You may have noticed that food prices have started to go up very aggressively. I repeatedly warned my readers that this is precisely what would happen, and more price increases are on the way. Fear of COVID-19 has sparked a tremendous amount of extra demand as Americans have feverishly stocked up their pantries, and at the same time the virus has made it very difficult for the major food companies to keep up.
Hundreds of millions of U.S. taxpayer dollars went to Chinese companies from the Paycheck Protection Program (PPP), which was designed to help small businesses survive during the pandemic, according to a new report.
In Part II of this three-part series, we continue to explore three main factors that will continue to push Treasury rates lower, possibly near 0% on the long-end of the curve.
Another record low was recently made in Bank of America’s MOVE Index (considered Treasury Market ‘VIX’), falling to an unprecedented 40.66 last week, has since turned up to 44.11 in early August.
The inflation vs. deflation debate remains one of the more hotly contested ideas in the marketplace today. The inflation hawks argue precious metals are a one-way street higher while cash is trash, and bonds are worthless. The deflationary crowd continues to play with the multi-decade trend arguing that interest rates are not done falling, and more gains are left with nominal Treasury bonds.
By now everyone knows that one fifth of LL corporations are “zombies” – companies that should be out of business as they are technically insolvent and don’t even generate enough cash flow to meet their debt obligations, but continue to exist thanks to either record low rates which allow them to issue even more debt and use the proceeds to pay for existing interest expense (and roll over debt maturities), or government handouts which perpetuate their pathetic, deflationary existence.
After a series of confusing headlines about virus relief talks sparked anxiety (in some) stocks, and sparked a bid in bonds and bullion and selling of the dollar.
The Trump administration boasted positive trade headlines around the clock to pump the stock market in 2019 and even in early 2020. The headlines, dubbed “trade optimism,” unleashed multiple expansion in stocks as President Trump told farmers to buy ‘more land,’ ‘bigger tractors’ to handle China’s farm purchases.
The economic pain that we are witnessing right now is far greater than anything that we witnessed during the last recession.
One quarter ago we pointed out something concerning: shortly after JPMorgan reported that its loan loss provision surged five fold to over $8.2 billion for the first quarter, the biggest quarterly increase since the financial crisis, in preparation for the biggest wave of commercial loan defaults since the financial crisis (a number which in the latest quarter surged to $10.5 billion along with all other banks’ loan loss provisions)…