The Silicon Valley Bank Insolvency and the Oncoming Recession: Blame the Fed
The big market-moving event of the week was supposed to be the February jobs numbers on Friday (March 10), but there was never a mention of those numbers in the financial media, upstaged by the second largest and completely unexpected bank failure in U.S. history, i.e., Silicon Valley Bank (SVB). The real issue here, which […]
The Fed Wins – Rates Higher for Longer
The Implications This week, there were three major data releases – the Consumer Price Index (CPI), Retail Sales, and the Producer Price Index (PPI), all for January. The CPI met expectations, rising +0.5% for January. The Retail Sales number at +3% beat the consensus estimate of +1.9%, and PPI came in a little hot. Markets […]
Employment Report – Not What Meets the Eye
Fed Near End of Rate Hikes The big news today was that payrolls increased by +261K. This caused markets to rally (shoot first, ask questions later). Interest rates moved up because the headline +261K may cause the Fed to be even more hawkish. Nevertheless, beneath the veneer, this was a very weak employment report. There […]
Fed Transparency = Market Volatility
Markets have tanked since the worse-than-expected CPI reading, and the latest Fed hawkishness means no Powell “pivot,” no Fed “Put,” and no soft-landing. The table shows the market peak for the four major indexes, the level and percentage changes at the market’s trough at June’s end, the levels and percentage changes from the top of […]
As the Once Hot Economy Smolders, a Hawkish Fed Gets New Ammo
The biggest surprise this past week was the unexpectedly large rise in the Payroll Employment Report, at +528K, more than double what appeared to be an optimistic consensus estimate of +250K. Most of the major equity indexes eked out a slightly positive week (see table), but neither the equity nor the fixed income markets liked […]
Reprise: Why the Upcoming Rise in Interest Rates will be the Fed’s Last Hurrah
The equity market rally this week (ended July 22) looks to us to be a “Bear Market” rally supported by short-covering and the mistaken belief that a soft landing is possible and a recession avoidable. The DJIA closed up +2.0%, the S&P 500 +2.6%, the Nasdaq +3.3%, and the Russell 2000 +3.6%. Still, these indexes […]