Inflation is on the Wane

Why the Fed is Still So Hawkish The evidence on inflation is quite clear; it peaked in June and is now on the wane. The latest data came from the Producer Price Index (PPI) which rose only 0.2% in October (consensus was +0.4%). This is a monthly level the Fed could live with (2.4% annual […]

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 […]

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 […]

Why Q3’s GDP Print Doesn’t Mean Recession Avoidance

The only saving grace of the GDP report was its headline +2.6%. As it turns out, Net Exports added 2.8 percentage points, and for the wrong reasons. Excluding Net Exports, the domestic economy’s GDP growth was -0.2%. The Recession continues. While the country still has a large negative balance of trade, it is the change […]

Did the Fed Just Blink? The Markets Think So!

Equity markets closed the week higher, up nearly 5% with half the gain occurring on Friday (October 21). There was also big news in bond land. The 10-Year Treasury yield broke the 4% barrier and now stands above 4.2% (see table). Bond yields had been marching ever higher on continued hawkish comments from some Fed […]

Inflation’s Last Hurrah

Despite a massive 2.5%+ rally on Thursday (October 13) (Financials +4.1%, Energy +4.1%, Tech +3.1%), markets still ended the week lower. The table shows that two of the four major indexes have now broken below their September lows; the “Bear Market” continues with its trademark volatility. Thursday’s rally appeared to be sparked by technicals: oversold […]