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Oct 02

New Territory

No, I’m not referring to the stock market even though the S&P 500 Index rose to another all-time high yesterday, it’s 43rd of the year.  Impressively, 2024 has climbed into the top ten in that regard going all the way back to 1970 – and there’s a whole quarter to... read more →
Sep 25

A Step In The Right Direction For China

For quite some time now, Chinese economic activity has been disappointing, slowing to its worst growth rate in 2 years. Additionally, China has experienced 5 consecutive quarters of deflation which is the longest stretch of contraction in prices since the late 1990s. There has clearly been a crisis of confidence... read more →
Sep 19

Fed Decides to Go Big

Yesterday, the Federal Reserve decided to launch the latest monetary easing cycle by going big with a half point cut to the Federal Funds Rate (FFR), instead of just a typical quarter point reduction.  Market expectations had been notably shifting in that direction over the past several days, apparently with... read more →
Sep 16

Are Fed Rate Cuts Bullish for Bonds?

Conventional wisdom would suggest that Fed easing cycles should be bullish for bonds, given the basic relationship according to which lower interest rates result in higher bond prices. However, a closer examination of the historical evidence reveals a more nuanced relationship. The chart below plots the path of the 10-year... read more →
Sep 13

Small Uptick In Inflation Won’t Stop the Fed

Over the past two days, we got the latest read on inflation with the release of the August Consumer Price and Producer Price Indexes.  On a core basis (ex-food & energy), both reports showed that inflation came in 0.1% higher than forecast month-over-month.  In the CPI, this upside “miss” was... read more →
Sep 09

Job Data Keeps The Fed At A Coin Flip

The August payroll release this morning showed a gain of 142k jobs for the month while the unemployment rate moved slightly lower to 4.2%. Underneath the surface there were some good data points and some bad data points, although on the whole we would characterize the data as softer. Hiring... read more →
Aug 22

Is Sahmthing Brewing in the Labor Market?

The so-called Sahm rule, created by economist Claudia Sahm, is a recession indicator based on the unemployment rate. The indicator results in a recession signal when the 3-month moving average of the unemployment rate rises by 0.5 points or more above its lowest point over the prior 12 months. The... read more →
Aug 19

Economic Bull Environment?

As we wait, and the anticipation builds, for the Fed to lay the groundwork for a new easing cycle the market has, as usual, moved in advance. The 10-year treasury yield has fallen from 4.70% at the end of April to 3.875%, which is quite the move lower. If we... read more →
Aug 16

A Normal Market Correction

A sense of calm has continued to settle over markets after the eruption of volatility a couple of weeks ago.  Stocks are on pace to finish the week with healthy gains, and the S&P 500 Index is now only a couple of percent below its previous high.  The VIX volatility... read more →
Aug 14

Inflation No Longer In Focus

The latest inflation data came out yesterday and today. Producer Price Index (PPI) for final demand moved lower to 2.2% on a year over year reading. Consumer Price Index (CPI), for both overall and core, was 0.2% for the month of July. With that inflation number, core CPI on a... read more →