Weekly Commentary

At the heart of the economic debate surrounding inflation is consumer demand. I’ve argued that around 60% of inflation is supply driven, but that’s not part of the current conversation. The argument goes something like this: if inflation moderates the Fed can pause rate increases and investors can develop a better picture of future earnings. […]

Our Q4 2022 Look Ahead is available for review. The video link is here and the PDF version is here. In this post, we highlight some key themes we see in the coming quarter. The Fed is on course to move the terminal fed funds rate to 4.25% by year-end. Historically the duration of time […]

After another painful week on Wall Street a healthy dose of despair might be setting in. The S&P 500 closed near the bear market low and is now down 23% from the peak in January. 1 Investor sentiment is now back to Great Financial Crisis levels according to the American Association of Individual Investors (AAII). […]

Last week’s extreme negative market reaction to recent inflation data adds more salt in the wound. With an almost certain 75bp rate increase coming this week, the S&P 500 dropped 4.77% last week in anticipation of the lift. 1 This year the S&P 500 is down 19% and the conservative 60/40 (equity/fixed income) portfolio is […]

Tomorrow we will get a critical update on inflation festering in the U.S. economy. Expectations are pointing to a lower reading, which could create a fear that the Fed will overreact by raising rates much higher than needed to moderate inflation. 1 It’s hardly a surprise to see a significant downshift in earnings expectations for […]

Within just a couple of weeks (September 20-21), the Fed will reconvene to determine the amplitude of the Fed Funds rate. Most market participants are expecting a ¾ point rate increase, while we believe a ½ point increase is still in the cards. 1 I’ve focused on interest rates above other issues (Ukraine, China, Energy, […]

Equity markets reacted violently to Fed Chairman Powell’s recent comments. U.S. equity markets shed over $1.2 trillion in one day when participants decided to reprice the trajectory and pace of interest rates. 1 The summary of what he said should not have been shocking; yet it was. The Fed is going to: Raise rates until […]

I completely understand we are still in the doom and gloom phase of the current economic growth detour. It’s far too early to declare the coast clear from headwinds real and imagined. With Q2 earnings season effectively over, companies fared much better than expected. S&P 500 companies grew earnings by 6.7%, compared to the 4% […]

Last week’s report on consumer prices finally gave a little respite to the onslaught of inflation news. The month-over-month change in consumer prices was zero, with a moderation in the year-over-year rate. 1 Energy prices were the main contributor to the easing of inflationary pressures. 2 Further, prices for hotels, airfares, wholesale gasoline, and producer […]

The latest jobs report for July crushed all estimates. The U.S. economy added 545,000 total jobs last month, with almost every category adding jobs. 12 The number of jobs added per month over the last year has been a remarkable 526,000 on average. 3 This latest report confirms the full recovery in private sector jobs […]