Today, it is widely expected the Federal Reserve will increase the overnight rate by 0.25%. The market is expecting the Fed will pivot sometime in early summer with the overnight rate being lower on December 31 than February 1. January’s stellar performance is predicated upon such an outlook materializing. As measured by the VIX, complacency … Read more
It is often penned the markets hate uncertainty. There is near unanimity today’s outlook is the opaquest in at least two generations facing a multitude of cross currents. Against this backdrop, Treasuries are posting the best start of the year since 1988. The NASDAQ is heading to the best start of the year since 1999 … Read more
The two-day FOMC meeting commences tomorrow, and a 25-bps increase is expected. As noted many times, despite consistent messaging from the Fed, there is a massive disconnect between what the Fed is stating and what the market is interpreting. The Fed has been adamant that it will increase the overnight rate to slightly over 5% … Read more
The economy grew at a faster than forecast into the end of 2022 but there were signs of slowing underlying demand as the steepest interest rate hikes in decades threaten growth. GDP increased at a 2.9% annualized rate in the final three months of 2022, after a 3.2% gain in the third quarter. About half … Read more
Markets reversed moderate gains, gains the of result data suggesting waning inflationary pressures, to fears that growth and profits may erode in the Fed’s quest to quell inflation. Equites were further spooked by comments from two Fed hawks stating monetary policy is “almost in restrictive territory but not quite yet,” interpreted as the Fed may … Read more
Equites were choppy on a reassessment of earnings and monetary policy. Bloomberg writes of the 33 S & P 500 companies that have posted results so far, 25 have beaten expectations, “the nascent trend of lagging buoyant surprises of the previous quarters.” The market is perhaps interpreting more downside profit reports. On the other hand … Read more
Fourth quarter earnings season will commence Friday with the release of Wells Fargo, Citicorp and JP Morgan’s results. Net interest margin is expected to surge given the most aggressive Fed in forty years. It is also expected the banks will add to loan loss reserves in anticipation of an increase in nonperforming assets later in … Read more
The labor market remained strong but wage gains somewhat cooled. Non-farm payrolls rose by 223,000, exceeding the 203,000 estimate. The unemployment rate decline to 3.5% but the labor participation rate increased to 62.3%. Consensus was expecting a 3.7% rate and 62.2%, respectively. Wages however only increased by 0.3% versus the expected increase of 0.4%. The … Read more
Private payrolls increased 235,000 last month after an upwardly revised 182,000 in November according to data from the ADP Research Institute. The median forecast in a Bloomberg survey called for a 150,000 advance. Job gains were concentrated in businesses with less than 500 employees. The largest companies cut 151,000 workers from payrolls, ADP said. The … Read more
Job openings remained elevated in November, highlighting how a resilient labor market is likely to keep the Federal Reserve tilted toward more restrictive policy in the months ahead. The number of available positions ticked down to 10.46 million from 10.51 million a month earlier according to the Labor Department’s JOLT survey. The figure was higher … Read more
