It is almost universally accepted that tariffs are inflationary and may perhaps cause a recession. It was almost universally accepted that the most aggressive Fed in history that increased the overnight logarithmically from 0.00% to 5.5% would be recessionary. In fact, all 24 Primary Dealers (money center banks that interact directly with the Federal Reserve/Treasury) … Read more
Where to? The Federal Reserve’s preferred measure of inflation—the core PCE—rose 0.2% from November and 2.8% from a year earlier. The data largely met expectations but is still considerably higher than the 2.0% speed limit. Real disposable income barely rose for a second month, perhaps causing the savings rate to fall to 3.8%, the lowest … Read more
The economy ended on a strong note. Fourth quarter GDP increased at an annualized rate of 2.3% after rising 3.1% in the prior three-month period. The median forecast called for a 2.6% growth rate. On the surface it appears this was a miss, but the details suggest otherwise. Inventories subtracted a full percentage point from … Read more
Do most get lost in the minutia? Yesterday most were focused on the outcome of the FOMC meeting and the earnings release of three of the largest companies in the world. Is this the proper focus? The second Trump era has begun and if one is confident about what it will bring (either good or … Read more
Will today be one of significance. The FOMC meeting concludes, and the post meeting statement is made at 2:00 PM. There is little fanfare expected from the forecasted outcome, but every FOMC meeting is of significance given their potential influence over the financial markets. After the close three of largest companies in the world post … Read more
It was an ugly day yesterday for the chipmakers. NVDA plunged over 17% on the news that a Chinese company may be an AI chip competitor. NVDA declined almost $600 billion in capitalization, a decline that is more than the total value of GM and XOM combined. It was the largest drop in value for … Read more
Will this be a week of significance? The preconceived narrative is that technology has improved growth and productivity. Real GDP has averaged about 2% per year in the past 20 years, about half of its growth rate from 1950-1973 according to First Trust. It’s hard to quantify government success because they don’t have profit motives. … Read more
Markets were mixed as President Trump urged in a virtual speech to Davos for OPEC to lower crude prices and said he will push for interest rates cuts. Trump also reiterated his threat to use tariffs to bring manufacturing back to the US. Every President has advocated for lower oil prices and interest rates however … Read more
Mega cap technologies led equities higher yesterday, the result of NFLX’s profit report. Next Wednesday January 29 three of the Magnificent Seven releases earnings; MSFT, TSLA and META. Was yesterday’s NFLX results a one-off event or the start of something better? The inverse of previous days, most of the companies in the S & P … Read more
Markets were mixed yesterday until the President Trump announced a new investment push into AI.. The NASDAQ rose about 0.5%, the Dow gained about 1.0% and the Treasury yields nominally declined. Many have commented the geopolitical and macroeconomic issues are the most daunting today than in at least two generations. Perhaps the biggest risk is … Read more
