The Federal Reserve’s preferred measure of inflation met expectations. The core personal consumption expenditure index (PCE) rose by 0.2% in August as compared with a 0.3% increase in July. On an annual basis, the core measure remained at 2.9% considerably higher than the 2.0% mandated speed limit. Equites treated the report positively as it offers … Read more
Final revisions of second quarter GDP indicated the economy grew at the fastest pace in two years. That data however is dated. The Federal Reserve Bank of Atlanta’s GDPNow estimate, however is predicting a 3.3% growth rate in the July-September period. How accurate is this assumption? As written many times the unexpected is continuing to … Read more
It has been more than five months since the S & P 500 had back-to-back decline of at least 1%. Complacency is at bubble like proportions as the euphoria over AI is inducing a virtuous feedback loop that is turning skeptics into equity buyers at significantly higher levels. Equity performance has become even more concentrated … Read more
FRB Chair Powell’s speech broke little new ground. Powell commented about the conflict of the Fed’s dual mandate (downside risks to employment and upside risks to inflation). As noted last week, Powell stated for now the labor market risks are paramount, which is why the Fed eased policy. Powell characterized the current stance of policy … Read more
Economics is about decision making and perhaps in a broad sense it appears that decisions today are being made differently than before the pandemic. Generally speaking, perhaps few fully understand how much has changed for employment, inflation, consumer behavior and more. This level of anxiety is present in almost every aspect of society. If one … Read more
The S & P 500 has gained about $15 trillion since its April lows, an advance partially predicated upon the predictions of a more docile Federal Reserve that could potentially bolster the outlook for corporate earnings. As noted last week, there is a very weak consensus of a dovish Federal as almost half of the … Read more
INTC led a rally in tech stocks sending the averages modestly higher. NVDA announced it would invest $5 billion in INTC causing shares of this beleaguered chipmaker to surge 30%, the greatest advance in four decades. Long dated Treasuries, however, sold off following the headlines that weekly jobless claims dropped the most in nearly four … Read more
Underlying inflation rose as expected in August, keeping the Federal Reserve on track to cut interest rates next week. Even though the overall CPI rose more than expected and is the largest monthly gain since the start of the year, the core CPI—ex food and energy—met expectations. The report suggests inflation continues to linger and … Read more
Speculation is rising to almost certainty that the Fed will lower interest rates in two weeks and again by year’s end. The two-year Treasury or the instrument most sensitive to monetary policy is around its lowest yield since 2022 and the yield curve is the steepest since early 2021. The outlook for longer dated Treasuries … Read more
The jobs data disappointed. Nonfarm payrolls increased by 22,000 versus expectations of a 75k increase. Revisions in the data indicate that employment shrank in June for the first time since 2020. Accounting for the revisions in this report, employment growth in the last three months has averaged 29,000. Payrolls growth has come under 100,000 for … Read more
