Reprise: Why the Upcoming Rise in Interest Rates will be the Fed’s Last Hurrah

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 […]

Inflation Peaks, Economy Weakens

The Fed’s Last Hurrah It was a down week for equity markets due to the ugly CPI print (+9.1% Y/Y) on Wednesday (July 13).  Some recovery occurred on Friday with markets using the +1.0% M/M Retail Sales number as the latest hope that the economic slowdown will result in a soft-landing. While the coincident and […]

As the Fed Fiddles, the Economy Burns

A Powell Failure The Fed tightened its administered Federal Funds Rate (the rate banks pay to borrow reserves) by 75 basis points (bps) (0.75 pct. points) to 1.50%-1.75%, a rate hike not seen since 1994.  The issue here is that, for the first time in its 109 year history, the Fed is tightening into the […]

Wall Street Narratives Distort Reality

A Deep Recession Is Rapidly Approaching Volatility remains the major feature of financial markets.  You are correct if you interpret the word “volatility” to include a downtrend in equity prices.  This is the kind of action one normally sees in a “Bear” market.  The table below shows the changes in the major U.S. indexes from […]

Markets See Looming Recession – The Fed Sees “Softish” Landing

Market volatility in spades this week!  On Tuesday, markets were all a-twitter (oops, can’t use that word!) over the large and unexpected rise in April’s retail sales (+0.8%).  That sparked a +2.0% rally in the S&P 500.  What market commentators neglected to mention was that, when adjusted for price increases, the “real” number was negative […]

When (Why) Bad News IS Good News

When (Why) Bad News IS Good News It was another volatile week in the financial markets.  While there were up days, like Friday (May 13), the trend continues to be down.  The table shows the weekly movements in the major indexes and the downdrafts from their nearby peaks.  Note that the Nasdaq and Russell 2000 […]