Pro Perspectives 10/19/22

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October 19, 2022
 
The U.S. 10-year yield closed today at 4.13%.
 
That's well above the 4% level, which has proven to be a level that reveals damage in the global financial system.  And the close today is 12 basis points above any close we've seen to this point (in this rate cycle).  
 
Remember, especially in this post-Global Financial Crisis and Post-Pandemic world, rising U.S. rates moves the anchor for global interest rates — higher. 
 
It took a breach of 3.30% in the U.S. 10 year, back in June, to put Italy (and the fiscally weak spots in the euro zone) on sovereign debt default watch.   The European Central Bank had to gather, in an emergency meeting, and devise a new bond buying plan to put a lid on sovereign bond yields in Europe — to avert another sovereign debt crisis.   
 
The first breach of 4% in U.S. yields (in this rate cycle) was on September 28th. 
 
That day was also the culmination of a 135 basis point, five day run-up, in the UK's 10-year government bond yield. 
 
That move, those rate levels, revealed UK pension funds to be on a quick path to insolvency.  The Bank of England had to intervene, to avert a financial crisis (which would have been global).
 
So now we have another new gap higher for the world's benchmark interest rate to digest.  Thus far, the central bank backstops provided in the euro zone and in the UK are keeping bond yields in those respective areas under control.
 
Where will the next vulnerability lie for the global financial system?  We will probably find out, soon.
 
As we've discussed dating back to early this summer, when the Fed was beginning to move rates, and when they announced quantitative tightening plans, "history tells us that unforeseen consequences will follow (i.e. something will break in the financial system)."  
 
The Fed seems determined to break something.
 
The good news:  History also tells us that the Fed (and other central banks) will respond, with backstops, guarantees, more QE.  "Whatever it takes." 
 
Speaking of market manipulation, let's talk about energy.
 
Bad energy policy-making from Western politicians has choked off investment in new oil exploration and production, and regulated away incentives to produce — which has led to structural supply problem.
 
Add in curtailed supply from a global producer, like Russia.  And cede control on global oil prices to OPEC, via less competition — and you get guaranteed higher energy prices.
 
What do the politicians do?  They don't change policy, they opt for short term price manipulation.    
 
The UK government has capped prices on energy for households and businesses.  European Union politicians have their hands all over the energy markets, working on plans to subsidize, backstop and outright control prices in Europe.  And in the U.S., the President just released the last tranche of oil from a 180 million barrel drawdown of the Strategic Petroleum Reserves, in efforts to keep a lid on oil prices.  That's a 28% total drawdown, and the administration left open the option to do more early next year.  
 
The moral of the story here:  The crises of the past fourteen years have resulted in central banks and governments crossing the lines of what was deemed to be acceptable engagement in free markets.  They don't go back.  They only become more emboldened. 

Pro Perspectives 10/18/22

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October 18, 2022
 
As we discussed the past few days, the banks kicked off Q3 earnings season with solid numbers, and solid reports on the health of businesses and the consumer. 
 
Today, we had more evidence of solid economic activity in the third quarter. 
 
Johnson and Johnson beat on earnings and revenues.  United Airlines had the strongest earnings in three years.  The CEO called it "the best operational quarter in company history."  And Netflix crushed estimates after the close today.  Reed Hastings called the first half "challenging," but said now they believe they are "on a path to reaccelerate growth." 
 
It's still early, but so far the retrenchment in S&P 500 earnings that the Wall Street doom and gloomers have been looking for, isn't happening.  
 
Add to this, this morning we saw reports on industrial production and capacity utilization for September — both strong. 
 
Let's take a look at Industrial Production …
Each of the dips in this chart, below zero, was associated with recession, with the exception of 2015 — which was associated with the expectations of the Fed's exit of GFC emergency policies (i.e. rate hikes). 
 
As we move to the right of the chart, despite two consecutive quarters of negative real GDP, AND (related) the Fed's exit of emergency policies, the industrial sector of the economy is performing well!
 
