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The Chronicles of Reflation - Behind the DCurve 2.0

January 12, 2024

Reflation is the act of stimulating the economy by increasing the money supply, lowering interest rates, reducing taxes, and/or providing other stimulus seeking to bring the economy (specifically price level), back up to the long-term trend, following a dip in the business cycle.

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Interest rates DRIVE a credit-dependent economy. Period.

August 3, 2023

Interest rates, (like a train), DRIVE a credit-dependent economy.  Period. As I've insisted for years, there are clear, definitive, observable, interest rate cycles observed in the financial economies of the world.  Interest rate cycles are certainly influenced by both inflation (excesses), and disinflation (corrections).

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From Interest Rate Risks to Credit Risks

March 24, 2023

Chaos and weakness cause a severe RE-EVALUATION of asset values (a good thing, but is painful during the process). Remember me saying in November 2022 that the magnitude and duration of this increase in the Fed Funds rate was historic and that they did in 9 months what last time took them 26 months?  Well...here we are. 

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Bond Bull Market 2023-2024

November 11, 2022

Analogously, with the exception of several bear market rallies in the stock market in 2022, and stocks in the traditional energy sector, it's been a quite frigid investment climate for stocks year to date.  The same has held true until, call it yesterday, for the bond markets.  This has been an absolutely brutal bond bear market year with borrowing costs / interest rates increasing 100% YoY (year over year), in many cases for borrowers.

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Bond Market Selloff Way Overdone: Buy Bonds with Both Hands

May 9, 2022

This is the worst 4 months for global bond markets that I can remember outside of the Great Financial Crisis.  Oh, I guess, thanks, Dave-since 1792 (see above).  It's overdone.  As you probably know if you think about it:  markets go too high and they go too low.  Most bond markets around the globe were too expensive heading into 2022 and many (not all), are now way too cheap.

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Balance Sheet Recession is on the Way

November 11, 2021

A type of recession that occurs when high levels of private sector debt cause individuals or companies to collectively focus on saving by paying down debt rather than spending or investing causing economic growth to slow or decline.

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FOMO is Fueling Inflation-Extrapolation Hysteria

June 10, 2021

The number one Google search for several weeks this year has been 'what is inflation?' In my nearly 25 years in this business, I've never seen so many economists, pundits, strategists and investors trying to "call" inflation.  WOW.  The cover of Barron's last month showed the "I" word.  Smart people like Bootle, Gundlach and Boockvar are saying inflation is not going to be transitory; that it's here to stay.  "Look out!  The invisible virus is gonna get you and the visible inflation is gonna get you!"

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The Kiss of Debt

January 25, 2021

The Credit Markets in the United States are currently functioning as well as they are due to the heavy-hand of government.  Presently, they more closely resemble credit markets in Japan and China where their economies function as 'command economies'.

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12 Things to Consider in 2021

November 9, 2020

The Credit Markets in the United States are currently functioning as well as they are due to the heavy-hand of government.  Presently, they more closely resemble credit markets in Japan and China where their economies function as 'command economies'.

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Welcome to the Casino!

June 12, 2020

By way of review, overall, Corporate balance sheets (some exceptions of course), BEFORE Covid-19 were not in great shape and most corporations were already saddled with a TON of debt.  As you may know, much of that debt was used to buy back shares of their stock to promote earnings per share growth.  In addition, valuations on popular growth stocks on a price to sales basis were really, really expensive.  

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