Why aren't we in recession yet? That's a question that has been asked often over the last year but with no real satisfying answer. I have my own beliefs on the subject, rooted in the distortions of COVID. (You can read about it in my latest Follow The Money piece) I think my explanation is a pretty good one but even [...]
The first half of the year is over and despite a few bank failures and three more rate hikes by the Fed, stocks and bonds both managed to produce gains in the first six months of 2023. Growth stocks were the big winners as the market for most of the first half was trying to price in rate cuts before [...]
It appears we have started the third correction in stocks since the bottom in October of last year. The first one was in December and saw the S&P 500 fall about 8% from peak to trough. The second one was from February into mid-March and totaled about 9%. I don't know how far this one might carry but a pullback [...]
I spend a lot of time thinking about what "everyone" else believes about the economy and markets. If you've been reading my weekly scribblings for any time, you know I have little faith in the soothsayers of this industry. No one knows what the future holds, least of all that group of crystal ball gazers known as economic forecasters. Most [...]
Housing starts rebounded nicely in May to 1631 units from a revised lower 1340 units in April. Permits went up sequentially as well, just not as much. Both series are above the historic mean and median levels. Housing starts actually showed 5.7% growth YOY. Permits declined 12.7% from a year ago, this was a slower decline and the smallest decline [...]
Everyone knows that growth stocks have been on a tear this year but what is more interesting is the divergence in performance between indexes with similar names. The Russell 1000 and the S&P 500, the two main broad US large-cap indexes, are both up about 15% this year. But the growth and value versions of these two indexes have produced [...]
No one could have possibly been surprised by the Fed's lack of action on Wednesday. They had signaled to anyone who would listen that they would pause (skip, take a hiatus, halt, or whatever you want to call it) at this meeting. And no one should have been surprised that Jerome Powell offered some tough talk about the future of [...]
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 [...]
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