In the Face of Hard Data & Market Selloff, the Fed Blinked
The incoming data, both sentiment indexes and the actual hard numbers, continue to show growth deceleration in the U.S. and worldwide. In post-Fed meeting appearances, the Fed Chair and other FOMC members have walked back their hawkish positions taken in the immediate aftermath of the December 19 (rate hike) meeting. The oversold markets, having thrown […]
December’s Petulant Children: Trump, the Fed, Markets
Surely, this was a December to remember, but due to financial pain, not joy. Prior to December, markets were uneasy, and this showed up in a downward pricing bias and significantly increased volatility. As measured by the intraday swings on the Dow Jones Industrial Average (DJIA) between high and low [(high-low)/prior close], volatility more than […]
“Pause” Gave the Market Temporary Hope But Hope is not a Good Investment Strategy
The Dow Jones Average rose 618 points on November 28th as the market interpreted Fed Chair Powell’s speech as dovish and has assumed that the Fed will “pause” in its stated rate hiking plan. Then, on December 3rd, the Dow rose another 288 points, interpreting the 90 day “cease fire trade pause” between the U.S. […]
Spiking Rates: The Fed Doesn’t See Economy’s Deceleration
After trading in a narrow range (2.80%-3.10%) for much of Q2 and Q3, interest rates broke wildly to the upside as Q4 began. The real wonder was not the rise in rates, but why they stayed so benign for so long, especially in the face of record low unemployment and what seems to be a […]
Inflation’s Virulence will Surprise: Yield Curve Inversion Likely
• The strength of inflation will be the biggest market surprise in 2018’s second half, forcing the Fed to continue its rate raising regime; • At the same time, the slowdown in world growth (not helped by the rise of protectionism) may keep the world’s other major central banks in easy money mode, thus feeding […]
The Fed’s new bubble – Part 2
In part I of this two part series, I discussed the possible rush for the exits and market volatility in what I saw as a long overdue correction. The violence of the correction and the extremes of volatility that I worried about have now actually appeared. As I rewrite the introduction of this part II, conventional […]