Sentiment has turned negative for the first time in 2024
Sentiment has turned negative for the first time in 2024 Read More »
Commercial Real Estate
“The source of the rise in the U.S. unemployment rate is not job cuts but a rise in labor supply”
The partial unwind of the Yen carry trade unleashed so much volatility that the Bank of Japan promised no further rate hikes during times of market turbulence. The Dollar has collapsed against the Yen. The BOJ’s intention was to support the Yen, but the Dollar collapse is really about U.S. debt and deficits.
“No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future.”
The extreme performance divergence between sectors on the receiving side of the stimulus is stunning. The businesses best positioned to benefit from spending by the upper and upper-middle class are thriving — just look at the share prices of your favorite credit card company; they are at all-time highs. Those most sensitive to interest rates and, thereby, the worst positioned for tight monetary policy are or soon will be flirting with bankruptcy. If you look at commercial real estate owners and their lending banks, you’ll see that their share prices are at all-time lows.
“Progress is impossible without change, and those who cannot change their minds cannot change anything.”
This past week we saw Q4 earnings reports. Jamie Dimon, the leader of the best-run bank in the world (an obvious bellwether for the economy), professes to be extremely worried about growth, employment, commercial real estate, the lagged effects of Fed tightening policy, deficits, geopolitical risk, and weak political leadership. He thinks the Fed should initiate more Quantitative Easing. I do not.
“Capitalism without failure is like religion without sin. It does not work.”
I remain 75% in liquid cash investments, which have a guaranteed yield to maturity of 4.625%. Given recent
events, and the expectation of forthcoming stimulus, volatility remains extremely elevated, sentiment is
schizophrenic, and investors are fearful.
“Capitalism without failure is like religion without sin. It does not work.” Read More »