Great article, once again. Concerning your first point, I understand the point you're making about Fed adjusting capital availability and the effect that has on rates. However, can't we say there's more to the story? In my latest article I expanded upon a point that Michael Howell and Jeff Snider have made,
Namely that the perceived return you can get from investing in the real economy has a heavy bearing on interest rates. As in, not just next quarter but if you look at trends over years or decades, if investors don't see growth opportunities in the real economy they'll favor bonds thus driving down yields. Irrespective of Fed adjusting capital. We could say it has more to do with demographics, pace of innovation, societal trends/regulatory environment, etc.
Although, I'm also not positive I've fully understood the implications of what you've written. I'm about to reread it again.
TINA...paying 4.3% while inflation is twice that. Works for me. With the government ramping up even more debt and businesses and consumers still drunk holding cheap debt, continued rising rates will encourage the rubber meeting the road. Expect skidding and blowouts.
TLBS, at least you can still use the acronym when you change to bull mode haha ;)
Anyway, can’t thank you enough for the knowledge that you brought to me this year and looking forward to learn more. All the best for you in 2023 and merry Xmas!!
As someone who thinks about interest rates quite a bit, you may also enjoy this analysis on its relation to energy, efficiency and velocity. I found it very interesting when I first read it!
Thank you so much for posting these, they are a pleasure to read. Your insights and writing style are absolute class. I've been going through Strunk and White's Elements of Style with a student of mine and shared your writing as an embodiment of Strunk's principles:
“Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. This requires not that the writer make all his sentences short, or that he avoid all detail and treat his subjects only in outline, but that every word tell.”
Thanks for this end-of-the year article. Congrats on the following you've built since 2021! I've thoroughly enjoyed all of your writings this year. You gave me so many satisfactory ''aha moments''. You and Lyn Alden are my favorite active econ/ finance writers. It's always a treat to read your thoughts! I'm also starting to feel excited about the opportunities and good deals that 2023 will bring.
"Today, Bulls are an endangered species." I think you have a bit of confirmation bias here regarding this sentiment. Maybe it's from the people that you're following and reading?
There's a difference between "doom and gloom" sentiment because stocks are dropping vs what people are actually doing with their money. Are people actually putting money where their mouth is? If more people see a recession coming and further drops in equity markets, we should see a lot more capitulation selling and a spike in put/call ratio. But that's not what we see. Margin loans are still near all time highs and the P/C ratios on some key stocks are actually quite bullish.
META 0.49
TSLA 0.66
AAPL 0.91
NVDA 0.97
Those ratios have been trending down, meaning that there are more bullish bets. I like to make data driven decisions. I highly recommend this rather than using something unquantifiable such as "I see a lot of recession talk".
Merry Christmas and have a great, relaxing break from all this madness - thanks for all the fish ... erm ... blog entries! I did not drink (too much) yet, I want to be sober during all this market madness.
Great article, once again. Concerning your first point, I understand the point you're making about Fed adjusting capital availability and the effect that has on rates. However, can't we say there's more to the story? In my latest article I expanded upon a point that Michael Howell and Jeff Snider have made,
https://theunhedgedcapitalist.substack.com/p/not-just-the-fed-why-weve-had-0-rates
Namely that the perceived return you can get from investing in the real economy has a heavy bearing on interest rates. As in, not just next quarter but if you look at trends over years or decades, if investors don't see growth opportunities in the real economy they'll favor bonds thus driving down yields. Irrespective of Fed adjusting capital. We could say it has more to do with demographics, pace of innovation, societal trends/regulatory environment, etc.
Although, I'm also not positive I've fully understood the implications of what you've written. I'm about to reread it again.
Hey Bear, great article. Always excited to read your content - thanks for everything. Merry Xmas 🎄
TINA...paying 4.3% while inflation is twice that. Works for me. With the government ramping up even more debt and businesses and consumers still drunk holding cheap debt, continued rising rates will encourage the rubber meeting the road. Expect skidding and blowouts.
TLBS, at least you can still use the acronym when you change to bull mode haha ;)
Anyway, can’t thank you enough for the knowledge that you brought to me this year and looking forward to learn more. All the best for you in 2023 and merry Xmas!!
Great article Bear. Making it easy to read unlike other writers that spam jargon which makes things unreadable to the newbie haha
Good point on turning from being the last bear and turning into the first bull.
Subscribing to doom and gloom is something I really try to avoid even thought it has helped me MASSIVELY for almost the entirety of 2022.
As someone who thinks about interest rates quite a bit, you may also enjoy this analysis on its relation to energy, efficiency and velocity. I found it very interesting when I first read it!
http://theoildrum.com/node/7147
OMG. “THE FIRST BULL RUNNING” that made my day. Thank you for your insight
Thank you so much for posting these, they are a pleasure to read. Your insights and writing style are absolute class. I've been going through Strunk and White's Elements of Style with a student of mine and shared your writing as an embodiment of Strunk's principles:
“Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. This requires not that the writer make all his sentences short, or that he avoid all detail and treat his subjects only in outline, but that every word tell.”
Great article. Looking forward to lots more in 2023. Merry xmas.
Thanks for this end-of-the year article. Congrats on the following you've built since 2021! I've thoroughly enjoyed all of your writings this year. You gave me so many satisfactory ''aha moments''. You and Lyn Alden are my favorite active econ/ finance writers. It's always a treat to read your thoughts! I'm also starting to feel excited about the opportunities and good deals that 2023 will bring.
"Today, Bulls are an endangered species." I think you have a bit of confirmation bias here regarding this sentiment. Maybe it's from the people that you're following and reading?
There's a difference between "doom and gloom" sentiment because stocks are dropping vs what people are actually doing with their money. Are people actually putting money where their mouth is? If more people see a recession coming and further drops in equity markets, we should see a lot more capitulation selling and a spike in put/call ratio. But that's not what we see. Margin loans are still near all time highs and the P/C ratios on some key stocks are actually quite bullish.
META 0.49
TSLA 0.66
AAPL 0.91
NVDA 0.97
Those ratios have been trending down, meaning that there are more bullish bets. I like to make data driven decisions. I highly recommend this rather than using something unquantifiable such as "I see a lot of recession talk".
Thanks for consistently putting out thoughtful analysis!
Great article and excellent ongoing coverage all year. My goal for 2023 is to be The Second Bull Running.
excellent coverage, thank you
Merry Christmas and have a great, relaxing break from all this madness - thanks for all the fish ... erm ... blog entries! I did not drink (too much) yet, I want to be sober during all this market madness.