February 10, 2023 at 5:12 pm #6871rjnwmillParticipant
credit spreads suggest our leaders have piloted us back to 1929? The chart tracks the spread between BBB corporates and short term treasuries. Over time one can see that the return to normal spreads has coincided with significant economic disruptions. And now we have a historical level on credit spreads just as we have record levels of treasury debt to refinance over the next two years. We also face financing demands driven by record deficit spending. Is it possible that we experience a material increase in interest rates as an economic slowdown worsens? Instead, is the Fed required to return to more “magic money” policies that exacerbate inflation?! Whoa Nellie!
And it is increasingly clear our published economic statistics may be imprecise/misleading. Look no further than headline statistics re job creation, a key measure highlighted in the administration’s “Biden economy” narrative. “The JOBS President”. Could they be somewhat misleading as Joe crows about job creation…deliberately misleading?
“The supposed creation of over 500,000 new jobs reported a week ago was truly incredible – as in, hard to believe it was truly credible. What is a reality is that these releases are often revised, in some cases drastically. For example, the initial announcement that 1,047,000 new jobs were allegedly created in last year’s second quarter was revised down just a bit – like by 1,036,500! This synchs with the Philly Fed’s recent disclosure that by their calculations almost no new net jobs were created in the trailing 12 months. Neither of these received more than passing press coverage. The key takeaway: Be extremely skeptical of these initial reports that often create powerful market reactions.”
(That second quarter “adjustment” is humorous, no?)
Hold on friends. We don’t even know who’s piloting the barge.
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Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long
February 11, 2023 at 7:10 pm #6873Hurlburt88Participant
Micro versus macro . . . from my perspective (my company and my industry) I am seeing job creation.
The spreads topic concerns me greatly. Irrational exuberance or just money seeking some investment vehicle? and does the answer to my question really matter in regards to possible significant downturn?
February 12, 2023 at 2:30 pm #6875rogpodgeParticipant
My uninformed opinion is that Japan style quantitative easing broke the economy in ways that will be difficult to understand. It created a giant pool of liquidity that now searches for a place to go, inflating serial bubbles that at some point will need to be decoupled from the debt that enabled it.
I know that sounds crazy, but if we keep inflating for political reasons, it will just make the correction to fundamentals that much more painful.
I would like to see historical correlation of this chart with the Fed’s zero interest rate policy and quantitative easing after 2008 global financial meltdown. Wealth inequality has worsened as a result of our central bank’s heavy intervention in credit markets. pic.twitter.com/vBxlis6sRa
— Judy Shelton (@judyshel) February 12, 2023
- This reply was modified 7 months, 1 week ago by rogpodge.
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