Unwarranted Inflation Fears Could Impact Recovery
Interest rates steadied this past week (March 22-26) after the Fed altered the rules, vowing not to cave to market whims or pressures, instead waiting for the “actual data” to dictate the path of monetary policy. We agree with the Fed’s approach, but worry that the markets’ uneducated view of the causes of systemic “inflation” […]
Dysfunctional Credit Markets – Still Waiting on the Fed
As the week ended, U.S. credit markets appeared confused, if not outright dysfunctional. The 10-Year Treasury yield began February at 1.09% and reached an interim peak of 1.54% on February 25. Then it retreated to 1.42% as markets thought the rise had simply been overdone. But Fed Chair Powell’s refusal to assure financial markets regarding […]
Careful Mr. Powell; Higher Rates Will Kill the Recovery
Treasury yields rose again this week; blame this one on Fed Chairman Powell. In an interview at the Wall Street Journal’s Job Summit, he said that the Fed isn’t ready to stop the run-up in yields “until financial conditions tighten.” In so saying, he paved the way for those financial conditions to tighten as markets […]
The Recovery Will Be Weaker And It Will Take Longer
While markets were slightly higher on the week (see table), there was a clear rotation back toward technology after several weeks of a lull for that sector. This is clearly shown by the week’s Nasdaq outperformance. January 22 January 15 % Change DJIA 30,997 30,814 +0.6% Nasdaq 13,543 12,999 +4.2% S&P 500 3,841 3,768 […]
Using 2020 Hindsight: The Emerging “New Normal” Picture
Using 2020 Hindsight: The Emerging “New Normal” Picture The year finally ended, and, as has been typical, the latest data continued to be downbeat. Despite the weak economic data, the equity market ended the year at all-time highs. The S&P 500, at 3,576 was up 10.5% for the year after falling 34% in the February/March […]
Mr. Market Won’t Let the Grinch-Like Economy Steal This Christmas!
The employment data for November were downbeat, and those surveys were taken prior to many newly imposed restrictions including stay-at-home orders. Other economic data, including Black Friday-Cyber Monday spending, and manufacturing and service indexes also disappointed. Pessimism also showed up in the Fed’s recent Beige Book, its survey of business sentiment. Yet, despite all the […]