Remember, as we discussed yesterday, nominal growth is hot, running at an average annual rate of 8% (averaging the quarterly annualized growth of the first three quarters).  This is what happens when you grow the money supply by 40% in two years (10 years worth of money supply in two years)!
 
And with an explosion in money supply, particularly when you put money directly into the hands of consumers, you also get a reset of prices. 
 
We've see it.  The level of prices has reset.  And the rate-of-change in prices is now moderating.
 
The Fed has successfully manipulated down inflation.  They've done it by talking down the stock market and threatening a Paul Volcker-like inflation fighting campaign.  That has crushed the exuberance in the economy, but not the activity — as we can see in the earnings, industrial sector, and in nominal growth. 
 
With the exuberance taken out of the economy, housing prices have started to fall.  Rents have started to fall.  Used and new car prices have started to fall.  Even global food prices (the FAO food price index) have fallen for five consecutive months.
 
If we get a split Congress next month (some well needed gridlock), we may have a formula for a period of hot growth and more moderate inflation. 
 

Pro Perspectives 10/17/22

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October 17, 2022
 
With the Bank of American earnings report this morning, we've now heard from the four big banks, on Q3 earnings.
 
Bank of America beat on revenues and earnings.  As we discussed Friday, where the banks are losing on investment banking activities (due to low confidence in the market and economic outlook) and wealth management (lower fees from lower account balances), they are making on trading revenue (market volatility brings more trading volume) and a very healthy interest rate spread (where they borrow, and what they pay you on your deposits).
 
Moreover, the big banks continue to say that consumer and business balance sheets are healthy, consumers have the appetite to spend, and jobs remain plentiful.
 
This doesn't exactly support the mood of the market.  
 
Keep in mind, while the Fed has talked down the stock market and has tried to talk UP unemployment, the nominal growth rate of the economy is running at the hottest pace since the early 80s.  Before the effects of inflation, the economy grew in the first quarter at a 6.6% annual pace, in the second quarter at 8.2%, and the third quarter is projecting over 9% annual rate at the moment (according to the Atlanta Fed GDP model).   
 
With all of the above said, by the end of the week we will have heard from about 20% of S&P 500 companies on Q3 earnings.  Will the fundamentals match the performance of financial markets?
 
To this point, investors in a traditional 60% stock/ 40% bond portfolio are suffering from the worst performance on record (down 30%).  The next closest year was 1931.  And those two economic environments don't compare well.  
 
With that, are markets overestimated the risk that we are heading for a major economic shock and calamitous fallout?  If so, I would argue markets are underestimating (if not misunderstanding) the role that central banks and governments, of the Western world, have taken (their mantra: "whatever it takes").  They are in full manipulation mode, intervening with monetary or fiscal policy wherever needed.  We've already seen plenty of it, just in the past few months,  both government and central bank backstops. 

Pro Perspectives 10/14/22

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October 14, 2022
 
We ended the week with the big banks kicking off Q3 earnings season. 
 
Revenues are up (and better than estimated), for three of the big four banks that have reported thus far. 
 
And earnings came in better than expected, but broadly lower than a year ago (exception Wells Fargo).
 
As we've discussed in the past, the banks are "heads they win, tails they win" businesses.  When times are unstable over the past fourteen years, they've been backstopped by the Fed (de-risked), and incentivized to fuel credit creation to help the economy — from which they make money in loan origination, investment banking and trading.
 
When times are more stable, their customer account balances balloon (as they have now), from which they get to earn an interest rate spread from the rising interest rate environment.
 
And now, a less stable time, but with rates rising from a long period of zero interest rates, the banks are cashing in on a very healthy interest rate spread.  They are very slow to move from paying practically nothing on deposits, while earning over 3% now from the Fed.
 
