Weekly News – December 15

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Bruce Richards on the Markets

Bruce Richards, CEO
Marathon Asset Management
insights on markets, investing and more!

That â€˜90s Show.

Chairman Powell wrapped up the final Federal Reserve meeting of 2023 and what is on everyoneâ€™s mind is when the Fed will lower rates and by how much.

Letâ€™s turn back the page to February 1994, when the Fed moved abruptly to raise rates by 300bps within a 1-year period as Chairman Alan Greenspanâ€™s concern about inflation combined with strong growth was the catalyst. Notice what then happened next, as the Fed lowered rates the following year by 75bps from 6% to 5.25%, then raised by 25bps to 5.5%, which put the market on notice.

Fed Funds remained between 5% to 6% for ~4 years. Fed Funds was 5.5% exactly where it is today.

Only time will tell how this rate cycle plays out, however, I believe firmly the market is pricing in too aggressively how much the Fed will lower cut its funds rate in 2024.

While history rarely repeats, it often rhymes.

To follow Bruce’s thoughts on markets, investing, and more followÂ @bruce_markets

Our take:

Is the market getting ahead of itself?
What should Bruce weigh in on next week?
Tell us what you think here

“double-dip” BK

PREIT files 2nd BK!

FTX plan filed

Hope springs eternal

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Hope springs eternal!

Find it here on CreditSights

Hope hits a snag…

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Argy in the news

Uptiers face pushback in the primary market

but 60% of entire market still contains loopholes

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Our take:
Even though nearly all new deals coming to marketÂ limit uptiers, it will still take a few years forÂ older documentation to become obsolete. In the meantime, enterprising lawyers will continue to come up with ways to siphon value away from creditors.
Whack-a-mole continues!

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