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 […]
More Rate Hikes + Soft Landing: Incompatible
Having eased financial conditions through much of January and early February, the financial markets now believe that taming inflation might not be the slam dunk that Q3 and Q4 data had suggested. In addition to the over-the-top Seasonally Adjusted Payroll and Retail Sales reports earlier this month, the latest three inflation gauges (Consumer Prices (CPI), […]
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 […]
Inflation Melts: The Evidence and Implications
The CPI for December was released on January 12th (-0.1% M/M; +6.5% Y/Y). As it turns out, inflation was transitory after all – the time frame was 18 months. Supply chains are back to normal, and we see evidence of falling prices everywhere we look. The ISM survey of prices paid in the manufacturing sector […]
Outlook: 2023 Recession Likely Deeper and Longer
Last year, our year-end outlook blog was titled: Outlook: 2022 Growth Will Likely Disappoint. And disappoint, it did. Real GDP was negative in Q1 and Q2, and while Q3 showed a slight bounce, through Q3, the economy’s annualized real growth was less than +0.2% (that’s not a typo). Thus, last year’s outlook headline couldn’t have […]
The Data Say Recession and Inflation are Cratering
But This Fed Continues to Raise Rates Since October, long-term interest rates have fallen. On October 18, the 10-Yr Treasury Bond was yielding 4.226%. It fell to 3.408% on Tuesday (December 6) and closed at 3.587% on Friday (December 9). Short-term rates are closely tied to the Federal Funds rate, the administered rate set by […]