Less Hawkish Fed – Don’t Celebrate!
They’re Still Tightening into a Recession Most of the economic news this week was downbeat. Even the normally buoyant U.S. consumer appears to be retrenching as July’s Retail Sales were flat (0.0% M/M). Both equity and bond prices ended the week somewhat lower with the DJIA barely moving, but the tech heavy Nasdaq and small […]
Pols and Bureaucrats Insist There Is “No Recession”
THAT DOESN’T CHANGE REALITY! The Fed raised the Federal Funds interest rate (the rate banks pay for reserves) on Wednesday by 75 basis points (bps) (0.75 pct. points) from 1.50% to 2.25%, and on Thursday, the BEA reported real Q2 GDP fell -0.9%. That’s the second quarter in a row of negative real GDP growth; […]
Inflation Peaks, Economy Weakens
The Fed’s Last Hurrah It was a down week for equity markets due to the ugly CPI print (+9.1% Y/Y) on Wednesday (July 13). Some recovery occurred on Friday with markets using the +1.0% M/M Retail Sales number as the latest hope that the economic slowdown will result in a soft-landing. While the coincident and […]
When (Why) Bad News IS Good News
When (Why) Bad News IS Good News It was another volatile week in the financial markets. While there were up days, like Friday (May 13), the trend continues to be down. The table shows the weekly movements in the major indexes and the downdrafts from their nearby peaks. Note that the Nasdaq and Russell 2000 […]
Today’s Policy Prescriptions May Prolong the Inflation Problem
The Fed (Powell) says the economy is strong and has signaled several rate hikes beginning in March. The data (and the Fed’s own Beige Book) say otherwise. But this politicized Fed appears to have no choice as the Administration’s poll ratings are at record lows, much of it due to inflation. Unfortunately, the tools that […]
As the Fed Confronts the Inflation/Recession Dilemma, Markets Display Signs of Indigestion
Employment numbers for December were much weaker than expected with net new job creation at +199K, significantly below the +422K consensus view. In addition, the workweek contracted as did factory overtime. But, markets didn’t react much to this. Instead, because the Labor Force Participation Rate (LFPR) continued well below its pre-pandemic level and didn’t budge […]