Employment Numbers Mislead, the Coming Banking Crisis, and Why Inflation Will Moderate

For most of last week (ending April 5th), financial markets were worried about the upcoming employment report, and when markets fret, the indexes languish. But after Friday morning’s “strong” (on the surface) employment report, those markets breathed a sigh of relief and reversed a major portion of the week’s losses. Still, the week ended showing […]

“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 […]

Fed’s Dilemma – Hotter Inflation & a Cooling Economy + Why Inflation is so Hateful

Inflation was the main concern of markets this week. On Tuesday (March 12th) Consumer Prices (CPI) came in slightly hot, but within market expectations. As a result, the financial markets took the report in stride and equities rallied. The problem was Thursday’s Producer Price Index (PPI), an index that is a leading indicator of future […]

Don’t be Fooled – The Macro-Economic Picture is Deteriorating

Once again, the Non-Farm Payrolls (NFP) number, at +275K, was well above the consensus +200K estimate. But, that’s where the good news ended. The sister survey, the Household Survey (HS), reported a fall in the number of jobs of -184K. The HS is used to calculate the Unemployment Rate. Since the labor force did not […]

Despite Deteriorating Economics, Equity Markets at All-Time Highs

There were several important news events this week including the Fed’s January minutes. But this took a back seat to Nvidia’s blowout top and bottom-line numbers and its forward guidance which occurred after Wednesday’s (February 21st) market close. The equity market, which had been relatively flat on Tuesday and Wednesday, advanced more than 2% on […]