What does the LDEI index level mean?
Unlike the Chicago Fed National Activity Index, the Lantern Daily Economic Index (LDEI) includes real and inflation data. This better reflects the “totality of the data”. The chart below shows how the LDEI compares to nominal GDP (QoQ%) over its history. They are very similar,…
76% hit rate over the last year
Jeffrey Gundlach, founder of Doubleline, and considered by many to be the “Bond King” has talked about his “hit rate” in various places of being a little over 70%. He talks about this in an interview here. 76% of my calls have been correct in…
It’s the data, stupid!
Just like October of 2023 or April of 2024, there is a lot of confusion over why rates have risen so much. And just like those times, the answer lies in the economic data and their extrapolation. All the other explanations (bond market vigilantes, foreign…
On the jobs report and recession
Also on ZeroHedge The strong jobs report today (+254k) caused the dam to break on what I’ve been writing about for weeks with Treasury yields. The 2-year yield is higher by 22 basis points today. With the 2-year now at 3.93%, the bond market is…
A 50 basis point cut may be the final ingredient for yields to rise
As I wrote last Friday, I think the Fed will cut 50 basis points tomorrow to get ahead of economic weakness. While there is no crisis evident yet, it is the right thing to do given how consistent business cycles unfold. In other words, a…
White Paper: GDP of each Federal Reserve District
I wanted to find out how much GDP comes from each of the 12 Federal reserve districts. Not finding it, I calculated it, and since it isn’t available anywhere else and isn’t easy to do, I wrote a short Whitepaper about it so others can…
Conceptualized U.S. Treasury interest rate behavior through a business cycle
With the yield curve (10-year minus 2-year) flirting with de-inverting today, and the Fed set to begin lowering rates in two weeks from today, it continues a sequence in this business cycle that has been mostly identical to the unfolding of events before the last…
Special Report: U.S. Treasuries and the Fiscal Situation
Reasonable Treasury debt ratios and more than enough buyers put Treasuries in a much better light than is commonly heard. PDFAlso on Advisor Perspectives
Not a new paradigm & new index
Because interest rates have risen in recent months, financial commentators are getting carried away with a “new paradigm” narrative suggesting that interest rates will be higher indefinitely. They cite trade policy, “green” investment, AI, war, deficit spending, and “friend-shoring” to suggest the U.S. (if not…
Recent economic data has weakened
As I’ve been writing, interest rates have risen since January from stronger economic data (real and inflation data.) In recent days, the biggest challenge to that theme has appeared. The balance of economic data released in April was stronger than expected but a few data…