Making Hay Monday - August 28th, 2023
Thank you, David Lin and Kevin Muir!
Hello, Haymaker Subscribers:
Today we have a double-serving of MHM content for you (along with our usual Charts of the Week). Last week, I was happy to re-join my friend David Lin on his growing YouTube channel for a little over a half-hour of conversation. David has been a great friend to me and to the Haymaker project since my appearance on his previous show at Kitco News. Since then, I’ve made several appearances on The David Lin Report, inclusive of the one we’ve linked a little ways down the page. In the latest David Squared entry, we cover my current takes on some familiar Haymaker topics, including energy prices, some of the conflicting realities of the home-building industry and residential real estate prices, how to understand money velocity in relation to economic health, and (everyone’s big question) what’s going on with the popular “soft landing” thesis. David has provided timestamps on the video page, so if time is short, jump ahead to any sections that particularly interest you.
Charts of the Week
Despite the widespread belief that there is an enormous short position on long-term Treasury bonds, reflecting intense bearishness, the reality may be the polar opposite. The above image displaying the BofA Global Fund Manager Survey (FMS) strongly suggests large institutional investors in long maturity Treasurys are, in reality, nearly as bullish as they have ever been over the last two decades. In fact, the only time they were more optimistic on long-term U.S. government debt was this past spring. That was likely a result of the flight-to-safety shift back then due to the nearly overnight collapse of three big U.S. banks.
One of the most troubling facts for those who believe we’ve entered a new bull market is the puny rally by small cap stocks since last October’s trough. Per previous Haymaker notes, a year into a renewed bull phase small caps have typically ripped higher by 74%. There’s still time but not much. The visual above, from the astute folks at Stack Financial Management, drives home how deficient has been this bounce by small cap stocks. At the 10-month mark, there’s never been anything close to the pathetic pace of this recovery in the index that usually leads new bull markets.
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