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The Risk Report
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The Risk Report

The Risk Report is a fact sheet that focuses on the current risk to the U.S economy and equity markets. This resource is a tool you can use to maintain a proper risk analysis based on current economic risk. Our reports provides comprehensive analysis of current economic conditions to help you make informed decisions about the economy and its associated risks. 

Hard Risk Points


Risk Points (Hard)

Hard Risk Points add risk to equity markets in the short the term, understanding these factors will help guide you in prepairing a proper risk outlook.

1. Bond Yields​: Bonds are down and stocks are up

  • Past: Investors were looking at attractive​ bond yields as they are finished weighing negative on the stock market, Yields eventually lowered and flattened and took pressure off the stock market.

  • Outlook: With long term bonds crashing down the inverse yield curve is signaling a recession warning, hopefully the Fed will pivot and lower interest rates to support long term bond yields before a recession occurs.

  • Outlook: It is a wait and see game, the economy seems like it is moving in the Fed's favor. As of now inflation has been moving in the right direction and bond yields have been lowering slowly, the 10 year treasury yield is 4.09%, the 6 month yield is at 5.25% on February 6th.

​2. Inflation: Still a bit high, but getting closer to its target rate, good economic numbers in January showed the economy is moving in the right direction

  • Past: CPE, and CPI are still above average toward the end of 2023 but moving in the right direction which has been noticed by The Fed.

  • Current: Businesses are judging wanting to take on big debt with the national interest rate sitting above 6% in a lot of cases. This effect will be felt by business that are looking to grow and in sectors that need a lot of start up money to succeed.

  • Current: The PCE Price Index offered the latest read on the Fed's preferred inflation gauge which came in at below 3% for the first time in 3 years. 

  • Outlook: A slowdown in the economy could help back pressure off inflation which is the purpose of the high rates, we saw the first signs of this during the Q3 earnings season and should be watched moving Into 2024. Look for a cooling economy to help the inflation numbers keep coming down and a strong consumer to help move the economy and stay away from a recession.

​3. Recession: More people are looking at a soft landing happening, but a recession is still in the cards for many

  • Current: The impact of the rate increases have yet to been fully felt, the highest rates were reached in September and the delay in this effect should be seen in January and moving forward, is this why the Fed is pausing at the moment? These pause should give the Fed time to gauge the impact of higher rates, inflation and the overall economy.

  • Outlook: Consumer spending and the issue of consumer debt is rising to all time highs. If consumers hit the breaks on spending this could also be a welcomed slow down to tame inflation but could be another caveat to a slower 2024 and a potential recession. We will see how the consumer holds up through Q1 following the 2023 Christmas season.

  • Outlook: While cooperations move through their current growth cycles that have spurred demand and back logs on the backend of the pandemic, a slow down in corporate spending should help slow the economy and help inflation. The Q3 earning season showed weaker outlooks for large companies, look to Q1/Q2 of 2024 for more signs of weaker outlooks and the effects of quantitative tightening to persist into 2024.

  • Outlook: The bond yield inversion is still in a bad position, this is one of the biggest indicators signaling a slow down in economic growth.

​4. Government Shutdown: The U.S. government was able to pass a spending bill in December but they have not been able to put a long term or medium term deal on the table, it could mean more showdowns on capital hill passing spending bills

New Context:​ Current: The U.S. government passed a short-term spending bill for the start of 2024. This is a display of good acting on their part after the downgrade, but they are going to have to prove they can do better then they did in the past to boost their credit rating back up and a short term spending bill was the least they could have done.

  • Past: The downgrade of the U.S. credit rating looked warranted back in August. Although the government has not defaulted on a payment, they are consistently having issues trying to pass a budget which puts pressure on the market each time.

  • Past: With a new speaker in the house the government took a step in the right direction to show some confidence to the public, that they are ready to move in the right direction. Congress moved with speed to get the December spending bill approved and voted on. This is a much welcomed sign that the government is moving in the right direction.

  • Outlook: The downgrade was a stern waring that the puts pressure on law makers to fix the reacurring issue. If the government falls back into the same patterns previously seen this could mean short term volatility for markets as we move through Q1 and Q2 of 2024.

