Rate hike odds for the March meeting are sitting at exactly 50% after yesterday’s rather sharp move from Friday’s 40%. We were at 44% intraday and then voting member Robert Kaplan said “sooner rather than later means in the near future” in response to a question on the next rate increase. There is only 4 days left in the Fed’s quiet period and this should be what the …
Fed Fund Futures, Pending Home Sales, Durable Goods, Dallas Manufacturing
The April fed funds futures contract which fully captures the March meeting is now pricing in a 44% chance (using the midpoint between .50-.75% instead of the current effective rate of .66%) of an interest rate HIKE at that get together. That level was seen on February 15th the day after Yellen’s testimony and June 2016 before that. Rate hike odds were 24% three weeks …
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State of the Union, Taxes, Treasuries and more…
With all due respect to the office of the President, I can't think of many other bigger wastes of my time than watching the State of the Union address. I honestly can't remember the last time I watched more than 10 minutes of one as nothing ever is new. It ends up being a combination of pats on the back and promises on everything with applauses every 5 minutes from …
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2/24 – Succinct Summation of the Week’s Events
Positives Existing home sales in January, likely covering contracts signed between October and December (and thus straddling the pre and post election move in mortgage rates) totaled 5.69mm, 140k more than expected and up from 5.51mm in December. This is a new high in this cycle but still remains well below the bubble peak of 7.25mm back in September 2005. …
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Mnuchin & Tax Reform, Yellen & Wealth Effect, Initial Jobless Claims and more…
As I said yesterday, I expected nothing new from the FOMC minutes as we heard from Yellen and other Fed members since the last meeting and nothing new is what we got. The FOMC continues to suffer from monetary constipation where this constant hemming and hawing over a rate hike won’t stop even in the face of a world that clearly changed on November 8th and as we …
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What Would John Templeton Think?, Home Sales, Mortgage Apps, Fed Minutes
Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. You likely have heard that quote before from John Templeton, an investing hero of mine. My prior boss, another great investor, often cited it and I felt that it was an important guide in gauging what stage of a bull market we are in. Sentiment is an unusual thing as its …
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Some Inflation in Europe, Fed Commentary, March Hike?, and more…
This was out yesterday but I need to highlight it in case you missed it. German PPI in January rose .7% m/o/m, well above the estimate of up .3% and brings the y/o/y gain to 2.4% from 1% in December. This is the fastest pace of gain since March 2012 and yes energy is the main culprit but PPI ex energy was still up a sharp .6% m/o/m and 1.8% y/o/y. What is also …
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2/17 – Succinct Summation of the Week’s Events
Positives FINALLY (but a few years too late), Janet Yellen realizes that “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.” FINALLY, BoJ Governor Haruhiko Kuroda publicly acknowledges that “a new …
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The Times They Are a Changin’
I’ve continued to call out Mark Carney for the inflation problem he has on his hands and which he further facilitated with his panic easing after Brexit. For a 2nd straight month retail sales ex fuel were very disappointing. They fell .2% m/o/m in January vs the estimate of up .7%. Also, December sales were revised to a 2.2% m/o/m decline from -2% and vs the initial …
Housing Starts, Jobless Claims, Philly Phantastic?, Unprecedented Treasury Selling
January housing starts totaled 1.246mm, 20k more than expected and December was revised up by 53k to 1.279mm. Single family starts were up by 15k to 823k after falling by 18k in December. Multi family starts were 423k, down about 50k but after jumping by 150k in the month prior. Permits grew m/o/m but it was all in multi family. Starts there jumped by 79k to 477k, …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.