Positives 1)However subtle, Jay Powell opened the door to the beginning of a trimming of the Fed's asset purchases at some point which we assume to be in the next quarter or two. St. Louis Fed president Jim Bullard furthered the commentary on CNBC by saying the tapering discussion is now wide open and that inflation is now rebounding more than he expected. He also …
[Read more...] about Succinct Summation of the Week’s Events: 6/18
We know how the Germans feel about inflation because of their history with it but Mario Draghi and his path down negative rate lane and massive QE made the Bundesbank irrelevant. Now that the country, along with all others, are feeling the inflation heat, we'll see to what extent there is more vocal pushback on the policies of the ECB. The head of the Bundesbank Jens …
I’ve argued this year that either the Fed gets control of the inflation narrative or the market will do it for them. The market certainly did up until yesterday and while Jay Powell & Co. was only slightly less dovish, it clearly was enough, for now. I emphasize ‘for now’ as we see how the temporary or not scenario plays out the rest of the year and into 2022 and …
After 6 straight weeks of declines, initial jobless claims unexpectedly rose to 412k from 375k last week and that was well above the estimate of 360k. Also, the number of those filing for PUA jumped to 118k from 71k. Delayed by a week, continuing claims totaled 3.518mm vs the estimate of 3.425mm but little changed with last week’s reading. Delayed by two weeks, those …
So the taper has begun, not in practice yet of course but in terms of the market's adjustment to the growing reality. This also alters the debate on whether inflation is 'transitory' or not because a cut in asset purchases is happening anyway, an interest rate hike or two next year is happening anyway (we have big economic problems if it doesn't). The question of …
[Read more...] about ‘Transitory’ or not now dictates timing and pace, not if
Unless I missed it, I did not hear one question on the housing market and the 13% annual price gains that is now resulting in a slowdown and why are they still buying $40b of MBS per month. This, as stated here before, the most interest rate sensitive part of the US economy and not one question. …
So the Fed is FINALLY talking about tapering according to Chair Powell even though he said they are still “a ways away” from substantial progress toward the Committee’s maximum employment and price stability goals. This belief even though we currently have maximum employment opportunities with record job openings and we have price instability currently instead. Powell …
There were some modest tweaks to the FOMC statement from the April one that sort of updated the reality of the more robust vaccine rollout and the obvious benefits. They also raised their reverse repo rate and IOER by 5 bps somewhat as expected in order to deal with the enormous RRP usage. They eliminated thankfully this sentence because it was clearly no longer …
[Read more...] about Death, taxes and a dovish Fed but less so?
May housing starts totaled 1.572mm, under the estimate of 1.63mm and April was revised down to 1.517mm from the 1st print of 1.569mm. Single family starts were 1.098mm of this, below the 6 month average of 1.155m. Multi family starts were up a touch m/o/m to 474k vs the 6 month average of 435k. Permits also came in less than expected with single family permits falling …
I'll be brief on the Fed until this afternoon. I want to hear what their updated definition of 'substantial progress' is in terms of achieving their goals. So, what does 'maximum employment' mean in the context of a record 9.3mm job openings? And what does 'price stability' mean to them because the last thing we have right now is stable prices. By the way, last week …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.
