Federal Reserve

Weekly Update

Searching for the Market’s Low Point


Published November 25, 2022

 

The stock market began its decline one year ago. We posted the first chart below around that time to point out the danger ahead from the failed break higher in smallcap stocks.

Since that failed breakout, we have seen an absolute assault on markets by the Federal Reserve with interest rates being raised at an almost unprecedented pace. The short-term 2-year interest rate has jumped from near zero to 4.50% in twelve months (second chart). (more…)

Weekly Update

Bulls and Bears in a Massive Tussle


Published August 19, 2022

 

It has been quite a long time since we have seen such disparity in the narratives flowing down Wall Street. How long and hard the Fed will tighten rates is one source of contention. But it’s not the biggest. That would belong to where corporate earnings are headed, which is sort of a Street barometer for whether or not the economy falls into a recession (how deep that recession is a third dimension discussion floating around also). (more…)

Weekly Update

Key Economic Indicators to Watch


Published August 12, 2022

 

The article below from Zacks provides a good overview of the key economic indicators to look for as we move into the second half of the year.

“The Federal Reserve is actively trying to curb demand in the economy by raising rates, and all the talk is about whether they can usher a ‘soft-landing’ without triggering a deep recession. So, the Fed will be a key factor to watch in the second half of the year. But I also have three other economic fundamentals investors should put on their watchlists, as they could be key in determining the path of the economy and markets over the next year. (more…)

Weekly Update

Market Recovers to Resistance


Published August 5, 2022

 

 

The stock market is at a crossroads having recovered the entirety of its June plunge. Prior to that plunge, stocks ran in place for several days as the bulls and bears fought mightily. That standoff was won by the bears, and the plunge ensued. The counter-rally, once it got going, has been almost as swift. (more…)

Weekly Update

Still Stormy Out There


Published June 10, 2022

Investors are facing a tremendous amount of uncertainty these days as inflation continues to push out the timeline for when the Federal Reserve might pause interest rate hikes. Friday’s “hot” inflation data offered the Fed no new cover for backing off their inflation-fighting posture. (more…)

Weekly Update

Yield Curve Inverts but Recession Still a Ways Off


Published April 8, 2022

 

The recent inversion in the yield curve has certainly generated a lot of headlines. The inversion occurs when short-term interest rates become higher than long-term interest rates. The driver of the inversion is usually a Federal Reserve raising rates while investors are skeptical about the long-term economic strength. Thus, the interest rate curve reflects a sort of temporary spike in rates. This inversion often suggests a recession is upcoming as the economic cycle has overheated to the point where the Fed has had to step in to slow it down. (more…)

Weekly Update

A Review of Economic Indicators


Published April 1, 2022

 

This week saw a strong move in growth stocks with breakouts in small-cap growth, software, semiconductors, real estate and other beaten-down growth and cyclical areas. This is a positive development for the broader stock market as the rally expands its reach beyond the commodity and defensive leaders of the past few months. (more…)

Weekly Update

A Bit of Calm Returns to Stocks


Published March 25, 2022

 

The stock market has settled down quite a lot in recent days as this chart of the volatility index shows. When volatility jumped down over that blue trendline, and kept going down, it was a likely sign that stock investors could breathe a little easier. Nevertheless, we also note that volatility has been generally elevated since mid-November and has a ways to go before true calm returns to the market. (more…)

Weekly Update

Stock Market Performance During Rising Rates


Published February 18, 2022

 

Stocks remain fully in the midst of a correction, searching for a bottom that may not come until after the Federal Reserve takes action in March. In the meantime, our friends at Delta back up and survey the broader picture to comment on market behavior during various interest rate/economic growth scenarios. (more…)

Weekly Update

The Fed Presses on the Brakes


Published January 7, 2022

 

Markets have kicked off 2022 with a bit of a bang. Interest rates have surged higher as investors bet that the Federal Reserve will act quickly to tamp down nascent inflation and return interest rates to their pre-pandemic levels. (more…)