Danielle DiMartino Booth

Margin squeeze is everywhere a corporate phenomenon.

Unique and viable prism.

Trickle-down never trickles UP: "Falling real-estate values & fewer sales squeeze property-tax & transfer-tax collections. Higher rates also make it harder for developers to earn their targeted returns. That cuts demand for construction workers, architects & building materials."

“Bigger bond move comes when investors want less exposure to uncertain earnings & more to contractual cash flows If growth continues weakening & inflation begins cooling because energy shock has destroyed enough demand, attraction of locking in today’s yields increases sharply”

And when regulators are informed the smoke alarm has gone off, it’s usually…

“Bessent does not necessarily need to force yields lower directly…more plausible strategy is to reduce duration supply, improve dealer financing, strengthen institutional demand & tolerate restrictive dollar conditions while waiting for weaker growth to create the bond rally.”

"With the 2-year SOFR swap spread at minus 14.55 basis points and the 5-year spread at minus 29.10 basis points, swap fixed rates sit below Treasury yields, reinforcing the market’s expectation of lower future overnight rates."

"...tech cuts are actually up roughly 54% YTD, hiring plans in September fell about 23% from a year ago to their weakest September since 2011, and the broader labor data still show weak hiring, falling temp employment, flat hours and deteriorating breadth."

An “extending and pretending” stock market? Who’d a thunk it?

👇👇👇

Correct! The de-dollarization crowds may eventually be proven right after decades of warnings. My best advice: The next time there’s a financial crisis, how’s about NOT issuing all of that emergency debt in $s. Someone once said something about actions speaking louder than words.

The inconvenient truth: “As the Fed’s reaction function catches up, short rates should fall faster than long yields. If the average funds rate converges to 2.75% & the term premium remains positive, the 10-yr should settle near 4%, with a normal 100 bps spread over the two-year”

Most disturbing quote demonstrating how out of touch top 1% is as strapped families flock to food banks: “Housing assistance, rental assistance, that’s very difficult to get. Food is a lot easier” said Brian Greene, head of Houston Food Bank, the country’s largest by distribution

Can the horse be put back into the barn?

ICYMI the magic.

THIS is the part even well respected economists are missing. Is this broken breakeven analysis simply BS or willful blindness? “If breakeven job growth near zero makes +29,000 reassuring, why did unemployment still rise because the labor force grew faster than employment?”

#Wisdom

The Weekly Quill — Do U.S. Workers Have Nothing to Fear? https://t.co/eSWA0an8wx #federalreserve #dimartinobooth #kevinwarsh #economy #jobsreport #employment #jobs https://t.co/CDI0Xzc1d2

The Weekly Quill — Do U.S. Workers Have Nothing to Fear? https://t.co/k7L0NG65oq #federalreserve #dimartinobooth #kevinwarsh #economy #jobsreport #employment #jobs https://t.co/X2kqolSnK3

DiMartino Booth joins Andy Wang of Inspired Money — Why Index Funds Won't Let the Market Crash https://t.co/XI7Njrdy4d #federalreserve #interestrates #dimartinobooth https://t.co/5xhKEKjxFd

Differing paths. In the U.S., CRE loss realizations are the transmission mechanism to a fanning out to tightening lending standards.

(Risk not) “one giant bank failing…it would be a refinancing window closing for weaker corporates, w/private credit & bank funding lines becoming transmission mechanism…visible bankruptcy would come later. The first real sign would be financing that suddenly cannot get done.”

Lagged is as lagged does…said every friendly neighborhood central banker.

ANEN.

Markets redefined?

Don’t forget the impetus to impose UBI under such circumstances. THEN, all bets are off. “The system becomes caught between global contraction pulling long rates down and fiscal dominance eventually placing a structural floor under them.”

Option A or B? “Either usable diesel supply rises meaningfully, or prices eventually destroy enough demand to bring consumption back toward constrained supply.”

Math they said would never be repeated.

cc @m3_melody

“JOLTS showed private hiring essentially flat in August & 170k below June, w/Quits subdued & several major industries weakening…I would view Indeed data as evidence that some parts of online recruiting are improving, but not confirmation that broader labor market has” (healed).