DRUNKENOMICS

It finally happened (again). U.S. Government long term debt has been downgraded from AAA to AA+, meaning the ratings agency are at least suggesting some sort of default risk for U.S. Treasuries. In case you're thinking that it's a byproduct of aggressive interest rate hikes, Fitch cited poor governance, political polarization, and a spine chilling (my word choice) government deficit. On the bright side, AA+ bonds *historically* have a low chance of defaulting on coupon & principal payments; and our Q2 GDP growth did surpass expectations. I guess we'll just have to see how this plays out....

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Yeah...I know I flipped the classic quote from the brilliant French Economist, Jean-Baptiste Say; but in many cases, this is also true. When supply shocks in an economy take place, they offer producers or consumers the opportunity to take advantage of advantageous price points. However, those price levels eventually spearhead the return to a good price equilibrium. With Russian disrupting Ukrainian exports, we might get front row seats to another supply shock again. Also, happy Fed and tech earnings week. Hope those events are good for your portfolio.

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I know debt that is about to default (or is already in default) is certainly less attractive that a damsel, but it is certainly distressing. Which is why we decided to pour one out this week to the corporate bankruptcy surge we saw in the month of June. However, we did spend some time at the beginning answering some questions in our discord about various asset classes and unionization. Speaking of...

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#Finance #Economics #Economy #FixedIncome #Debt #CorporateFinance #Interest #whiskey

So the S&P almost breached 4500 last week and it's still hanging out around it's 52-week highs. On top of that, a lot of market 'experts' on CNBC and Bloomberg have suggested that the price action isn't euphoric and that there is substance to this kind of equity valuation. A lot of the optimism, however, doesn't seem to want to remove any blinders to the fact that the Fed is still in it's tightening cycle along with some major issues in the world's second largest economy: China. So in other words, we'll see who wins this tug of war.

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#Finance #Economics #Trading #StockMarket #Economy #China

If you think you had a tough week, check out what happened in the UK. Nothing like an Inflation print that constantly and stubbornly surprises to the upside leading their central bank to declare a 50 bps emergency rate hike. Additionally, the Russian paramilitary organization, The Wagner Group has led a pretty solid resistance against their motherland. Although ironic, it does create some uncertainty within commodities and trading blocks.

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#economics #trade #finance #economy

So we're taking a trip across the Pacific this week and drinking Japanese whiskey to toast Antony Blinken's visit to China. With that, the presence of the U.S. Secretary of State to the People's Republic doesn't solve a lot of their issues; but there could be some optimism (hopefully) to come of this. Also, hope you all had a happy Fed day last Wednesday along with a very happy CPI day on Wednesday eve. The Fed deciding to pause hopefully garnered some optimism for your portfolio, although it came with a very hawkish tone.

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#Finance #Geopolitics #Economics #Economy #FederalReserve #China

From a case study standpoint, we're fairly certain that economists are going to look back on this time frame 5 years from now and call 2022-2023 a long and shallow recession. Even if you turn on any financial news outlet now, you'll hear 'experts' saying that a 'recession' is really just hitting different parts of the economy at different times. Currently, manufacturing seems to be the one going through the ringer...and commercial real estate is seemingly next on the chopping block. At least the Fed decided to pause this month as far as rate hikes are concerned...lol.
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So the Government has officially kicked the Debt Ceiling can two years down the road to 2025, which provides more significance to the Fed meeting next week. Conveniently, the next inflation print comes out the day before the rate decision is announced; so we have plenty of economic events to look forward to next week. Additionally, has anybody seen the most recent jobs/employment numbers??

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Well at least we can now finally put the debt ceiling thing behind us. Who would've thought that the representatives that the good people of the United States would actually choose to compromise a few budget constraints over the alternative; which is complete economic catastrophe. Nonetheless, there are certain contingencies in the bill that might affect the economy moving forward and essentially could put us back in the same exact situation a few years down the road. But all this back & forth has left the window open for the opportunity to build some momentum behind the war against the dollar...yikes

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First off, I must apologize for all the tech issues in the last couple weeks. Seriously, I've missed you guys. But coming back in inglorious fashion, we have to split a bottle of scotch over the potential likelihood of a US Government default. Though there's still a very low chance that a default does happen, there's still a first time for everything. Odds are, they strike a deal at the 11th hour in true form. Lets talk about what happens if they do...then speculate on what happens if they don't.

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