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 […]
Despite Black Friday/Cyber Monday – Holiday Sales Will Likely Disappoint
It’s Black Friday/Cyber Monday weekend. Consumers are looking for bargains. Despite what may be a better-than-expected start to the holiday season, for reasons discussed below, the indicators that measure the state of the U.S. consumer are mainly downbeat, and we think that overall, holiday sales will disappoint. So, while we might see an initial surge […]
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 […]