I have been in your camp on interest rates since January 1st of this year. No way the Fed cuts rates like the market was expecting. I thought they had the opportunity to cut once and that would be late this year. Go figure right around the election. Did anyone notice the 10 year auction this week. It went horribly. (Govt spending out of control) How about the commodity markets. Grains are the only one showing a bear trend. What really gets me is that these investment bank analysts calling for cuts in rates are completely missing the real costs that the average American is having to face. I wonder if the Fed is noticing? One does not have to wonder why the media cannot figure out why Biden is not popular after this bull trend in equities. The average Joe/Jane is getting plowed by inflation and its everywhere you look. And your point on war in the middle east and/or Ukraine just adds a bit of nervousness. Tells me to look for a larger correction in equities in the near term.
Great post Mr Carter! We should probably do a "George Castanza" and do the opposite of whatever the people in power (Obama's 3rd term) tell us and we'd be okay. Pray for the country!
Former Defense Secretary Robert Gates said this back when Biden was Vice President, "I think he has been wrong on nearly every major foreign policy and national security issue over the past four decades,” Not much has changed about Biden since then.
Many average, non-finance people were probably wondering, like me, why is my 401K doing so well, with this chaotic and profligate spending from the WH? As in, I was looking at some homes in a small CO town that in 2020 were $1 M and in 2023 they were $2 M! The answer is, I think, inflation. The housing market in CA has topped out, so stocks and luxury homes away from the state are a good place to go. And again, I'm not a professional, but this bear market seems to be built on fake govt dollars and not on real business activity as in Trump's time. So I'm holding off on that new car for now.
Robert Gates, 2014 :" He (Biden) has been wrong on every major foreign policy and national security issue for the last 4 decades". Now 5 decades and still going strong
I sold investments when I left the MERC and we would always say that there has never been a good day to say America is done. My kids are always in (I can give good advise but not follow it) and in 10, 20 and 30 years you will be happy you were too. Only savants can time the market. (trader story follows).....I fully invested at The Bottom of the Covid selloff and after 6 - 9 Months I was out.....even sold my TSLA. Always be closing, Always be in. Long term investing is the opposite of the pits but you can never take the Pit out of the trader. Being a trader is an illness....an addiction of sorts.
From top to bottom, I couldn't agree with Jeff more. Still, I don't want to let Jerome Powell off the hook, either.
Powell is the weakest, most selfish, ego driven Fed chairman in history. He's like a liberal woman, really.
In late 2018, when stocks cratered, he acquiesced to Trump's call for lower rates. I didn't blame a big spending Manhattan developer for wanting the best borrowing rate the U.S. could get, but I blame the Chairman for feeding the deficit beast. Then, during the pandemic, Powell went full emotional teenage girl with not only ZIRP and a 7 trillion dollar Fed balance sheet, but he bought mortgage backed securities and even ETFs, too. I knew he was out of control in 2020 when he answered a question about how soon to rate normalization with the quote, “We're not even thinking about thinking about raising rates.”
So, when did he finally tighten? Only after being safely re-appointed by Burisma Joe, after Biden figured out that his first pick, uber dove, Lael Brainard, would never be confirmed by the GOP Senate.
We already had a comp or fractal for Covid's effect on markets and society. It was the Spanish Flu epidemic of 1918-1919 and the Fed didn't lower rates to zero despite the death of 675,000 Americans.
Because Powell's legacy will be the words transitory and inflation in the same sentence, he'll keep channeling the ghost of Paul Volker if that'll rewrite history. And, if he can hawkishly tank assets but then save the day with a few election eve rate cuts, better still.
"Alternative energy" is very capital-intensive. For wind and solar, there is no ongoing fuel cost, such as there is for coal or gas, but the initial capital cost is high. For nuclear, fuel costs aren't zero, but they're less significant than in the cases of coal and gas, but upfront cap costs are much higher.
Most of the financing of these facilities will be debt in one form or another, probably with at least 15 or 20 year maturities, I would think. The has to have an impact on the interest rates in those maturity ranges.
I agree with almost all you wrote about, save Iran. The population despises the Mullahs and would welcome a change in leadership, we just shouldn’t have anything to do with it. Let the house of Saud usurp them.
Posted publicly about my views on the bull market being over with weeks ago.
The irrational exuberance that's borderline drug addiction like while blathering on about interest rate cuts was laughable. When prognosticators have gone from six cuts down to four cuts down to three cuts down to one cut it's pretty obvious they don't know what they're talking about.
The points you made in your article are spot on. While admittedly there still is a chance that one of the FED Governors steps out of line and says something about if the US gets embroiled in war there's justification there for a rate cut, I just don't see it happening.
