In order to get inflation to 2%, how much demand do you have to kill or how much does credit have to tighten to offset the new interest income in the economy and a 6.1% fiscal deficit per year for the next decade? Inflation will be higher for longer. The Fed by necessity will have a higher implicit if not [...]
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 [...]
I am changing the format of these weekly updates. Rather than publishing one long weekly note, the weekend note will cover just the market and economic news of the week. The general commentary portion will be published another day during the week. We will also be publishing some new research notes during the week. The Monday email will include links [...]
The stock market surged last Friday after the employment report showed a gain of over 300k jobs while the year-over-year change in average hourly earnings fell to 4.3%. That was the popular explanation and it makes sense; continued economic growth and fading inflation pressures would certainly seem a big positive (although wages have little to do with the recent bout [...]
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 [...]
Every time we hear, watch, or read the news, we are reminded that liberty is a rare commodity in this world. - Ronald Reagan It is foolish and wrong to mourn the men who died. Rather we should thank God such men lived. - George S. Patton In the End, we will remember not the words of our [...]
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 [...]
What is long term? That's a question with many answers depending on your point of view. Some people might think a year is long term. I had a client tell me once that he was so old he didn't buy green bananas because he might not be around to eat them. Some might say 3 years is long term but [...]
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