Inflation
Inflation, Changing Regimes, and the End of Green Conceits
With the S&P 500 bouncing off very long support at the 200-week moving average, the stage may be set for the bear market to get a breather. Inflation remains a clear problem, but as we have been telling you for some time, inflation will eventually begin to settle back from Read more…
Guild Basic Needs Index
How Much Longer Before This Bear Hibernates?
Fed Chair Powell tried to channel Paul Volcker at Jackson Hole. Insiders report that the market’s reaction to his July press conference was to assume that a pivot to easier policy was coming — so he scrapped his prepared remarks for Jackson Hole and instead delivered a short, blunt message Read more…
Employment
Jobs, Inflation, and Gaslighting
While some economic data — notably year-over-year GDP growth — are flashing “recession,” some other important data are contributing to positive investor and trader psychology, and helping maintain the current counter-trend stock market rally. It can be awhile before reality comes calling… and that means that we wouldn’t want to Read more…
Bonds
Sometimes, Things Really Are Different: Why Bond Allocations Are Now Radioactive For Investors, and Why You Need To Think Differently About Stocks
As expected, the Fed hiked rates by 75 basis points on Wednesday, with a 50 or 75-basis point hike on deck as well for July. Whatever the very temporary immediate response of the market, it focuses attention very clearly on the inflation and interest rate trajectory. For the majority of Read more…
Federal Reserve
Market Desperately Seeking Reason To Bounce
First, let’s touch on the inflation level revealed by the Guild Basic Needs Index [GBNI] — our in-house, real-world inflation measure which we compile from a simple set of data series covering consumer expenses for food, shelter, clothing, and transportation. We had to adjust the x-axis on our graph: year-on-year, Read more…
Bonds
Inflation, Interest Rates, Currencies, and the Fed’s Blink
At the end of March, we noted about the dollar: “In [the context] of a very likely European recession, regardless of the cessation of hostilities in Ukraine, we would expect the U.S. dollar to stage a stronger rally, particularly against the euro. Why isn’t it? And perhaps a question equally Read more…
Inflation
Commodity Markets Signaling: This Is Not A Drill (Although Drilling Might Help)
Agustin Carstens, the General Manager of the Bank of International Settlements (BIS), spoke in Geneva a week ago — offering some soul-searching reflection on how the world’s financial authorities got the inflation story so terribly wrong. (The Bank of International Settlements is essentially “the central bank of central banks.”) We Read more…
Federal Reserve
The Earnings Recession Has Arrived: Is the Economic Recession Coming Next?
We say it often and we will say it again: earnings are the mother’s milk of stock prices. On a market-wide basis, a flat or declining earnings trend almost invariably accompanies a flat or declining trend in stock prices. This doesn’t mean that investors should go completely to cash (particularly Read more…
Inflation
The Markets This Week — 10 February 2022
Interest Rates, Inflation, and the Fed’s Coming Gut Check This morning’s CPI print hit 7.5% year-over-year, up 0.6% from the previous print, and slightly worse than expected. Some (not us) had believed that December’s number would be a peak; it was not. Given trajectories of energy and housing costs, February Read more…