As we move into next week, and hear more on corporate earnings, we'll do so with the stock market trading off of a new low for the year, marked yesterday.  And with a forward P/E on stocks that has come down from north of 20 (at the beginning of the year), to just 15.5.  The long-term average P/E on the S&P 500 is 16.
 
So stocks have fallen for three consecutive quarters, evaporating the premium to the long-term valuation multiple on the stock market. 
 
Moreover, as of yesterday's lows, we were less than 3% away from fully retracing to the pre-pandemic levels. 
 
Yet we have $6 trillion of new money in the economy (additional money supply), since the pandemic.  Unemployment is at record lows, and interest rates (still) are at slightly lower than long-run average levels.  
 
The fundamentals don't match the market behavior.  Clearly there is stress in the financial system.  But policymakers have shown us, they will do whatever it takes to maintain stability.  We should expect intervention, where needed.  Again, in their own words:  "Whatever it takes."
 
Stocks are cheap.  And among the broad market, banks are very cheap, trading at single digit forward P/Es, well below the 5-year averages.      

Pro Perspectives 10/13/22

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October 13, 2022
 
The September inflation came in hotter this morning (more in a moment).
 
Stocks went down.  Yields went up. 
 
Then it all reversed. 
 
Once again, the 4% area in the 10-year yield, the benchmark of the  government bond market, seems to be the line in the sand. 
 
As we’ve discussed often in my daily notes, this liftoff phase of global interest rates, where central banks have been exiting emergency policies, has been led by the Fed.  And a rise in U.S. rates, moves the anchor for global interest rate.
 
With that, as the U.S. 10-year yield hit 4% in late September, it dragged higher government bond yields, and it resulted in a shock in the UK government bond market, which required intervention from the Bank of England. 
 
So, here we are heading into today’s big inflation report, with the 10-year around 4%. 
 
Again, the inflation data for September was hotter than expected, and the 10-year yield had a quick visit to 4% and reversed. 
 
Stocks reversed as well, and that turned into another historic moment for the stock market.  
 
Remember, last week, we saw one of the biggest two-day gains in stocks.  And we looked at this chart …
Looking back through all of the two-day returns in the S&P 500 futures, dating back to 2006, a two-day return of over 5% is rare, and every time since 2006, it has been fueled by policymaker intervention, to respond to a significant risk to, or destabilization of, the global financial system.  These were all significant moments in the history of markets.   
 
As such, the big 5%+ bounce in stocks last week was (also) intervention-driven, as the Bank of England intervened in the UK bond market to stabilize the UK financial system.  Again, given the comparables in history, we can draw the conclusion that this UK bond market event was a very significant threat to the global financial system.    
 
Now, let’s fast forward to today, and again we have another rare occurrence.  The S&P futures plunged 2.6% after the inflation data, and then surged to close up over 2% for the day.  It was on a 5.4% trading range.
 
I went through 25 years of S&P futures data that have this magnitude of trading range, or greater in common.  And like the two-day return study, these extraordinarily large trading range days (finishing up or down) also come associated with very significant moments. 
 
As you can see in the chart above, these ranges are associated with major market crises, policymaker intervention, policy change (via elections/votes) and market liquidity crises. 
 
The past two, however, have come as the result of an inflation report (and have come in consecutive months)!
 
What do we make of it?
 
Remember, high inflation environments, historically, have only been resolved when short term rates (the rates the Fed sets) are raised above the rate of inflation.  The Fed remains well below the rate of inflation.
 
Why?  As we’ve discussed along the way of this Fed tightening path, even if the U.S. economy (including our government’s ability to service its debt) could withstand the pain of high interest rates, the rest of the world can’t.  And we’re already seeing, at current interest rate levels, that the global financial system can’t withstand it.
 
That’s why this 4% level in the 10-year yield seems be a vulnerable point.  And that’s why this inflation report, has become the equivalent of a major market moment in recent history.
 
The good news, as we discussed yesterday, some of the hot spots in the inflation report, are cooling (new cars and rents), though it didn’t show in today’s report. 
 
