Inflation

Weekly Update

Mid-Year Review of Markets and Economies


Published June 16, 2023

 

We routinely publish Schwab’s longer-term (6-12 month) outlooks as part of our weekly blog. Below is their mid-year outlook beginning with a brief review of what has transpired so far in 2023 compared to what they thought. Schwab has been very cautious on the stock market for many months. Read below to see if the recent lift in stock prices has shifted their view. (more…)

Weekly Update

What if the Recession Has Already Happened?


Published May 19, 2023

There is no shortage of commentary and hand-wringing about a coming recession. In the piece below, one Fidelity analyst posits that the recession may have already occurred. Here is Denise Chisholm’s analysis:

“Did we already have a hard landing? The National Bureau of Economic Research (NBER) hasn’t officially called a recession, but signs suggest that we may have already had a fairly bad one. One of the most consistent recession indicators has been a contraction in real wages (adjusted for inflation), which happened in every recession since 1962 except the 2020 COVID shutdown (chart hereunder). Real wages declined throughout 2022—falling more than they did during the Great Recession—as inflation outpaced wage growth. Real wage growth may have bottomed last fall; a rebound could provide a tailwind for the economy and the stock market. (more…)

Weekly Update

Who Backstops Cryptocurrencies?


Published November 11, 2022

 

For the first time in awhile the usual market suspects of inflation and the Fed’s assault on the stock and bond markets took a backseat for a couple of days. When interest rates rise sharply as they have this year, investors find out who was overly leveraged and caught without a seat in the market’s cakewalk. This week, we found out that cryptocurrency exchange FTX was the latest one without a seat. (more…)

Weekly Update

The Market Sans Energy Is Not So Pretty


Published August 26, 2022

 

With summer winding down, we await the post-Labor Day return of a fuller market trading pattern to provide better clues of investor thinking. In the meantime, the summary below from Delta offers a good overview of the current economic data.

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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

Bulls Find Some Traction


Published July 29, 2022

 

In a bull market, investors buy the rumor and sell the news, with the selling being typically light. In a bear market like we are in now, this week showed us it is the opposite. Investors fear the news, sell stocks down on the fear, buying them back when the news, though bad, is not quite as terrible as it could be. So it was with the Federal Reserve announcement this week. (more…)

Weekly Update

Consumer Sentiment Reaches Extreme Levels


Published June 24, 2022

 

While no one has any clue which way the stock market goes from here, what we do know is that the magnitude of negative sentiment is extreme. The last time we saw consumer sentiment at these levels was in 1980, a dismal period for the economy. The current sentiment reading seems very much at odds with what’s really going on in the economy. (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

Market Offering Almost Nowhere to Hide


Published May 6, 2022

 

This week the Fed made the first of their larger interest rate hikes with a 0.5% move (50 bps in bond market parlance). Here’s the path of Fed interest rates that the market foresees – straight up from now through March 2023. (more…)

Weekly Update

Market Concerns Continue to Build


Published March 11, 2022

 

The market mess enters its fourth month with Chinese stocks now getting hit (down -15% in the first 10 days of this month). Credit spreads, a proxy for risk concern in the bond market, have risen sharply as the chart below shows. So plenty of reasons for hand-wringing, all of which builds to a buy point for stocks, eventually. (more…)