It was all about inflation this week. Tuesday’s CPI report was basically more of the same, but the reaction to it was…maybe pronounced is the word? Out of proportion? I’m not so sure about that. Violent? Almost certainly. Now it’s not like the reported numbers were massively above expectations. The year-over-year change for August came in at +8.3% – expectations were for +8.1%. The month-over-month change was +0.1% versus expectations of -0.1%. What’s a couple…
Continue reading >>

The markets spent the week trying to find a narrative to believe.   On the one hand, every Fed speech this week focused on the need for another 75bps hike in the funds rate in a couple weeks…...
Continue reading >>

  Market Recap   All week it felt like we were in a holding pattern waiting for Fed Chairman Powell’s comments at the Jackson Hole meeting that kicked off today. A collective holding of breath so to speak. He didn’t say much new, as we cover below, but it was enough to trigger a sell-off on Friday and push most of the indexes into the red for the week.   In terms of economic data,…
Continue reading >>

  Market Recap   All the markets cared about this week was inflation. How high is it? Is the growth rate slowing? What’s it mean for policy? I’ll try and keep this quick!!   This week we had the consumer price inflation (CPI) report, the producer price number, and a report on import prices. All told a similar story, so let’s use the CPI report as the example. The headline year-over-year growth number came in…
Continue reading >>

  If you are confused about what to worry about, join the club. One day the market freaks out about the recession that we are meant to be either in or is coming up quickly. The next day growth is too strong and inflation is the fear du jour. Just look at the performance of long-term Treasury bonds this week – the numbers below show the price change in the iShares 20+ Treasury Bond ETF…
Continue reading >>

  Market Recap   Markets can be a counterintuitive animal. If by some magic you had this week’s major economic news headlines a week ago (I’m channeling Back to the Future here), how would you have bet on the markets? Fed hikes rates to battle inflation, economy is close to, if not in recession, corporate earnings coming in generally on the soft side. Odds are you wouldn’t have bet on a 4+% rally in stocks….
Continue reading >>

  It’s all about inflation and earnings, earnings and inflation, oh, and what the Fed will do (or what can they do) about inflation. Markets sew saw on the latest data point or comment from a Fed talking head. Combine that with low liquidity over the summer months, and the stage is set for volatile back-and-forth trading.   The main event this week was obviously the Consumer Price Inflation (CPI) report. It was expected to…
Continue reading >>

  How quickly the narrative changes when it comes to the markets. A week ago, inflation was skyrocketing, interest rates were soaring, and the mood was gloomy regarding risk assets. This week it’s as if things flipped 180 degrees. Rising recession risks combined with lower commodity prices is feeding the growing belief that inflation has peaked. This is leading to the idea of the so called ‘Fed pivot’ by year-end. This is just a fancy…
Continue reading >>

  The standard definition of a bear market is clearly ‘arbitrary and capricious.’ There’s nothing magical about a decline of 20% that all of a sudden morphs a correction into a bear market, but we hit just such a threshold this week for the S&P 500. This process has been going on all year. First non-profitable tech/growth companies were taken out back and shot late last year. Then crypto was annihilated. Next the FANG type…
Continue reading >>