Aug
04
As if on cue to allow everyone to enjoy the last few weeks of summer, today’s labor report was mostly a snoozefest that came in very close to the official estimate with a gain of 187k jobs vs. 200k expected. While that’s technically considered a slight miss, it’s still a...
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Aug
02
One of the Fed’s two jobs is to manage inflation around a long-term target (roughly 2.5%). They try to impose price stability into the economy and attempt to manage such by using their lever on short-dated interest rates. Like Novocain, it takes a while to work but eventually it works. ...
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Jul
31
We talk about “cycle investing” all the time – that’s the time-tested belief that over time markets are driven by monetary policy and the cost and availability of credit. It’s tough to have a growing economy and improving earnings when lending gets tight and the demand for credit falls. History...
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Jul
27
Second quarter earnings season is in full swing, with this being the busiest week that has the largest number of S&P 500 companies due to report results. As usual, investors are laser focused on the latest updates of how corporate America is performing, particularly for mega-cap Tech stocks to try...
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Jul
19
The U.S. Dollar has fallen sharply since the CPI report continuing a downtrend that started at the end of last year. The Dollar has broken below the post COVID uptrend and has moved below key support at $101 (and the nice round number $100). Source: Stockcharts.com, as of 7/18/23 ...
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Jul
18
Last week brought us fresh evidence that inflation continues to cool rapidly. On Wednesday, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) only increased by 0.18% in June, after increasing by just 0.12% in May. This means that over the last two months, CPI increased at...
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Jul
14
It’s my belief the Fed will hike one final time at their late July meeting and then go on an extended “pause”. Higher rates, tighter financial conditions, and ongoing quantitative tightening (code name for the Fed balance sheet shrinkage program) is slowing both the economy and the level of inflation. ...
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Jul
12
We have been saying it for a while: inflation is falling and falling quickly. 2020 was about COVID and goods inflation. 2021 was about vaccination and service inflation. 2022 was about the Fed being too slow to react to the first inflationary spike in 50 years. And 2023 is about...
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Jul
05
The VIX index, frequently referred to as “the Fear index”, is a widely followed measure of market volatility. It is derived from the prices of one-month call and put options on the S&P 500 index, providing us with a real time gauge of market participants’ expected volatility over the near...
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Jun
30
Eighteen months ago, the financial markets began their transition from a zero-interest world to a world of higher nominal and real yields. The history books will have the final say, but those pages will likely include a chapter or two on how the global central banks printed nearly $8 trillion...
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