Positives 1) Jay Powell seems to be trying to wean the economy and markets from the addiction of many years of excessively cheap money and away from this seemingly endless regime of negative real interest rates and the legacy of QE. 2) Initial jobless claims were about as expected at 214k vs 206k last week. This brings the 4 week average to 222k from 225k. …
[Read more...] about Succinct Summation of the Week’s Events – 12/21
Well, not only did the Fed hike rates as widely expected, they kept language in the statement that “further gradual increases” are warranted where many thought they would take that out. Thus, this was not a dovish hike as many were expecting and certainly hoping for. With the commentary on the economy, they maintained their belief that “the labor market has …
Positives 1) China will remove its 25% auto tariff they put in place in July on US exports and they will start buying soybeans again in January. While we are just removing a negative, let’s hope it is a precursor to the positive of something substantive agreed upon with respect to protecting technology patents. 2) After an unexpected rise in claims over the past …
[Read more...] about Succinct Summation of the Week’s Events – 12/14
It now seems we have a 3rd party at the US/China trade negotiation. His name is Mr. Market. Late Friday the WSJ reported that "As Trade Battle Unfolds, Trump Keeps Close Focus on Markets." Randall Forsyth also hit it on the head in Barron's over the weekend saying "It's the Stock Market Stupid." I'll say, live by the Tweet on the stock market, die by it. It's clear …
[Read more...] about There is now a 3rd person at the negotiating table
Positives 1) The November ISM services index rose .4 pts to 60.7 and that was 1.7 pts better than expected. For comparison, the 6 month average is 59.3. The breadth of the growth remained good as 17 of 18 industries surveyed saw growth, the same level for a 3rd month. This said, 15 of 18 saw growth in new orders, the least in 4 months. Also, all 18 industries said …
[Read more...] about Succinct Summation of the Week’s Events – 12/7
Imagine for a second that the Chinese government arrested the CFO of Apple and extradited him to the US. While it's not the case, also imagine if the CFO was the child of Steve Jobs. I'll leave my comments at that. In yesterday’s Beige Book, the Fed described the US economy as having “expanded at a modest or moderate pace from mid October through late November, …
Only 13 bps now in the 2s/10s yield spread. What is the most striking aspect of this move is the extent of it in just two days and how the acceleration came out of nowhere right after a supposed amicable meeting between the US and China. It's almost as if the bond market screamed out, "It's too late, the growth slowdown underway can't be reversed. Tariffs are still …
Positives 1) There is an opportunity Saturday night to at least postpone further tariffs as both sides seem interested in some détente. Even Robert Lighthizer is optimistic. 2) Jay Powell gave himself some breathing room and flexibility in terms of the timing of achieving his goal of an eventual 3%-ish fed funds rate. 3) The headline PCE inflation deflator …
[Read more...] about Succinct Summation of the Week’s Events – 11/30
For a market that is so beholden to monetary policy and desperately wanting to know 'are we there yet?' in terms of ending the tightening, I only thought of this yesterday after Powell basically said we are: https://www.youtube.com/watch?v=18AzodTPG5U. BUT, as long as QT is still in place, we really aren't there just yet. Their balance sheet is still expected to …
The markets are latching on to two words in the Jay Powell speech, “just below” referring to where he thinks the neutral rate is. We know that no one really knows what the neutral rate really is but I “just below” is different then what he said in October when he said “we’re a long way from neutral at this point, probably.” Of course we’re playing a game of …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.
