Two weeks ago, “it was almost a certainty” that the Federal Reserve would not lower interest rates in 2025 and there was a growing minority believing the Central Bank might actually raise rates. Today the market has fully priced two quarter point cuts this year and most believe a third one is possible in 2026. … Read more
The cross currents are incredible. According to a Havard/Harris Poll, 72% of respondents support DOGE objectives. The breakdown is as follows…9 out 10 Republicans surveyed support DOGE…70% of Independents and 60% of Democrats. As written several times, the President’s agenda has increased uncertainty in the markets, albeit this uncertainty has not yet translated into greatly … Read more
Bloomberg writes for the fifth consecutive session value stocks are beating growth as the info tech sector lags. Value has not beaten growth in six straight sessions since the start of 2022. For the month, growth stocks are down 3.7% while value is up 0.2%. Bloomberg writes that over 350 S & P 500 companies … Read more
Are inflationary expectations about to become unanchored, a horrifying question given that the county is $37 trillion in debt and interest expense is now over $1.1 trillion, up from $350 billion four years ago? A major determinate of bond yields and monetary policy is inflationary expectations. Inflation is defined as too much money chasing to … Read more
Equites were rattled by WMT’s profit report. Its CFO stated “uncertainties related to consumer behavior and global economic and geopolitical conditions” affected results and outlook. His comments followed last week’s retail sales report which indicated “an abrupt pullback by consumers.” It is largely believed that consumers are dealing with stubborn prices and high borrowing costs, … Read more
Markets are searching for a catalyst to move in either direction. The Minutes from the recent FOMC meeting offered no new insight; the FOMC is in no rush to lower interest rates. The President floated tariffs on chips, cars, and drug imports. No major corporate announcements were made. There was little market reaction to a … Read more
Equites lacked direction as potential risks from tariffs to inflation to geopolitics weighed on prices. Most will agree that the Administration’s aggressive agenda is more of a headline narrative rather than a market driving narrative, perhaps from the realization that there has been more jawboning than actual policy. FRB Chair Powell has made similar observations … Read more
The Treasury market shrugged off greater than expected manufacturing data and import/export prices and focused instead on weaker than expected retail sales. Sales slumped in January by the most in nearly two years, perhaps indicating an abrupt pullback by consumers after a spending spree in the closing months of 2024. The immediate interpretation of the … Read more
There was no new ground broken during the first day of FRB Chairman’s Congressional testimony. Powell essentially reiterated what he had said at the conclusion of the January FOMC meeting, that the Committee is in “no rush” to lower the overnight rate. He described the labor market as “broadly in balance” and “not a source … Read more
The Administration is creating uncertainty, but this uncertainty is largely ignored by the markets. Is the President bluffing? Can the President remotely accomplish any of his objectives? Will it produce social unrest? Perhaps more direct, can change occur without a crisis? Most, including FRB Chair Powell has stated the current fiscal tract of government is … Read more
