“Higher for Longer” Rates Have Risks – Especially for Banks

As expected, at its recently concluded March meeting, the Fed stood pat on interest rates. Of greater interest, the “dot-plot,” a picture of FOMC thinking about rates over the next two years, stayed at three cuts for 2024. Looking at the chart (the 2024 column), the median dot is 4.625%. That is a 75 basis […]

Why the Equity Markets Are Out of Touch

    Low Date of Low   12/31/22   6/30/23 Chg fr Low to 12/31 Chg fr Low to 6/30 Chg fr 12/31 to 6/30 S&P 500 3,577.03 10/12/22 3,839.50 4,450.38 +7.34% +24.41% +15.91% Nasdaq 10,321.39 10/14/22 10,466.48 13,787.92 +1.41% +33.59% +31.73% DJIA 28,725.51 9/30/22 33,147.25 34,407.60 +15.39% +19.78% +3.80% Russell 2000 1,655.88 9/26/22 1,761.25 […]

The “Boom” Is Off the Rose

The employment number was a shock to the “boom” economy narrative; it was the biggest consensus miss in history! The majority of forecasters, even those with scores of economists and huge budgets, simply got the “boom” narrative wrong.  The Payroll Survey employment number was an “aberration” they hastily said.  But the sister Household Survey tells […]

When the Stimulus Tailwinds Fade

Prologue Big numbers are showing up in U.S. economic data, partly due to the low levels of economic activity a year ago, partly caused by the reopening, and partly caused by the generosity of Uncle Sam.  We’ve had three helicopter money drops, two of them in 2021.  The economy is rapidly reopening as seen from […]

U.S. Data Says “Boom:” Part Base Effect, Part Transient, Part Real

Prologue The much anticipated economic boom has finally arrived!  The NY Fed Weekly Economic Index exploded to the upside in late March and early April (see chart above).  Retail Sales were up an amazing +9.8% M/M in March!  That number is not Y/Y.  The Y/Y number was +27.7%, but was greatly influenced by depressed Retail […]

Incoming Data Looks Robust – It’s A Mirage

Incoming PPI data marked the initial volley of the oncoming “siege” of inflation data. Despite reopenings, state Initial Unemployment Claims spiked as March ended.  Either the reopening lags are longer than we thought, or disincentives from overly generous benefit payments are at play. If recent history is any guide, only part (25%) of the stimulus […]