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Fed Drives S&P 500 To Record Levels, Economic Fundamentals Still Soft

Holiday sales look flat. While online sales were up, sales at traditional retailers were lackluster. Penney’s, Kohl’s, L Brands, Macy’s, Urban Outfitters, Bed Bath & Beyond, all reported lower sales vs. a year ago. Meanwhile, in what looks to be a “frugality” or “trade down” movement on the part of the consumer, same store sales at Walmart, Costco, and Target rose. The Wall Street Journal reported that nearly 40% of exchange listed companies lost money in …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 ‘Insurance’ Cut Worry

Fed Chair Powell’s congressional testimony did little to allay market fears regarding the Fed’s underlying posture. Markets continue to be worried that, while the Fed is certain to cut the Fed Funds rate by 25 bps at July’s meeting, the rate reduction may turn out to be just an “insurance” cut, especially in light of the fact that the June jobs report has been portrayed as “strong.” Describing the cut …Read More

Market Hopes: An Easy Fed; End Of Trade Wars. So Far, Neither One Has Happened.

The “expected” scenario, a resumption of trade talks, is what emerged from the G20 meetings. The best the agreement between Presidents Trump and Xi did was to temporarily reduce the specter of further growth killing tariffs. We still have the existing ones that have significantly slowed world trade, created a “soft patch” in the U.S.’s economy, and contributed to the emerging recessions in Europe and China. Capital spending growth is …Read More

Fallout From Fed Dovishness

The rate setting committee of the Fed met on Tuesday and Wednesday, March 19 and 20. What the Market Saw and Heard From their formal statement and press conference, the equity market saw and heard only what it wanted, at least at first, and equity markets rose on Thursday, March 21st (Dow Jones +217): No rate hikes in 2019, and possibly only one in 2020 (and that one would occur because …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