Markets Now Recognize Approaching Disinflation

The CPI came in at +0.4% M/M for October, much better than the +0.6% consensus estimate, and the Y/Y number, a favorite of the Fed, fell to 7.7% from 8.2%. The financial markets rejoiced. The tech-heavy indexes, which had been hit hardest in the markets’ recent selloffs, rose the most. The Nasdaq rose 7.9% on […]

The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]

The Inflation Scare

Interest rates backed up last week.  The 30-year T-Bond, which was 1.19% on August 4, closed at 1.44% on Friday (August 14).  The 10-year T-Note closed at 0.71%.  It was 0.52% on August 4.  The CPI showed up with a +0.6% M/M rise (7.4% annual rate) for July.  That pushed the Y/Y rate to +1.0% […]

Look For The Preponderance Of The Evidence, Don’t Rely On One Factor

The headline on my LinkedIn page on Friday (October 4th) read: “Jobless rate reaches half-century low, HP plans to cut up to 9,000 jobs…” Is this good news about jobs, or bad? I’ve learned many times over the years to rely on the preponderance of the evidence, and not on any single indicator. The jobs numbers, themselves […]

What Investors Believe: Central Banks Have Their Backs

In a world of fragile economic growth where the odds of recession have been on the rise, investors are now convinced that central banks (CBs), led by the Fed, have their backs, as they see the CBs as “buyers of last resort.” Note that the Fed, whose legislative mandates are low unemployment and stable prices, has […]

5/27/2019 Bonds, Not Stocks, Reflect the State of the Economy

The equity markets have gyrated around tariff and trade news (and Presidential tweets), falling when, at the last minute, the expected trade deal with China fell apart, and then fluctuating around various trade announcements, going up when they looked hopeful, and falling when they did not, including additional tariffs put on by both sides, suspension […]