Inflation continues to fall. On a YOY basis CPI dropped from 4.96% to 4.13%. With this print, the probability of a Fed Pause went from 77% to 94%. Falling inflation rates are a result of A. more restrictive money or B. falling demand. This is not a binary question and there is a causal relationship. 11 months ago, we hit [...]
Overall, the employment pictures remains healthy. Higher frequency weekly initial claims are trending in the right direction (lower). Aggregate hours worked are still growing at 2.2% YOY. While positive the growth in total hours worked continues to slow all be it at a lesser rate of decline. This will be a factor to watch in the coming months. The accelerated [...]
Regional Surveys from Philly, NY, Texas and Chicago are all at levels previously indicative of a recession. The lone false signal was the Texas General Business Activity Index in January 2016...the weakness was regionally isolated as the price of oil went from over $100/bbl in 2014 to around $30/bbl by early 2016. No region has absolutely fallen off a cliff, [...]
Factory Orders continues to slow after pandemic surge. Questions to ask: Is the slowing just reversion after a pandemic surge because of supply chain disruptions, onshoring, low interest rate, stimulus? Thus, will this be the soft landing everyone is hoping for? Does it matter as slowing activity is slowing activity and activity continues to slow? No one knows the answer [...]
Housing starts and permits for April are running at a level of right around 1.4M units down from around 1.8M last year. That's a drop of 22% in starts and 21% in permits. 1.4M units is roughly in line with the long term average. The level of starts and permits is not yet concerning, but the slow down continues to [...]
A one year, educational look back through the lens of Super Bowl commercials. The economy was awash in liquidity. Behavior had changed. Would trends continue? Would behavior revert? The Fed's first rate hike would occur roughly one month later. H/T Steve Beiser. Last year’s Super Bowl commercials – if you invested $10k when they aired you would have….• FTX - [...]
Pandemic Wealth Effect The top 1% of the US made about $14T or $4.2M per person. The next 19% made about $20T or $318,000 per person. The next 30% made about $5T or $50,000 per person. The bottom 50% made about $1T or $6,000 per person. The resulting inflation is at a 40yr high and Powell wants the money back. [...]
I'll save the epiphany for the end. QE can work when the Fed is the buyer of last resort and then interest rates slowly go down. The market breathes a sigh of relief and the country can go about their business. But that's not what has happened in this country, especially since Q1 2020. By no means would I ever [...]
Monthly closing price for SPY on the 1st day for the month from 2 years prior to a market high to 3 years after that top. The data points are indexed to the starting point 24 months before the market top. I know, I know, it's different this time. It's always different. Different is not a relative measure of anything. [...]
The lagged effect of inflation. Jay Powell: Call me Ishmael.
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