Bank Failures Shine Light On Interest Rate Risks
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound.” — Treasury Secretary Janet YellenSource: The Wall Street Journal, March 12, 2023 Financial markets reacted turbulently to the collapse of Silicon Valley Bank (SVB) on March 10, 2023, followed two days later by the […]
Collateral Damage
I have become aware of new information about what may be preventing the REPO market from operating properly. Despite emergency Fed intervention, the REPO market continues to have trouble meeting cash demands. It may not be a liquidity problem after all, it appears to be a problem with collateral. The following example from Fed Governor […]
Dightman Capital – Q4 Outlook
U.S. stocks have experienced a strong recovery in 2019 but the increase in volatility the last several months is a concern. If stock indexes can hold current gains, they will deliver solid double-digit returns for the year despite sputtering trade progress with China and political turmoil in Washington DC. While political developments can lead to […]
A Divided Market
There are clearly opposite views on the market right now. After a fabulous day for all three indexes yesterday, not to mention the performance of many leading stocks, some commentators remain committed to the idea we are headed for a recession. A week ago, recession fears were plastered on the front pages of all the […]
Q2 2019 Market & Economic Review
Volatility returned to the U.S. stock market during the second quarter of 2019. By the end of May, broad U.S. stock indexes were below levels from the start of April. The S&P 500 actually traded below its 200 day moving average before a rally kicked off in June which ultimately delivered gains for the quarter. […]
Q1 2019 Market & Economic Review
U.S. stocks experienced a strong rally in the first quarter of 2019. The biggest performance driver came from the Federal Reserve pausing their interest hikes. Between 2017 and 2018 the Fed raised the Fed Funds rate approximately 8 times and until recently expected to continue raising rates into 2019. The sell-off in Q4 was largely […]
Stocks Turn Bearish
The investment environment continues to deteriorate despite the pickup in economic activity in the U.S. the last couple of years. As the Big Four Indicators I highlighted recently show, the U.S. economy continues to move in the right direction. Despite the U.S. economy doing well, international economies are performing poorly with few catalysts outside of […]
Are Cracks Forming in the High-Yield Bond Market?
While high-yields bonds (HYG) have held up better than equities, there are signs of cracks forming. Negative developments at GE have caused some to speculate more highly leveraged borrowers are looking at downgrades. The lower tiers of investment grade ratings currently represent a large number of bonds and if we see a series of downgrades […]
Will Higher Interest Rates Derail Stocks?
Continued economic growth has led the Federal Reserve to raise the Fed Funds rate to 2.25%. This is the biggest issue facing asset markets right now even though the rate remains well below levels that led to recessions twice during the last 18 years. For that reason, I believe the Fed is going to be cautious […]
2018 Investment Strategy Review
Stock and bond market performance has been more volatile in 2018. After an amazing run in 2017 stocks have become more sensitive to interest rate hikes and potential disruptions in global trade because of ongoing trade negotiations by the Trump administration. Bonds too have seen an increase in volatility as the Federal Reserve increases the […]
