Former head of credit strategy | Investor/Trader | Add your email at https://teapaw.org/t.co/XTLs3jKi6C to receive our research to your inbox for no charge
Joined March 2022
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The Spread Thread retweeted
Also for the love of everything holy please stop comparing the U.S. to Singapore. Singapore has a massive positive NIIP. If you don't understand what that means and how the U.S. situation is different you need to do more work on this topic.
The Spread Thread retweeted
Not the tightest ever. But yes, tight. Either way. Credit isn’t the forward looking indicator people think. Spreads were at all-time tights in mid-2007. Also, note, unlike stocks, credit has not gotten back to the tights hit early this year. A bit of a divergence
Left chart MS
The Spread Thread retweeted
The Spread Thread retweeted
WELLS: ".. 1Q24 earnings have been a mostly negative catalyst for large caps, with below-typical sales beat rates." Some commentary:
Conagra: "We saw some trade-down .."
Lululemon: "We were off to a slow start in the US."
JB Hunt: environment "persistently challenging"
Fastenal: "the core issue remains poor demand"
CarMax: "the consumer is still in a tough spot"
Walgreens: US customers "confronting considerable pressure"
FedEx: "revenue expectations have deteriorated significantly"
The Spread Thread retweeted
We are doing a multi-part series analyzing high yielding equities in relation to fixed income but going beyond dividend yield, which we think is a flawed measure. The first part, and arguably most difficult given added growth and risk components, is midstream energy.
1/19
The Spread Thread retweeted
The Spread Thread retweeted
Some industrials guiding lower today:
UPS
JetBlue
Polaris
Danaher
Corning
Pentair
Johnson Controls
Whirlpool
@CNBC
The Spread Thread retweeted
🇺🇸Our current ISM model after three Regional Fed Surveys predicts a read <45. Even excluding the very weak NY Fed New Orders. Consensus >47
Just a static model based on historic correlations, no bias, could deviate a lot etc. etc.
The Spread Thread retweeted
My view - you can't look at delinquencies w/o also considering UE b/c people are so much more likely to default if they lose a job. And so delinquencies rising like this with 3.7% UE vs 10% UE when they peaked in '09 is the indicator to consider, and my issue with normalization.
The Spread Thread retweeted
Slow to move, but hard to see how it's not coming.
The most cyclical sectors, a basket of 21 million payrolls, have lost 251,000 jobs since October 2022.
Slow so far, but this category also peaked in July 2006..
The Spread Thread retweeted
The rate of nominal growth has moved back into the pre-2020 range.
From 2010-2019, the economy averaged roughly 4% nominal growth with an avg. Fed Funds rate of less than 1%.
Now we're in the same nominal growth range with a 5.5% FF rate and a trough level of ~3.5% in 2025.
The Spread Thread retweeted
If you think we've achieved a soft landing, you should want to cut rates six months ago, to prevent a recession
If you think cutting rates now (or six months ago) would lead to a reacceleration in inflation, then you probably don't really believe we've already achieved soft lndg
The Spread Thread retweeted
The holidays are upon us. Some thoughts on consumer spending and how the holiday season is likely to play out.
We have yet to feel the full effects of earlier rate hikes and even though mortgage rates have receded from their peak, housing is still unaffordable and contingent on builders moving down on the size of homes they build and offering mortgage rate discounts to unleash the pent-up demand of first-time buyers. Millennials are aging into their prime home buying years with the worst affordability since the mid-1980s.
The Spread Thread retweeted
“…the key question is if these rates are manageable for enough of the economy long-term, even if we get ‘surgical’ cuts. In other words – how much of this economy was only viable in ZIRP…”
Great 🧵 on the economy. Read 5/11 to 11/11 first and then back to 1/11 to 4/11.
Note/thread below with some market thoughts...
We continue to see large swings in sentiment in 2023, and it has paid not to get caught up in a narrative for long. Recession-> H4L-> bank crisis-> soft landing-> fiscal crisis. Now back to soft landing.
1/11
thespreadsite.com/zombies-am…
The Spread Thread retweeted
Great thread 👇
Note/thread below with some market thoughts...
We continue to see large swings in sentiment in 2023, and it has paid not to get caught up in a narrative for long. Recession-> H4L-> bank crisis-> soft landing-> fiscal crisis. Now back to soft landing.
1/11
thespreadsite.com/zombies-am…
The Spread Thread retweeted
Excellent thread looking into the rate macro picture for the remainder of this year and into 2024.
Note/thread below with some market thoughts...
We continue to see large swings in sentiment in 2023, and it has paid not to get caught up in a narrative for long. Recession-> H4L-> bank crisis-> soft landing-> fiscal crisis. Now back to soft landing.
1/11
thespreadsite.com/zombies-am…