“Higher for Longer” Will Suffer the Same Fate as “Transitory”
As expected, the Fed “paused” at its September meetings. And while the Fed’s administered rates did not change, the markets interpreted this as a “hawkish” pause, and market rates across the spectrum rose in the aftermath of the Fed statement and the Powell press conference. The “hawkishness” can be seen in the dot-plot chart. The […]
Why the Fed is Bluffing
As expected, the Fed “paused” after 10 straight rate hikes. They characterized this as a “skip,” not a “pause,” as the former implies the rate hiking regime is still in place while the latter has been construed to mean that the hiking cycle is over. The Fed does not want to convey that for fear […]
A Softening Economy Will Be Buffeted by Stimulus Withdrawal
While the story of the week was the big “miss” in Nonfarm Payrolls, most of the incoming data continue to be much softer than the markets or financial media let on, as they continue to ignore the implications. The chart above shows U.S. vehicle sales beginning in 2015. Note the steady sales levels until the […]
The Recovery Will Be Weaker And It Will Take Longer
While markets were slightly higher on the week (see table), there was a clear rotation back toward technology after several weeks of a lull for that sector. This is clearly shown by the week’s Nasdaq outperformance. January 22 January 15 % Change DJIA 30,997 30,814 +0.6% Nasdaq 13,543 12,999 +4.2% S&P 500 3,841 3,768 […]
Inflation Expectations Rise Even as the Economy Cools
It has now become clear, and mainstream, that the economy weakened significantly in November, and that such weakness will carry forward to year’s end, at a minimum. The weakness occurred primarily in the services sector as the virus’ resurgence caused some governors to mandate new or additional service business restrictions. As a result, jobless claims […]
Mr. Market Won’t Let the Grinch-Like Economy Steal This Christmas!
The employment data for November were downbeat, and those surveys were taken prior to many newly imposed restrictions including stay-at-home orders. Other economic data, including Black Friday-Cyber Monday spending, and manufacturing and service indexes also disappointed. Pessimism also showed up in the Fed’s recent Beige Book, its survey of business sentiment. Yet, despite all the […]