If fact, even if prices continued to move at the pace of the past three months (the three-month average monthly headline inflation) we’re looking at an inflation rate that is running around 2% annualized — which is the Fed’s inflation target.
 
And if that’s the case, we could be looking at a collapse in inflation by next year, as most of the effect of the 300 basis points of tightening has yet to be felt in the economy (still lagging).  
 
So, how would 2% inflation be possible (much less lower), if the Fed Funds rate is still (at the moment) well below the 8.2% current annual inflation rate that we see in the media reports (which measures prices now against prices of a year ago)? 
 
Arguably, the Fed has done its job, slowing the economy and lowering inflation (which is showing up in the monthly inflation change). They’ve done it by destroying confidence and destroying stock market wealth.  And that’s been accomplished mostly through tough talk.
 
Why is that good news?  Perhaps the pain has already been inflicted, on the stock market and the bond market.     
 

Pro Perspectives 10/12/22

October 12, 2022

The September inflation report comes tomorrow morning.

Let’s take a look at what stocks have done since the last inflation report.

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It’s been straight down.  The report itself sent stocks into a 4.8% slide (peak to trough) for the day, on September 13.

This was all on the view that it would force the Fed to do more (more rate hikes).   Indeed, they’ve certainly threatened to.

So what was so bad about the last inflation report?

First, the headline number (this was data from the month of August) was up just 0.1% compared to the prior month.  At that monthly pace, inflation would be running just a bit over 1% annualized.  That’s very, very tame inflation.

But it was the uptick in the inflation number excluding the effects of food and energy that spooked markets.  That ticked up from 5.9% to 6.3%, year-over-year.

It was shelter that accounted for about 40 percent of that increase.

Other drivers of that increase in the core inflation number:  healthcare costs, new vehicles, used cars and trucks, and household furnishings.

Let’s take a look at what we know about those components, for clues on what tomorrow’s number might look like.

If we look at the recent data released by Kelly Blue Book on new car prices in September:  It was the first decline in five months.

What about used cars?  The Manheim used car index showed a 3% decline in used car prices in September compared to August.

For healthcare, the U.S. Health Care Price Index (which measures cash price paid for healthcare) declined in September.

Remember, shelter was the hottest component in the last report.  What did shelter prices do last month?  Realtor.com says median home prices peaked in June.  And the Apartment List National Rent Report says the national month-over-month rents were down by 0.2% (chart below).

 

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Rent has been a key contributor to overall inflation.  Both CNBC and Bloomberg are running headlines today, calling for a hot number tomorrow, driven by rents.  We’ll see tomorrow if the fastest growing rental market place in the United States has a better handle on rents than Wall Street media.

Add to all of this, gas prices were down 7% last month, for the third consecutive month.

Pro Perspectives 10/11/22

October 11, 2022

The U.S. bond market was closed yesterday.  And yet we entered today with a spike back to the dangerous 4% level in the 10-year yield.

It was just two weeks ago that the combination of the global benchmark for interest rates (U.S. 10-year Treasuries) at 4% and the global benchmark for stocks (the S&P 500) back at the lows of the year, was creating stress in the global financial system.  It looked like a breaking point.

And it was.  The next morning, the Bank of England (BOE) was forced to rescue failing UK pension funds.

As Warren Buffett has said, “only when the tide goes out, do you discover who’s been swimming naked.”  The “tide” in this case, is the easy money, low inflation era.

With higher rates, UK pension funds have been exposed as overleveraged and dangerous to the UK government bond market.  As the value of UK government bonds (gilts) were falling (rates rising), these funds were getting margin calls, where they were forced to sell bonds.  The forced selling, resulted in lower bond values, which resulted in more margin calls, which resulted in more bond selling (and a self-reinforcing global sovereign debt spiral was underway).

