Juggling Dynamite

This segment includes an articulate explanation of the yield curve inversion and its implications. I would add: it’s not just ‘normalizing’ interest rates that has sparked cardiac arrest through the economy, it’s the years of excessive credit creation that preceded it.  Now we have the take back phase.

Campbell Harvey, Duke University professor of finance, joins ‘Squawk Box’ to discuss the Fed’s inflation fight, why he believes the central bank has overshot and should have stopped raising rates in January, the state of the economy, Treasury yields, and more. Here is a direct video link.

The four Ds drive real estate listings: death, divorce, default, and discretionary. The first three tend to trigger regardless of market conditions. ‘Discretionary’ and default listings tend to rise with interest rates– both are escalating now.

Ted Oakley discusses real estate with property market expert Ivy Zelman.  Here is a direct video link.

For those who think that interest rates are not high enough to cause significant strain, context is critical. It is the rate of change that matters most. The move from less than 1 percent to more than 5 percent over 16 months is by far the most severe of any previous tightening cycle in at least the last 50 years (chart of the US 10-year yield change in log scale below since 1977 courtesy of Francois Trahan). Moreover, this rate shock hit when all levels of the economy were at record levels of indebtedness—# thisisabigdealfolks.

US lubricant consumption has fallen to the lowest level in at least 42 years, according to Bloomberg Opinion calculations based on data from the Energy Information Administration and reflects a cyclical slowdown globally. See The Lube that Greases the World Economy Says Beware 2024:

Wherever one looks, from Europe to the US to China to India, the message is uniform: The machines that power economic growth aren’t running as fast as they did in previous years. That echoes other indicators of industrial activity. JPMorgan Chase % Co.’s global manufacturing index has notched 14 consecutive months below the 50 level, which indicates a contraction. Diesel consumption has also weakened in many countries, another sign of factories slowing down.

Also, despite an ongoing war in the Middle East and an extension of Saudi/Russian production cuts, oil has fallen from $95 at the end of September to $76 this morning see Oil slips below $80 amid economic concerns, sufficient supply. US gasoline consumption per capita is also weakening (shown below since 1990).