Weekly Commentary

The U.S. economy posted its second consecutive quarter of negative GDP growth. 1 If you review our Q3 2022 Look Ahead, you can see the outcome was highly predictable. The question is are we in a recession? According to the Bureau of Economic Analysis, an independent federal agency that provides official macroeconomic and industry statistics, […]

This week the Federal Reserve will put its’ next installment in place to fight inflation that it mostly can’t impact. They will raise the Fed Funds rate by 75 bps and much of that is to diminish consumer demand in hopes of cooling inflationary pressures. The Fed readily admits it cannot influence supply. Fed Chair […]

The U.S. Dollar, relative to other countries, has been on a tear in the past year. The U.S. trade weighted dollar is up over 10% this year and nearly 20% off the bottom in 2021. 1 The strength in the U.S. Dollar is always relative to how other countries’ currencies are viewed. Relative to most […]

We kick off Q2 earnings season this week, and it should be the bottom of the earnings cycle. 1 Expectations are for S&P 500 earnings to come in around 4.3% for the quarter, marking the weakest earnings report since pandemic earnings in Q4 2020. Going forward earnings expectations trend back to much more normalized levels: […]

Our Q3 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. We think we are in the midst of a growth cycle detour. 1 We believe we will have a period of […]

The Fed wants to orchestrate a “soft landing” for the U.S. economy, one in which job losses, wealth destruction, and credit contractions are minimal while inflation reduction is impactful. How do we frame this and measure this? The good news is the Bank of International Settlements recently publish a report that does just that. The […]

It’s easy to get lost in the day-to-day pain of demand destruction. Living through economic cycles is a discipline of its own for investors. One thing that helps is to reflect on the cause, as it generally provides the path to a solution. In our current case, the cause resides in good intention. 1 During […]

It’s been a nasty year for portfolios, especially those traditionally considered conservative like the 60/40 stock/bond portfolio. 1 Much of the portfolio headwind is being driven by raising rates and the Fed’s policy to combat inflation. Bonds typically act as an anchor to falling stocks, but not during rising rate periods. The recent report on […]

For many months I have been focused on the tension between inflation and a recession, with the principal actor being the Federal Reserve. Can the Fed skillfully land a 23 trillion-dollar economy in a soft spot while fighting 8% inflation? It’s clear some don’t believe that’s possible. Much smarter people than me suggest big trouble […]

Transitory might just rear its head again as a way to describe inflation. In the most recent reading of the Personal Consumption Expenditure (PCE), the Fed’s favored inflation gauge; inflation continued to ease ever so slightly. 1 Perhaps this is why we are seeing a small uptick in equities and a down tick in fixed […]