It has now been revealed that these massive pension funds were just hours from insolvency, which would have quickly spilled over into the UK financial system, which would have quickly become a problem for the global financial system, and global sovereign debt markets.

With that, we close the day today with a very important comment from the head of the Bank of England.

There has been speculation that the BOE will continue to absorb the stress in the pension funds, and where ever else it might emanate in the financial system – for as long as it takes.

But the BOE Governor rejected that today, warning the pension funds that they have three days to fix themselves, using the liquidity provided by the BOE.

This comment sent U.S. markets back to the worst levels of the day, and back around the danger levels of two weeks ago.

This comes as the Fed continues to march officials out in front of the media with hawkish rhetoric.

And this comes just two days ahead of the very important U.S. CPI number.

So, the current level of global market interest rates are already proving to create stress in the global financial system.  Meanwhile central banks (led by the Fed) continue to talk about responding to hot inflation data, with even higher rates.

What if the inflation data on Thursday is hot?

Keep this in mind:  The Bank of England (and the Fed) are responsible for maintaining stability in the financial system.

The BOE is talking to UK pension funds as if they are in a position of strength.

They are, right now, the “buyer of last resort,” in the UK bond market.  They are in a position of weakness.  And we’ve already seen what that looks like.  They’ve been forced to come off of the sidelines, and return to the business of emergency policies (QE).

As the old adage goes, if you own the bank $100, you have a problem.  If you owe the bank $100 million, the bank has a problem.

Pro Perspectives 10/7/22

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October 7, 2022
 
As we discussed yesterday, the Fed has been verbally attacking demand. And the mechanism they are targeting to bring demand down, as they've explicitly stated, is jobs.
 
With that, the September jobs report came in this morning.
 
Unemployment ticked down.  The Fed wants unemployment up. 
 
So the Fed's rate path and jawboning (about the rate path) didn't raise the number of unemployed.  And that leaves the gap between job openings and potential workers at 1.7 to one.  The Fed's alleged target is one to one.
 
But as we also discussed yesterday, the objective of the Fed, in targeting jobs, is to reduce the leverage workers have in negotiating higher wages. 
 
On that note, wage growth in this mornings report came in tame, for the second consecutive month.  At a 0.3% monthly change, that's 3.7% annualized wage growth.   That's just a touch above the monthly annualized wage growth for the nine-month period prior to the pandemic.
 
Meanwhile, with headline inflation running over 8%, employees are experiencing negative real wage growth (losing 5% in buying power over the past twelve months).  
 
Of course, that's against a broad basket of goods (CPI).  But if we look at the basics of food, shelter and energy.  It's double-digit losses in buying power.  This equates to a lower standard of living. 
 
Now, is the Fed trying to suppress wages because they think prices will eventually fall, closing the gap between the change in the level of wages over the past two years, and the change in the level of prices (i.e. restoring the standard of living)?
 
No.  An IMF report, published two days ago, lays out the policymaker rational for pinning wages down. 
 
It says, "real wages (after the effect of inflation) tend to go down initially as inflation outstrips wage growth."  That limits the ability of consumers to maintain the level of demand.  They can't afford to pay up for goods.  With that, businesses do worse, and are less likely to hire and give raises.  That process, they think, stops a self-reinforcing upward spiral in prices, where wages feed into higher prices, which feed into higher wages …    
 
But it only works, according to the IMF report, if businesses and consumers expect future inflation to be tame.  On that note, the Fed has talked down the stock market, and has continuously threatened to crush jobs and threatened a "whatever it takes" type of approach to crushing inflation — for the primary intent of managing down this chart …
As you can see, it has worked. Inflation expectations are 15 basis points lower today, from the September Fed meeting.  And lower than the levels of the July Fed meeting, when the Fed signaled a pause in tightening cycle.
 
So, again, the Fed's tough talk has worked.
 
But remember, bringing down the rate-of-change in prices, is different than bringing down the level of prices.  
 
