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The Recession Has Arrived, & with a Vengeance

For some time, I have outlined the growing softness in the U.S. and world economies.  Most of the recent data is pre-virus, and are generally meaningless.  The numbers we will get for March will be awful, but the worst is yet to come.  An example of March’s data is from the Philly Fed.  The print of their Manufacturing Index was -12.7 for March, down a record amount from the +36.7 …Read More

The Goldilocks Labor Report: “Just Right!”

It isn’t ever a good sign when markets become manic. August was quite volatile with five days out of 22 (23%) where the S&P 500 intra-day market swings exceeded 2%, and three days when the market closed down more than -2.5% from the prior day’s close. (We haven’t seen such price volatility since 2011!) While, so far, September has been less volatile, the market is still susceptible to tweets. For example, news about the …Read More

The Deer in the Headlights

The big event of August, the one that was going to move markets, was supposed to be Jay Powell’s remarks at the KC Fed’s annual symposium at Jackson Hole.  Turns out, his speech was a non-event! The Powell Non-Event The media made it their purpose, prior to his speech, to spotlight the fact that the FOMC members, the Fed’s rate setting committee, are very divided on the appropriate policy, given …Read More

The New Mercantilism Rates Race to the Bottom Currencies Depreciate

During the recent period of world growth, where nearly every country’s exports were rising, there was little incentive for governments to manipulate economic policies to foster even more economic growth. Getting back to “normal” seemed to be the universally adopted mantra, and that implied rising rates and tighter monetary policies. However, today, when world trade is contracting (some of which may be due to “trade wars,” but much of which is due …Read More

In the Face of Hard Data & Market Selloff, the Fed Blinked

The incoming data, both sentiment indexes and the actual hard numbers, continue to show growth deceleration in the U.S. and worldwide.  In post-Fed meeting appearances, the Fed Chair and other FOMC members have walked back their hawkish positions taken in the immediate aftermath of the December 19 (rate hike) meeting.  The oversold markets, having thrown the biggest December tantrum since 1931, responded positively and, at this writing, have recouped about …Read More

Slower Growth, Inflation, the Fed, and End of Cycle Indicators

The U.S. economy itself appears to be doing well, but we see many end of cycle signs, including less than 4% unemployment, rising interest rates, emerging consumer inflation, a strained housing market, slowing growth worldwide, and huge instability now developing in the emerging market space. Economy Still Healthy The 0.8% rise in retail spending in May would seem to confirm that the U.S. economy is still expanding. We believe that …Read More