Macro Observations
At first glance, pushing higher interest rates sounds counterintuitive. Investors and pundits today expect the Fed to continue to cut rates as the economy softens. Yet history shows that complacency can be dangerous. Consider credit spreads – the extra yield that corporate borrowers pay over safe Treasuries. Right now, those spreads
Macro Observations
Capitalism depends on consumer spending, not ideology. About 70 percent of U.S. GDP has long come from household consumption¹. The system runs on a simple feedback loop: businesses pay workers, who then buy the goods and services those same businesses sell². As automation accelerates, that loop is breaking. Artificial
Macro Observations
When Warren Buffett—famed for spotting undervalued stocks—is reluctant to buy, investors take notice. His firm, Berkshire Hathaway, is holding nearly $350 billion in cash and short-term Treasuries—the largest hoard ever amassed by a public company, even exceeding the combined liquid reserves of Apple, Microsoft, Alphabet, Amazon,
Macro Observations
Not long ago, the fear was that robots would steal factory jobs. Now artificial intelligence is coming for the cubicle. From accountants to customer service reps, white-collar workers are suddenly vulnerable. In 2023, IBM paused hiring for certain back-office jobs, projecting that roughly 7,800 positions could be
Macro Observations
The U.S. stock market continues to grind higher despite a range of potential headwinds. Investors have largely shrugged off soft economic data, geopolitical tension, and policy uncertainty. While low volatility suggests stability, volatility down often means complacency up. When markets are this quiet, investors may be letting their guard
Macro Observations
For more than two years, the traditional financial media focused nonstop on what kind of “landing” the US economy would go through as higher interest rates worked their way through the system. What few people thought about, however, is that it may not land at all. The “no landing” situation
Macro Observations
The Fed cut interest rates a quarter-point this week, as expected. Looking at the Fed Funds futures market right now, the market currently expects about 4-5 more by this time next year. However, economic data presents a more complex picture that raises questions about the necessity of these
Macro Observations
The yield curve finally works in favor of smaller banks again. The 30Y-2Y Treasury yield spread currently sits at 129 basis points. This marks the highest level for this spread since the beginning of 2022. This steepening creates a fundamental advantage for regional banks. They borrow short and lend
Macro Observations
The markets reacted to Donald Trump’s firing of Fed Governor Lisa Cook earlier this week in the same way that it’s reacted to a lot of things lately. With a lot of indifference. The markets barely moved despite the fairly significant implications of what could happen if this
Macro Observations
The markets have fixated on September's potential Fed rate cut with probabilities shifting dramatically. Currently, investors see a 76% chance of a rate reduction, down from more than 95% just a week ago. These expectations will drive everything from equity valuations to borrowing costs. Powell's Jackson
Macro Observations
This past week’s highly anticipated inflation reports yielded a mixed bag of results, although I’m guessing most investors only paid attention to one number. The July CPI rose 0.2% month-over-month to an annualized rate of 2.7%. The core CPI rose 0.3% to 3.
Macro Observations
President Trump is expected to sign an executive order this week that could fundamentally change the way Americans save for retirement. The order would open the door for 401(k) plans to include private equity, venture capital and other so-called “private market” assets. These investments have historically been available