations, and volatility in Q2 was “the best of all possible worlds” for risk assets, but we suspect it is on borrowed time. Our near-term outlook has turned more cautious for risk as odds build that the next 10% move is lower, not higher. •  The premium investors pay […]

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Emerging Headwinds

Posted on Perspectives

• Our near-term outlook remains bullish, but our sentiment has been trimmed despite growth prospects for the current year that remain outstanding. •  Future headwinds to risk appetites are beginning to crystallize. The move higher in equities may persist over the near term, but we suspect that it is the underlying move higher in borrowing […]

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Bubblicious – Policy Is the Bubble

Posted on Perspectives

It is a struggle to find anyone not pleased to kiss 2020 goodbye. The year was one full of COVID-19 related tragedy and unavoidable change, affecting health, employment, social well-being, and societal norms. Political strains also surfaced, ranging from diplomacy with China, UK-Europe Brexit, and a US election process that left few South of the […]

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