The fear trade is alive and well in the smaller community and regional bankers–fear of interest rate hikes and resultantly commercial real estate failures of which these bankers have some pretty large interests. Everyone needs to keep a close eye on these bankers, unfortunately after a month or 2 of over communicating we are all stuck now with little new data–on top of this we had the head Fed yakker testifying before congress the last 2 days-with ongoing threats of further rate hikes. Investors can either take another ‘bite of the apple’, sit back and watch or sell. Obviously with nothing new known I am holding–and will consider further nibbling in a week when a large number of CDs and treasuries mature replenishing my dry powder. I’m looking at the Merchant Bancorp (MBIN) issues and Associated Bancorp (ASB).
Well the S&P500 has been soft this week and is soft again this morning–all of which is helpful in resolving what I believe is an overly optimistic economic view of equity markets. It seems healthy to have some backing and filling in indexes instead of something that goes up week after week. This is not the S&P500 of the olden days–this index is filled with tech companies so necessarily the index will likely run in the direction of the tech company’s.
Economic news this week has been mixed–like it has been for months and months. Yesterday we had 1st time unemployment claims up some from what was forecast–264,000 versus 256,000 expected–no giant jump and a continuing indication of fairly strong employment. The number of housing starts, which was released on Tuesday, was truly impressive at 1.63 million new starts versus expectations of 1.39 million. I have always written, and believe, that employment breeds housing demand and to me strong employment is the number 1 indicator of the future of the economy. I’m still looking for the forecast recession–I can’t see it as of today.
Well lets’s get this day started–it looks like a soft day in equities, but a Friday at the end of June means that equity volumes may be light and directions can change quickly–whatever–it will do what it will do.
I hear you, Tim – “the long-awaited recession has yet to arrive”
BUT
the T-Bill 2-10yr spread today is 100 bps.
Its been 80-90 for the past several months.
Over the past 50 years, when the 2-10 spread has been over 80 bps, a recession has ALWAYS followed.
These are unusual times.
My personal take is that there is so much liquidity out there that is overwhelming the economic trends and fueling inflation. Liquidity is still not falling despite the end of quantitative easing and the re-filling of the Treasury’s coffers after the debt ceiling imbroglio.
When/if liquidity DOES begin to decline, I expect that recession to arrive – with a vengeance.
On a personal level, here’s an anecdote I heard last night that explains another reason why the recession has yet to arrive. A friend of my wife’s told her that she was shocked when the cashier told her the bag of cherries she wanted cost $23.
BUT
“I really wanted those cherries.”
So she paid it.
As long as that liquidity is out there, the inflation punchbowl will keep us all high.
I’ve been searching for data related to my “it’s all about liquidity driving the markets” idea.
Came to the Federal Reserve Money Supply data.
Interesting.
When we think of Money Supply, we generally think of M1 and M2.
Those two have ranged from 18-20 billion over the past 18 months.
Borrowings from the Fed ranged from 15-30 billion through February.
In March (SVB) borrowings jumped to 215 billion.
In April, 329 billion.
Those increases drown any QE or Fed bank account refunding decreases.
May data to be released next Tuesday.
In another find, I always wondered what the “point analysis” was they keep talking about after the Fed meetings. It’s on page 4 of the June press release below. The dots represent the opinions of the individual participants regarding future policy. The majority thinks fed policy will be pretty high for the next 18 months.
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230614.pdf
I personally keep waiting for the reality shoe to drop
Cherries usually run $6.99 to $7.99 in my area and bags average 2.5 to 3 pounds, so $23.00 is not all that unusual. 5.99 is the usual sale price. The early Cali crop was slow to arrive this year so you may be seeing early pricing.
Your friend should consider buying smaller bags, because cherries are best when very fresh. Which is not long. Better to buy a smaller bag that you enjoy and finish, than a bigger one that you don’t.
In keeping with the spirit of Reader Initiated Alerts, my local market is offering cherries for $2.49 a pound as a week-end special.
Disclosure: July means Peak Cherries. While I don’t time markets, I am funding my July cherry habit with some 4.6% CDs that will be rolling over at around ~5.3% in early July (thank you, Fed) and a F2F floater that should peg north of 9% mid month (thank you Tim.). While you can’t have your cake and eat it too, life can still be a bowl of Yakima Valley cherries if you hang out at the III website.
That goes for Leelanau County cherries in northern Michigan also (but only if you want really good cherries!). 😁
Agreed. Michigan cherries — most of which I think are technically described as tart or Montmorency cherries — are very good but hard to find around here. except maybe in juice form. I am more attuned to the Washington cherry season, which more or less occurs like clockwork every year.
Disclosure: Detroit/Wayne County in my younger days, never did make it up to Leelanau though.
Cherry season here finishes up with Canadian cherries from Summerland. Been a late start this year with the rains. Birds helped me finish off the ones in my yard. Tonight is cherry tarts my wife made with the North star cherries. First time I got cherries from my Black gold cherry tree
I’ll see your cherries and up you with a flat (6 packs per flat) of Okui’s strawberries from Grover Beach, CA., for $16. They are at peak ripeness right now, and every berry is sweet and delicious. My treat to 1 carton if any of you are in the area. I didn’t really like strawberries until I moved here, and now they are an addiction.
Moved to AG 42 years ago, used to like strawberries, bought them fresh and cheap in Santa Maria right from the field stands. If I never see another strawberry or broccoli for the rest of my life I will be happy, totally overdosed 🙂 Heading up to PR Mid-Sate fair next month, my wife got us tickets to see Luke Bryan, see if I can find my boots, they are around somewhere 🙂
Saw Luke Bryan at the Houston Livestock Show and Rodeo a couple of years ago. That is a fun time.
New to AG, but currently renting near Cherry St. and planning to build a home near Lopez Lake. I am good on my offer of a carton of Okui’s strawberries any time you want to take me up on it.
My daughter and I drove from Traverse City to Fishtown in Leland (in the Leelanau Peninsula) one 4th of July weekend in a convertible eating MI cherries. The basic food groups of Northern MI are Walleye, Whitefish, Cherries and Fudge (and Bell’s Beer) and if you are in the UP pasties.
Smoked whitefish sausage from Carlsons in Fishtown was the best on the Great Lakes.
Oh and the Leelanau Peninsula should not be confused with the Keweenaw Peninsula in the same way that Lake Michigan should never be confused with Lake Superior.