I have been in your camp on interest rates since January 1st of this year. No way the Fed cuts rates like the market was expecting. I thought they had the opportunity to cut once and that would be late this year. Go figure right around the election. Did anyone notice the 10 year auction this week. It went horribly. (Govt spending out of control) How about the commodity markets. Grains are the only one showing a bear trend. What really gets me is that these investment bank analysts calling for cuts in rates are completely missing the real costs that the average American is having to face. I wonder if the Fed is noticing? One does not have to wonder why the media cannot figure out why Biden is not popular after this bull trend in equities. The average Joe/Jane is getting plowed by inflation and its everywhere you look. And your point on war in the middle east and/or Ukraine just adds a bit of nervousness. Tells me to look for a larger correction in equities in the near term.
Great post Mr Carter! We should probably do a "George Castanza" and do the opposite of whatever the people in power (Obama's 3rd term) tell us and we'd be okay. Pray for the country!
Former Defense Secretary Robert Gates said this back when Biden was Vice President, "I think he has been wrong on nearly every major foreign policy and national security issue over the past four decades,” Not much has changed about Biden since then.
Many average, non-finance people were probably wondering, like me, why is my 401K doing so well, with this chaotic and profligate spending from the WH? As in, I was looking at some homes in a small CO town that in 2020 were $1 M and in 2023 they were $2 M! The answer is, I think, inflation. The housing market in CA has topped out, so stocks and luxury homes away from the state are a good place to go. And again, I'm not a professional, but this bear market seems to be built on fake govt dollars and not on real business activity as in Trump's time. So I'm holding off on that new car for now.
Robert Gates, 2014 :" He (Biden) has been wrong on every major foreign policy and national security issue for the last 4 decades". Now 5 decades and still going strong
I sold investments when I left the MERC and we would always say that there has never been a good day to say America is done. My kids are always in (I can give good advise but not follow it) and in 10, 20 and 30 years you will be happy you were too. Only savants can time the market. (trader story follows).....I fully invested at The Bottom of the Covid selloff and after 6 - 9 Months I was out.....even sold my TSLA. Always be closing, Always be in. Long term investing is the opposite of the pits but you can never take the Pit out of the trader. Being a trader is an illness....an addiction of sorts.
From top to bottom, I couldn't agree with Jeff more. Still, I don't want to let Jerome Powell off the hook, either.
Powell is the weakest, most selfish, ego driven Fed chairman in history. He's like a liberal woman, really.
In late 2018, when stocks cratered, he acquiesced to Trump's call for lower rates. I didn't blame a big spending Manhattan developer for wanting the best borrowing rate the U.S. could get, but I blame the Chairman for feeding the deficit beast. Then, during the pandemic, Powell went full emotional teenage girl with not only ZIRP and a 7 trillion dollar Fed balance sheet, but he bought mortgage backed securities and even ETFs, too. I knew he was out of control in 2020 when he answered a question about how soon to rate normalization with the quote, “We're not even thinking about thinking about raising rates.”
So, when did he finally tighten? Only after being safely re-appointed by Burisma Joe, after Biden figured out that his first pick, uber dove, Lael Brainard, would never be confirmed by the GOP Senate.
We already had a comp or fractal for Covid's effect on markets and society. It was the Spanish Flu epidemic of 1918-1919 and the Fed didn't lower rates to zero despite the death of 675,000 Americans.
Because Powell's legacy will be the words transitory and inflation in the same sentence, he'll keep channeling the ghost of Paul Volker if that'll rewrite history. And, if he can hawkishly tank assets but then save the day with a few election eve rate cuts, better still.
It's the spending. Not sure if the election makes a difference on that but certainly on the other issues you mention. Great article!
"Alternative energy" is very capital-intensive. For wind and solar, there is no ongoing fuel cost, such as there is for coal or gas, but the initial capital cost is high. For nuclear, fuel costs aren't zero, but they're less significant than in the cases of coal and gas, but upfront cap costs are much higher.
Most of the financing of these facilities will be debt in one form or another, probably with at least 15 or 20 year maturities, I would think. The has to have an impact on the interest rates in those maturity ranges.
I agree with almost all you wrote about, save Iran. The population despises the Mullahs and would welcome a change in leadership, we just shouldn’t have anything to do with it. Let the house of Saud usurp them.
Posted publicly about my views on the bull market being over with weeks ago.
The irrational exuberance that's borderline drug addiction like while blathering on about interest rate cuts was laughable. When prognosticators have gone from six cuts down to four cuts down to three cuts down to one cut it's pretty obvious they don't know what they're talking about.
The points you made in your article are spot on. While admittedly there still is a chance that one of the FED Governors steps out of line and says something about if the US gets embroiled in war there's justification there for a rate cut, I just don't see it happening.