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Past: A event that occurred in a former time Current: The event is occurring now Outlook: The events future outlook

​5. Commercial Real Estate: With the shift to hybrid work commercial real estate has low occupancy and loans coming due that add up to roughly $325 billion which could hurt banks if they start to default on loan payments

  • Past: Hybrid work pushed workers out of the office leaving commercial real estate firm and business with large footprints all over the U.S. with low occupation.

  • Current: Commercial real estate is in a tough position and banks are in there with them. National and regional banks are both exposed to the commercial real estate in both loans and market exposure with regional bank 4x more exposed then national banks. 

  • Outlook: The Federal reserves Jerome Powell and Janet Yellen have both mentioned that they are looking into and preparing for this issue from a banking perspective. The questions that remain are: First, if the commercial real estate sectors plunges in some sort of way how big will it be and how does it affect broader markets? Second, if commercial real estate plunges does the U.S. Government save both of the industries that are affected, the commercial real estate industry and banks? Third, although the economy is running strong, can this issue at its worst pull the economy into recession, could this be the catalyst?

Soft Risk Points


Risk Points (Soft)

Soft Risk Points are economic issues that pose a significant threat to economic activity and market sentiment, some issues have been priced into market conditions, others are potential foreseen warnings and others are past events that could still effect economic and stock market conditions.

​1. Corporate Debt

  • Past: Cooperations took on debt at low rates during the pandemic, but those low rates were not at fixed variables, refinancing that debit could cause issues for many companies balance sheets.

  • Outlook: This could cause headwinds for corporations and their future earnings. Typically when corporation are showing signs of not taking on more debt it signals that companies will slow growth and it is a warning sign that economic activity may slow.

2. Consumer Debt

  • Past: Consumers are running low on cash funds that were acquired during the pandemic.

  • Outlook: If consumers keep taking on debt and the economy slows and with potential for more layoffs, this could be a a bad sign for banks and credit companies as consumers start to become delinquent.

  • Observation: This will also have a large effect on the economy as the strong consumer helped keep the economy strong through 2023. If consumers start to slow there spending in 2024 this could hinder the economy in some way.

3. Student Debt

  • Past: This also relates to the consumer debit issue, student debt totals $1.77 trillion dollars near the end of 2023. Restarting student loan repayments could negatively effct consumers wallets and spending when repayment start. The Biden administration has been working diligently to help student borrowers in many ways to mitigate this issue, in January 2024 Biden announced $5 billion in student loan relief.

  • Current: Student debit payments were supposed to start in October but most payees extend their first payment to January 2024. These payments will start at the beginning of 2024 and we will see if the consumer stays strong or starts to spend less.

  • Observation: The Biden administration has also created many payment options and forgiveness programs to help graduates pay their loans off. This could help ease pressure from graduates who need to resume payments and might not be fully ready to start making them again.

4. China's Real Estate

  • Past: Starting with Evergrande then Country Garden, China's real estate problem can effects markets on a global level in the short-term.

  • Past: China has planned for this action to take place, the country started limiting developers borrowing power on purpose possibly foreseeing developer debt as becoming an issue with repayment and developer borrowing power being insecure. So the occurrences that have happened, yes have hurt the overall market at times with uncertainty, but it is a planned effect. We just don't know how deep the cuts are going to go and if they will be felt again.

  • Current: Although it is not effecting current market, if the issues arises again and more companies (miss bond payments, bankruptcies, etc.) this will have impact on the global market in the short term at any given moment.

5. Ukraine War​

  • Past: The war in Ukraine has been put behind the current market/news cycle and has had its negative effects on the market in previous cycles.

  • Outlook: If this war were to escalate (nuclear bomb threats, other countries entering the war etc.) this will cause global markets to fall in the short term as those ramifications move through markets.

  • Outlook: Also, the if anything were to happen to the supply of energy and food that both Ukraine and Russia export, this could cause an impact to commodities and energy sectors around the globe.

​6. Israel and Hamas war

  • Outlook: The effect of this war has been priced into current market conditions, but flare ups and disturbance to conditions in this region can put pressure on markets just as it did when the conflict started.

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