The level of prices, thanks to this chart, is here to stay…   
Wages will ultimately go higher, but the closing of the wage-price gap will be slow and painful. 
 

Pro Perspectives 10/6/22

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October 6, 2022
 
Back in March, when the Fed made its first rate hike, Jerome Powell launched a verbal attack on demand.
 
In his press conference, he was asked what mechanisms he would use to reduce demand? 
 
He said this:  "If you look at today's labor market, what you have is 1.7-plus job openings for every unemployed person.  So that's a very, very tight labor market — tight to an unhealthy level…. We're trying to better align demand and supply, let's just say in the labor market.  So, if you were just moving down the number of job openings so that they were more like one to one, you would have less upward pressure on wages [and] you would have a lot less of a labor shortage" … "and that, over time, should bring inflation down."
 
So the case the Fed has made for attacking jobs, has been to reduce the leverage that workers have in commanding higher wages.  Higher wages are inflationary (but also a requirement to maintain a standard of living in a world where the level of prices has been reset higher). 
 
This is the chart of the jobs opening data Powell was referencing.  
Against about 6 million people unemployed, the job openings peaked in April at nearly 12 million openings.  That's two jobs for every one unemployed worker, and the Fed has been using that data point throughout the five months to justify tough talk about the rate path.
 
But as we know, the rate path already has created a shock to the global financial system:  enough to bring two major central banks off of the sidelines and back into the game of emergency policies (i.e. both the Bank of England and the European Central Bank: backstopping sovereign bond markets).
 
This destabilization in the financial system creates a conundrum for a Fed that's threatening bigger and bolder rate moves, as the job gap they've been touting, as their objective, has shown little signs of change.  
 
On Monday, they were thrown a life-line.  The August report on job openings, from the U.S. Bureau of Labor Statistics, magically collapsed by 1.1 million jobs.  Over a million jobs vanished in a month. 
 
To put that in perspective, that was the biggest change on record (by far), only slightly behind the April 2020 collapse in job openings (when the economy was practically shut down).  
 
That brings the job openings to workers ratio down to about 1.6 to 1.
 
And as you can see in the next chart, wage growth is tame, within the range of pre-pandemic, and running around 3.6% annualized in August (monthly change).  
We get the September jobs report tomorrow.  The Fed needs the cover of an uptick in unemployment, and soft wages. 

Pro Perspectives 10/5/22

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October 5, 2022
 
Yesterday, we discussed the big two-day move in stocks.  And we looked at this chart …
As you can see in the chart, a two-day return of over 5% is rare, and every time since 2006, it has been fueled by policymaker intervention, to respond to a significant risk to, or destabilization of, the global financial system.  
 
Today, let's step through the history in this chart, and talk about the event, the response, and the outcome. 
 
Most recently (the far right of the chart), as we know the Bank of England stepped in last week to buy UK government bonds.  That reversed the aggressive rise in UK market interest rates, which were beginning to reveal an impending shock to the UK financial system, which (if history is our guide) would become contagious, globally. 
 
What was revealed?  Fourteen years of global QE and zero rates has left the global financial system unable to sustain higher interest rates and shrinking liquidity. 
 
Evidence: As rates were rising in the UK last week, UK pension funds were getting margin calls, where they were forced to sell UK government bonds.  When they sold bonds, yields went higher, which forced more margin calls, which required them to sell more bonds (and a self-reinforcing global sovereign debt spiral was underway).
 
The pain point on policy tightening was revealed to global central bankers.  The Bank of England responded, buying bonds, and reversing the rising tide of interest rates.  Markets calmed.  Global stocks rallied.
 
This move in stocks was the biggest two-day move since 2020. 
 
Of course, this was driven by both fiscal and monetary policy intervention.  The early April spike on the chart came with the rollout of the Payroll Protection Program (backstopping business and jobs).   And the big spike in March of 2020, came as the Fed finally resolved a crisis in the bond market (a threat to the entire financial system) by vowing to outright buy corporate bonds and bond ETFs. 
 
