Good Monday AM,

Bonds are strong again this morning with the 10-yr at 1.26%. There are several factors at play. First, the craziness over the weekend in Afghanistan has markets nervous about the Taliban (as they should be). Thousands of Americans are trapped and in danger, which I cannot even fathom, and there are several other global implications here (I will mention them in the coming days, but you may want to go watch the movie Charlie Wilson’s War for reference). This situation is horrible. Additionally we have the charts, which over the last few days have turned bullish for bond prices, and are showing signs of a full retracement from their recent lows (Covid cases and deaths continue to spike, mask mandates are imposed although largely ignored). Today the Empire State Manufacturing data set, which is not typically a big market mover, was hammered just adding fuel to the fire. Lastly, China reported much lower than expected retail sales, leaving traders to wonder how strong of a recovery we are seeing. Through all of this and with the 10-yr at 1.24% (from 1.43% last week), amazingly stocks are roughly flat. I do not get it.

Data is fairly light this week, but there are a few big ticket events.  First up will be July’s Retail Sales numbers on Tuesday morning.  Economists see the headline falling by 0.2% after a 0.6% gain in June.  Then on Wednesday, the Fed releases the minutes from its most recent meeting (3 weeks ago).  These will help set the stage for Powell’s Jackson Hole speech at the end of the month which will, in turn, set the stage for tapering prospects this fall.  Of course, the Fed will be the first to admit that a resurgence in the pandemic will put the brakes on tapering goals–something we already know they discussed at the last meeting.

The below picture speaks volumes. Rates can’t stay low if inflation is going up. That the smartest guys on Wall Street shared this information, I wouldn’t worry too much about inflation.

And here is a great graph of the US Housing price trajectory. Even with the dips (which are few and far between), real estate has been a great investment.

I read this little tidbit and wanted to share… Some states that require judicial foreclosures have consumer protection laws that prolong the proceedings. In Arizona, the state with the lengthiest foreclosures, the entire process takes more than five years. Now I understand why people are moving to Arizona.

Please remain safe and healthy, make today great.