ProfitScore Update – June 2024
To the clients and friends of ProfitScore: The Bond Bear Market Stocks can trend for years, but interest rates trend for decades. We are four years deep into a bond bear market, and this has caused many advisors to rethink their asset allocation strategy. For…
ProfitScore Update – January 2024
To the clients and friends of ProfitScore:See Saw as a Predictor? Last year, we witnessed a significant rebound in the market after a notably challenging period, which had experienced one of its worst years, particularly for a 60/40. This pattern often leads to the assumption…
ProfitScore Update – December 2023
To the clients and friends of ProfitScore: Potential Impact of BOJ Policy Shift on US Treasuries and Global Markets We’re closely monitoring a significant development in global finance: the Bank of Japan (BOJ) is showing signs of ending its negative interest-rate policy. This speculation has…
ProfitScore Update – October 2023
Exploring the Impact of Basis Trading in Financial Markets The SEC is about to pass new rules impacting basis trading in US Treasuries. Why should you care? First, let me give you a little background on basis trading. In the complex world of finance, the…
ProfitScore Update – October 2022
Inflation Adjusted Equity/Bonds To the clients and friends of ProfitScore: With all the talk of inflation, there is one element that you don’t see much. The S&P is down -17.75% through October, but adjusting for inflation puts the S&P down -23.05%. For reference, the S&P…
ProfitScore Update – January 2022
To the clients and friends of ProfitScore: The expectation of heightened volatility for 2022 did not disappoint in January. The VIX rose to just short of 32 in late January, its highest level since January 2021, settling at 24.38 by month’s end. According to weekly data published…
ProfitScore Update – November 2021
To the clients and friends of ProfitScore: Our flight-to-quality indicator had been building towards the end of November and went long on the Wednesday before Thanksgiving. This trade can last for a few days or several weeks. It can also chop around depending on the…
The Currently Odd Volatility of Long-term US Treasuries
The US sovereign bond market is traditionally viewed as a safe-haven by investors. When US equity markets are under stress, investors generally purchase US Treasury bonds, pushing yields lower and bonds higher. Traders seeking convexity prefer buying the long-end of the yield curve, which causes the…
World War C: Will Rising U.S. Deficits Steepen The Yield Curve?
Estimated Deficit Spending for 2021 Modern Monetary Theory (MMT) – Version 1.0 The U.S. Dollar Stays Strong Drowning Out The Noise What Opening Up May Look Like The economic toll, as measured by deficit spending, is going to set new records across most modern economies. Even…
Why The Unwind Of The Carry Trade Is Increasing Volatility
Central bank interest rates are of fundamental importance to exchange rates and foreign exchange flows as they determine the direction and profitability of carry trades. When the interest rate differential between two central banks is positive, it is generally possible to borrow a currency at…