A Slower Economy, Lower Inflation The Odds of a June Rate Cut Are Significant

During the last week in March, there were several significant foreclosures (hundreds of millions of dollars per property). They included properties in SanFrancisco and Mountain View, CA, a large complex in Washingdon, D.C., and a medical office building (still under construction) in the southern part of Florida.   Leveraged loan delinquencies now exceed 6% (normal is […]

“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 […]