Underlying inflation rose in May less than forecast for the fourth month in a row, suggesting companies are largely holding back on passing higher tariff costs through to consumers. The prevailing narrative is that companies massively increased inventories before the tariffs were enacted and firms are now working off these stores, hoping to replenish supplies … Read more
The narrative is beginning to rise about the reliance of a small number of stocks that has underpinned the “V” shape recovery since the tariff induced April swoon. Bloomberg again quantifies the concentration…about 50% of the returns since April is in 10 names and 33% of the gains are from 5 names. The Newswire further … Read more
Yesterday was a relatively quiet day. As widely noted, the April tariff induced equity swoon has been reversed with tech doing almost all of the heavy lifting. According to Bloomberg the “giants” are up about 33% further stating that not all of the “heavy weights” are pulling their fair share. This comment further morphed into … Read more
Last week’s data was not the doom and gloom statistics of the prevailing market narrative. The market narrative is now stating the deterioration in the economy will now start next month. The labor market data is consistent with the solid growth experienced thus far this year. June’s employment gains were greater than expected, however the … Read more
What will today’s jobs data suggest? Following yesterday’s release of weekly jobless claims, which are volatile on a weekly basis, the markets are now anticipating the Fed will lower rates as soon as September, versus October while continuing to fully price in at least one additional cut by year’s end. As widely noted, monetary policy … Read more
Treasury yields declined to the lowest levels in nearly a month following a weaker than expected gauge of job creation and the first contraction in the service sector since last June. The market has priced in higher odds of two quarter point cuts by year end, in October and December. The market also increased a … Read more
Job openings unexpectedly rose in April, the advance in openings was accompanied by a broad-based pickup in hiring which reached the highest levels in nearly a year. The quit rate however fell, perhaps indicating a lack of confidence in finding a new job. BLS data indicate available positions increased to 7.39 million from an upwardly … Read more
Several of the largest and most prestigious fixed income firms—DoubleLine Capital, TCW and PIMCO—are either avoiding or shorting the 30-year Treasury, wary of the unending growth of the federal deficit. The firms instead are buying the shortest maturities. As widely noted, Warren Buffet is the largest holder of short, dated Treasuries, defined as less than … Read more
Thirty days ago, equities were suggesting doom and despair. Today the inverse as the S & P 500 has recaptured its April tariff induced decline as the S & P 500 had its best May since 1990. Treasuries, however, fell in price, their first monthly drop this year. The dollar declined for the fifth consecutive … Read more
Short dated Treasuries rallied after a “solid” $44 billion seven year note auction. The market is now again suggesting interest rates will be cut twice by year’s end. The volatility in expectations is great and these expectations could radically change yet again following the interpretation of next week’s top tier data. The S & P … Read more
