The Fed: “We Don’t Talk About Rate Cuts – No! No! No!”
The title of this blog was inspired by Disney’s Encanto, a story about a family living in a charmed villa in the mountains of Columbia. Cracks begin to appear in the foundation of the grand villa, and it is Bruno, an ostracized family member, who holds the key to stop the foundation from crumbling. The […]
As Inflation Fades and Incoming Data Disappoint The Fed Appears Intransigent
The headline CPI reading of no price inflation (0.0%) in October surprised the financial markets (but not us). It caused a bond market rally as yields (especially on the long end) fell. Then the PPI (Producer Price Index) showed up with a negative number for October (-0.5%), and this is generally a harbinger of what […]
Recession: The Stars Continue to Align
The oft forecasted Recession hasn’t yet appeared. Has it been avoided (i.e., “soft-landing”)? A look at the growing evidence leads us to conclude that the Recession is coming; we suspect that when the NBER gets around to dating it, this quarter (Q4) will mark its beginning. The first evidence of this showed up in the […]
The Fed is Done Hiking – What Could Possibly Go Wrong?
Sometimes “bad news” is “good news.” That seemed to be the case on Friday when the jobs report came in weaker than expected. That, combined with the Fed’s continuing rate “pause” on Wednesday ignited the financial markets – both equities and bonds. Among the popular averages, the DJIA gained 5.1% on the week, the S&P […]
GDP Growth Will Slow – Likely to Turn Negative
The economic story of the week was the “hot” 4.9% GDP print. The chart shows this in relationship to the recent past, with the dotted line showing the long-run 1.8% growth rate of the economy. The 4.9% is an annualized number, so the actual growth from Q2 was just under 1.5%, and the year/tear growth […]
Rates Spike, Sentiment Softens – Real Inflation Already at Target
Is a Recession Imminent? The relentless upward spike in interest rates continued this past week despite Fedspeak implying that the Fed will continue to be in “pause” mode, at least at the November 1st meeting. Rates on 10-Year Treasury Notes closed on Friday (October 20) at 4.91%. During the trading day, the 10-Year almost pierced […]