Financial Sense Blog

When a Pause Is Not a Pause & Why 2.5% Is the Most Important Threshold to Watch

Aug 1 – A true pause by the Fed means an end to rate hikes AND an end to shrinking its balance sheet. The market is cheering that we may be getting closer to the former but, I believe, has yet to come to grips with the latter...

One Chart That Explains the Recent Oil Price Collapse

Jul 14 – As shown by the chart below, the Biden administration is selling off US Strategic Petroleum Reserves (SPR) at the fastest pace on record. As of today, we are now at the lowest levels since 1985. Here is where things get concerning...

Riders on the Storm: Inflation Nation

Jun 16 – The great majority of professional economists and the mainstream media define inflation as merely rising prices. However, this definition says absolutely nothing about any specific cause of rising prices. It implies that inflation can be caused by anything...

Peak Fed Rate Expectations? Using the 2-Year UST Yield to Time the Fed Pivot

May 25 – Since the 1981-1982 recession, every time the 2yr UST yield dipped below the fed funds rate by 50 bps or more, the Fed cut interest rates within 1 year, no exceptions. The typical lead time was just under 2 months...

Are We There Yet? (AKA: Is the Bottom In?)

May 18 – With financial markets not quite near seizure levels, we do not appear to be close to a Fed pivot yet. Further, the other concern given the decline in economic growth (negative print in GDP for Q1 2022) is that analysts continue to not price in...

Riders on the Storm

May 2 – In my four decades in the business, I have only witnessed one soft landing once a fed rate raising cycle began, which was 1994. They have a very poor track record of predicting inflation and engineering a soft landing in the economy...

Why the World's Energy Shock Will Continue

Apr 13 – Much of our oil comes from just 25 oil fields discovered over 75 years ago. The worlds’ 507 giant oil fields make up about 1% of all oil fields, but they produce 60% of the current oil supply. The majority of these fields are over 50 years old...

Macro Headwinds Abound

Mar 4 – New home sales are down double-digits from last year’s level as a 30-year fixed rate mortgages have surged from under 3% to nearly 5%. Unless mortgage rates move materially lower soon, the slowdown in housing is...

As Volatility Picks Up, Here's Where Investors Are Putting Their Money

Jan 21 – Current money flows are reflecting a reactionary positioning to higher inflation and higher interest rates with dramatic moves seen across the ETF space. Also, as shown below, money is coming out of very large, passive ETFs and going into...

Most Recent Data Shows a Large Withdrawal in Market Liquidity Underway

Jan 4 – While economic growth is likely to remain positive in 2022, we are seeing a large withdrawal in market liquidity coming from several sources: Fed QE is ending, REPO facility is exploding to nearly $2T, and the US Treasury will be...