<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=905697862838810&amp;ev=PageView&amp;noscript=1">

LenderHub

SWBC's LenderHub blog is a one-stop resource for lenders.

 

Trying to Understand the Stock Market/Economic Disconnect? Stop.

From the great cult classic movie “Big Trouble in Little China,”

Jack Burton – “I don’t get this at all?”
Lo Pan – “Shut up Mr. Burton! You were not brought upon this world to get it!”

As U.S. equities continue their relentless march higher, the question reverberating from all corners of the investment world is, “How can the stock market completely decouple itself from economic reality in what is really just the first couple of innings of the COVID crisis?”

Read More

Market Commentary: Week of June 15, 2020

What happened:

It was another turbulent week; stocks continued their strong and somewhat puzzling run toward erasing the sharp losses suffered in February and March. The main event of the week was the Fed’s FOMC meeting sobering pronouncement that FOMC members saw a very slow recovery filled with chronic unemployment until 2022. Not exactly a “V-shaped” recovery.

Read More

The Adventures of Jerome Powell

We have to hand it to The Federal Reserve; what they have managed to do with the investment-grade and high-yield bond and loan market has been remarkable. Back in March, they announced a Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity to frozen markets. They would use this facility to buy investment-grade corporate bonds, high-yield corporate bonds that were investment-grade prior to March 20, 2020, and investment-grade ETFs. The U.S. Treasury provided $25 billion in capital, which meant that the Fed could buy about $250 billion.

Read More

Market Commentary: Week of June 8, 2020

What happened:

The week was dominated by some of the biggest protests and civil unrest throughout the country since the late 1960s. Stocks held a positive tone against adversity and then went ballistic when a shocking May BLS employment report came out Friday. The report showed a LOWER unemployment rate and a 2.5 million job GAIN, versus estimates of a 7.5 million job LOSS!

Read More

Market Commentary: Week of June 1, 2020

What happened:

It was an action-packed week with regard to outside market events. After the Chinese Legislature passed laws that essentially put Hong Kong under the same national security laws as Mainland China, President Trump reacted by removing Hong Kong’s special trade status. Additionally, the President announced that the United States will no longer fund the World Health Organization under the accusation that it is overly influenced by China and it aided and abetted China in covering up COVID-19. Naturally, this is a negative for US-China trade relations.

Read More

Farewell Independent Federal Reserve...Hello Modern Monetary Theory?

The Federal Reserve Open Market Committee (FOMC) April 29th meeting minutes, released this past Tuesday had one rather alarming comment.

"Several participants remarked that a program of ongoing Treasury securities purchases could be used in the future to keep longer-term yields low. A few participants also noted that the balance sheet could be used to reinforce the Committee’s forward guidance regarding the path of the federal funds rate through Federal Reserve purchases of Treasury securities on a scale necessary to keep Treasury yields at short to medium-term maturities capped at specified levels for a period of time.”

Read More

Market Commentary: Week of May 25, 2020

What happened:

The week started with euphoria that the drug-maker Moderna was making great progress on a COVID-19 vaccine. Stocks, oil, and corporate debt risk surged. Even though the next day brought a bit more sober news about Moderna’s progress, risk assets finished the week strong. Speaking of sober, another 2.4 million applied for initial jobless claims; continuing claims are now at 25 million. Additionally, many losing their jobs are also losing their health insurance, which is bad, especially in the midst of a pandemic.

Read More

Market Commentary: Week of May 18, 2020

What happened:

Last week was shaped around Fed Chairman Powell’s speech to the Peterson Institute for International Economics. The Chairman warned that the economic recovery might be a prolonged one with the recovery period lasting until late 2021. He also restated what most acknowledge about the 2nd Quarter—it will be awful.

Read More

Market Commentary: Week of May 11, 2020

What happened:

From the “Never thought I was going to see that!” department, the January 2021 Fed Funds Futures contract crossed the Rubicon and closed over 100, which means an expectation of a negative Fed policy rate.  What makes this even more “interesting” is that this occurred BEFORE Friday’s Employment report which, while expected to bad, felt even worse when the numbers posted.

Read More

"Do Not Pick up Nickels in Front of the Steamroller!"

It seems like every time a sudden and severe shock hits the financial markets, all the fancy hedge fund investment strategies that use monikers like, “Enhanced Return,” or “Alpha Plus” go from being perfectly fine to gone within a month. This has happened in the major market blow-ups in 1998, 2001, 2008, and 2020, with a few notable semi disasters (2002, 2013, 2016) thrown in between.

Read More