At the end of December the Federal Funds rate futures pegged the odds of a rate cut at the March FOMC meeting at 90%. Last week the odds the FOMC would lower the Funds rate in March was less than 20%. In January Wall Street was projecting the FOMC would lower the Funds rate 7 times in 2024 with...
The FOMC statement was particularly direct in summing up the mindset of the FOMC. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
TLT was expected to rally to 96.50 – 97.50 for wave b, before declining below 93.10 for wave c to complete the correction from 100.57. TLT exceeded the target range for wave b on February 1 by a small amount. In response to the January Employment report Treasury yields are ramping higher and...
Tracking the paths created by financial markets is a different form of hunting. Most investors rely on economic data to determine whether it’s a good time to invest or not. They follow economic data as if data were Tea Leaves providing...
The FOMC won’t make a change to the Funds rate on Wednesday and will likely only change a few words in the FOMC Statement. Markets will focus on Chair Powell’s press conference for any indication that the FOMC is leaning to lowering the Funds rate at the March 20 meeting. President Truman...
In November consumer borrowing zoomed by $23.75 billion boosted by an increase of $19.5 billion in spending on credit cards. In records going back to 1943 November was the third highest increase ever. The surge in consumer spending continued in December as the monthly increase in Retail Sales...
The Consumer Price Index for December came in a little hotter than expected by Wall Street. The monthly increase for the Headline and Core was 0.3% compared to estimates of 0.2% for the Headline and 0.3% for Core. As a result the annual rate for the Headline CPI rose to 3.4% but the Core CPI...
In the January Macro Tides I discussed several reasons why the economy was expected to hold up in the first quarter. “ The Unemployment Rate in November was 3.7% hovering near the lowest level of the last 50 years. Wage growth has slowed but wages were still up 5.2% from November 2022 through...
The Table recounts a recurring 17 year cycle showing that in the five instances since 1939 the S&P 500 declined by more than -20% after a peak with plunges of -48.4% in the 1973 – 1974 bear market and -57.7% during the 2008 Financial Crisis. The length of time for each decline to unfold...
Heading into 2024 Wall Street and most investors are positive about the economy and the outlook for stock prices. Inflation is expected to decline as consumer spending holds up. The drop in inflation will allow the FOMC to lower the Funds rate as economic growth...
The stock market is extremely overbought which develops when a bullish narrative is widely embraced. As I’ve noted Wall Street expects the economy to avoid a recession in 2024, earnings will be up 12%, and the FOMC will be aggressively cutting the Funds rate 6 times. It doesn’t get any...
Financial markets and pundits were quick to conclude that Chair Powell had become a Dove since he didn’t push back against the aggressive 4-5 cuts in the Funds rate that Wall Street has been expecting in 2024. An economist at a major investment bank said, “ It was “12 doves a-leaping .” A...
I thought the Summary of Economic Projections (SEP) would change modestly from the September SEP. For the most part that was correct. I thought the projection for the Unemployment Rate would hold at 4.1%, the estimate for headline PCE would dip to 2.4% from 2.5% in September, and the Core PCE...
There is always a Bull market in herd thinking on Wall Street, often allowing Wall Street to dismiss data that may not jibe with the ‘narrative’. Wall Street believes the economy will avoid a recession and the FOMC will cut the Funds rate 4-5 times in 2024. In November a 199,000 jobs were...
Wall Street is forecasting that GDP will slow in the first half of 2024 with growth averaging 0.35%, so a recession will be avoided. Wall Street expects the FOMC to cut the Funds rate by 0.25% in March and 4 more times by the end of 2024. The FOMC...
Frequently the words hearing and listening are used interchangeably as if they are basically the same which isn’t accurate. Hearing is a passive, involuntary, sensory process in which our minds perceive words because our ears are functioning. Listening is an active, voluntary, and intentional...
