“Higher for Longer” Will Suffer the Same Fate as “Transitory”
As expected, the Fed “paused” at its September meetings. And while the Fed’s administered rates did not change, the markets interpreted this as a “hawkish” pause, and market rates across the spectrum rose in the aftermath of the Fed statement and the Powell press conference. The “hawkishness” can be seen in the dot-plot chart. The […]
Obtuse: The Fed & Treasury View of Banking Issues
Despite ongoing silent runs on the Regional and Community Banks, it appears that both Fed Chair Powell and Treasury Secretary Yellen view the events of the recent past (SVB, Signature Bank, First Republic, Credit Suisse, and now Deutsche Bank) as one-off events and not symptomatic of stress in the world’s financial system. The dictionary defines […]
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 […]
Less Hawkish Fed – Don’t Celebrate!
They’re Still Tightening into a Recession Most of the economic news this week was downbeat. Even the normally buoyant U.S. consumer appears to be retrenching as July’s Retail Sales were flat (0.0% M/M). Both equity and bond prices ended the week somewhat lower with the DJIA barely moving, but the tech heavy Nasdaq and small […]
Pols and Bureaucrats Insist There Is “No Recession”
THAT DOESN’T CHANGE REALITY! The Fed raised the Federal Funds interest rate (the rate banks pay for reserves) on Wednesday by 75 basis points (bps) (0.75 pct. points) from 1.50% to 2.25%, and on Thursday, the BEA reported real Q2 GDP fell -0.9%. That’s the second quarter in a row of negative real GDP growth; […]
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 […]