That was the covid-lockdown driven bottom for stocks.  The stock market went on to double, over the next 18 months, following that intervention. 
 
Continuing to move left on the chart …
 
In December 2018, by Christmas the stock market was on pace to have the worst decline since the Great Depression.  The Fed had hiked rates three times that year, into a slow economy.  They had systematically hiked seven times since the 2016 election.  And it was when the 10-year yield surged through 3%, that stocks began a calamitous fall (falling 18% over 23 calendar days).  Here's a look at the chart on yields (notice where we are now, in relation)…
Stocks were signaling fear in the markets that the Fed had already gone too far (i.e. was choking-off economic momentum).  The Fed ignored the signals and mechanically raised rates again at their December meeting.
 
The bottom fell out in stocks.  By December 26th, the S&P 500 was down 18% for the month of December.   That led to a response from the U.S. Treasury (i.e. intervention).  Mnuchin (Treasury Secretary) called out to major banks and the President's Working Group on Financial Markets (which includes the Fed) to "coordinate efforts to assure normal market operations." 

That was the turning point.  That put a bottom in stocks. 

Within days of that, the three most powerful central bankers of the past ten years (Bernanke, Yellen and Powell) were backtracking on the Fed's rate path — signaling a pause.  Stocks rose 47% over the next 15 months. 
 
Let's continue moving left on my S&P returns chart above …
 
In 2015, once again, it was the Fed. By mid August, China's stock market had boomed and crashed, all in 2015.  The Chinese economy was slowing and in August they surprised the world with a currency devaluation. 
 
Meanwhile, the Fed had ended QE a little less than a year earlier, and the Fed had well telegraphed its first post-Great Financial Crisis rate hike for the following month (September), however there was plenty of global angst surrounding the removal of liquidity by the Fed.
 
In August, U.S. stocks crashed 13% in six days (including a 7% flash crash). 
 
The Fed responded two days later (August 26).  The New York Fed governor spoke at Jackson Hole and cited the market turbulence for marking a September rate hike unlikely.  From the lows that day, stocks bounced 9% in fifteen days, and ultimately 14% from those lows.
 
If we continue moving left on the S&P returns chart (above) we see the other rare 5%+ two-day moves in the S&P futures. 
 
They come (far left on the chart) surrounding massive monetary and fiscal policy intervention to avert disaster from the Lehman failure/Global Financial Crisis.
 
It was the Fed launching QE, and G20 global central banks vowing to coordinate policy, that solidified the bottom for stocks (in March of 2009).
 
With all of the above in mind, as we've discussed this week, major turning points in markets have often been the result of some form of intervention (i.e. policy action or adjustment). 
 
We can see it in the examples above.  And based on this history, it's fair to say that we are at a significant moment, seeing significant vulnerabilities in the financial system (driven by rising rates), and we've seen a significant response (by the Bank of England).
 
Will there be more intervention?  Maybe.  But we know that interest rate markets have reached the "uncle point," and central banks are on high alert, and will do whatever it takes to preserve financial stability. And these moments are, historically, turning points for markets.
 
Best, 
Bryan  
 
PS:  If you aren't a member already,  I want to invite you to join us in my premium subscription service, The Billionaire's Portfolio.  
 
We just made a new addition to the portfolio on Monday.  Now is the perfect time to get on board. 
 
It's the highest conviction position in the portfolio of one of the best biotech investors in the world. And also involved in the stock, is the best activist investor in the world.  Both are very influential billionaire investors, with large stakes in the company, and are already pushing company leadership to unlock value in the stock.  Wall Street has a high 12-month price target on the stock more than 60% higher than current levels. 
 
If you're interested in this stock, click here to join us, and I'll send you all of the details … plus you'll get access to our full portfolio of similar big-opportunity stocks, all owned by some of the most influential investors in the world.