Phil, Mike, and Larry address how the debt ceiling debate has caused bond yields to rise dramatically all across the board and whether this is a good time to buy bonds. They then discuss whether it’s better to buy bond funds or individual bonds in this environment.

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Phil, Mike, and Larry again discuss the debt ceiling debate after President Biden and top lawmakers once again postponed a meeting on Friday to discuss it for the second consecutive week, leaving just two weeks to make a deal. They then address the rally in technology stocks, which are up nearly 20 percent year to date.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry discuss the debt ceiling debate after President Biden and top lawmakers postponed Friday’s meeting. However, there are just four days when both the House and Senate are scheduled to be in session before June 1, which is the date when the US could default on its obligations. Treasury Secretary Janet Yellen said that the failure to raise the debt ceiling before the U.S. runs out of available cash and emergency measures would cause an “economic catastrophe.” They then address comments from Stanley Druckenmiller who said, the economy is teetering on the edge of a recession and he forecast a “hard landing.” He predicted the downturn will occur during the current quarter.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry discuss the Friday’s jobs report which showed that U.S. hiring and workers’ pay gains accelerated in April, a sign of labor-market resilience. With nonfarm payrolls coming in much higher than Wall Street’s forecast and the unemployment rate falling back to a multi-decade low of 3.4%, will the Federal Reserve have to raise rates in June. They then talk about how rising interest rates have been one of the big factors behind the turmoil in the banking sector and whether the banking sector’s problems are over.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry discuss the idea that there is a bubble in commercial real estate and the forecast from Morgan Stanley that market prices could plunge as much as 40% over the next two years, worse than in the Great Financial Crisis. This throws another wrinkle into small and regional banks that are the biggest source of credit to the $20 trillion market and hold 80% of the sector’s outstanding debt. They then talk about JP Morgan Chase’s takeover of First Republic Bank and if there are more bank failures hiding in plain sight.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry talk about how despite the market’s rally after Silicon Valley Bank went belly up, there are signs that a significant credit crunch is coming and liquidity is drying up. It’s been more than 10 years since it’s been this hard to borrow money, say small businesses. The Fed said banks have tightened lending standards, distressed corporate debt has rocketed 300%, bond and loan defaults are rising, and corporate bankruptcies are surging. They then discuss Elon Musk’s Terrible, Horrible, No Good, Very Bad Day. Last Thursday, Tesla’s earnings sank 24%, missing Wall Street’s expectations, then as a perfect metaphor, one of his Space X rockets blew up.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry talk about how earnings season will provide the next test of how companies have managed headwinds like banking system stress, higher rates and slowing demand. All lead indicators point to a deeper profit recession than expected. They then discuss Bank of America strategist Michael Hartnett, who said Wall Street’s attitude toward stocks is the most negative in several years. He said the recent rally will fail and that investors should avoid U.S. stocks as expectations of a recession have become universal. He’s also very negative on technology shares, which he thinks will come under pressure from increased regulatory scrutiny and higher interest rates.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry examine the 15% drop in the yield on the 10-year U.S. Treasury bond over the last four weeks and what that means for equities. They then look at the dollar’s 14% decline since September when it hit parity with the Euro, and what it means for stocks, bonds and rate hikes. 

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

Phil, Mike, and Larry talk about the health of the U.S. Shadow Banking system and private equity firms following the slew of recent bank failures. A recent Bank of America survey found that investors’ biggest concern in the wake of these failures is a systemic credit event that could be caused by the shadow banking system. They then address the Bank of Japan appointing a new leader who is expected to raise Japanese interest rates. They discuss if this could cause Japanese investors, the biggest foreign holders of U.S. government bonds, to sell those bonds.

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As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.

It looks like the turmoil in the U.S. banking sector is spreading to Europe. Phil, Mike, and Larry talk about Deutsche Bank’s 10% decline last week as the cost of insuring its debt against default surged, which sparked a selloff in European bank stocks. They then address how this turbulence is affecting money market funds as investors to flee to cash in the biggest rush since the onset of the pandemic. Last week, global cash funds posted inflows of nearly $143 billion, the largest since March 2020 and money market funds saw $238 billion in new cash in just two weeks.

Submit your questions to [email protected]

As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.