Blog

Looking for Cracks

“If rates continue to rise the way they’ve been rising, there will be a financial accident.  Something will break and that will get the Fed moving in the other direction,” said David Lebovitz of JP Morgan on October 2, 2023.

Looming over the country this weekend is a potential government shutdown. We have been here before, but the circumstances and obstacles are unique. The Senate passed a bill to keep the government running and the House has only until midnight this Saturday to approve a spending bill. If an agreement is not made, the federal government will shut down on Oct. 1^st.

August 9, 2023

I am sorry Dave, I’m afraid I can’t do that….

“The only way to stop the political outrage is not to play it.”  ~Carmine Savastano

In Minneapolis, we have already had one blizzard in April, and more snow potentially is on the way as we endure the third snowiest year on record. As many people here wonder what April blizzards portend for flowers in May, at Bond&Devick we are wondering what bank closures and tightening credit standards portend for interest rates and the markets.

Most Federal Reserve rate hiking cycles tend to end when the economy tips into a recession or when something breaks and the Fed changes course to prevent further issues.  The economy does not seem to be currently in a recession, but something broke and in a big way.

The stock and bond markets started to cozy up to the idea that employment would begin to soften, and wages would moderate even more.  This would reduce inflationary pressures and allow the Federal Reserve to reduce interest rates at a faster pace than was previously expected.

Patti Page’s classic song may soon be coming back into vogue as the price of puppies (and most everything else continues to come down). According to Bloomberg, the average price of dogs in the UK fell by 28% last year and cats were down 32%. Apparently, animal shelters are filling up as more and more companies call their workers back into the office.

Last December our year-end email focused on supply chain issues, growing inflation, the dominance of growth stocks, and surging interest in cryptocurrency. We surmised growth stocks could have a challenging time in 2022 should interest rates rise rapidly and speculative investments could come under extreme pressure.