Markets yesterday had a nervous undertone. What will be the impact of the longshoremen strike? Will inflationary pressures reignite given that wages are the largest cost of production? Will other unions/workers make similar demands? Will public service sector unions become as dogmatic as the longshoreman/UAW/Boeing strikers? And then there is the Middle East. It is … Read more
It is often stated that truth is the first virtue lost in truth and war. The question today is what is truthful? Is the next data point truthful? It is widely accepted that the establishment of the internet slowly increased the flow of information than suddenly overwhelmed all with a massive increase in volume. According … Read more
Markets were relatively quiet ahead of a week filled with top tier statistics. A speech by FRB Chair Powell was generally market insignificant as he stated the Committee was in no hurry to cut rates. Treasuries ended lower in price however the two-year Treasury or instrument most sensitive to monetary policy y were up for … Read more
Treasury yields declined nominally as the Fed’s preferred gauge of underlying inflation rose mildly in August. The core PCE was up 0.1% from July and 2.7% from a year ago. Last month the 12-month increase was 2.6%. The data largely met expectations. The yield curve steepened. The markets have fully discounted an additional 175 to … Read more
Yesterday’s data exceeded expectations, causing many to again question the pace at which the Federal Reserve will lower interest rates. Some have postulated that Wall Street is determined to “jawbone” the Fed into action for numerous reasons including the proverbial “talking your book” to more nefarious reasons such as perhaps attempting to influence the outcome … Read more
Equities struggled to find direction as the market ponders the path of rate cuts. Moreover, third quarter earnings season commences in about two weeks and there are some concerns that estimates may be too lofty. As noted many times, about 90% of trading is done via technology, utilizing algorithms that are primarily based off of … Read more
Moody’s warned yesterday “the next Administration must grapple with widening budget deficits…the Administration’s tax and spending policies will affect the size of future budget deficits and the expected decline in fiscal strength, which could have a significant effect on sovereign credit profile.” The ratings company further stated “the debt dynamics would be increasingly unsustainable and … Read more
About 19 or 20 years ago I was introduced to the works of Hyman Minsky. A basic tenant of his economic philosophy is stability leads to instability. His work focused on economies that are hooked on debt; excessive borrowings fuels financial instability. Minsky believes that change happens slowly, then suddenly. An analogy used to explain … Read more
Where to now? September is regarded as the worst month of the year for the markets with the climatic event occurring in October. The markets are devoid of liquidity, and direction is primarily determined by momentum and technology-based trading, the direction of which is heavily influenced by five-word headlines. It is widely accepted that the … Read more
Led by the mega techs, equities staged an impressive rally believing the Federal Reserve will be able to engineer a soft landing. Markets declined nominally on Wednesday after the decision was made. Some pundits asked what changed between Wednesday and Thursday? As noted several times, the Atlanta’s Fed GDPNow Index currently suggests third quarter GDP … Read more
