Fed
- US Policy
- First Word
Did the Haver "ransomware" attack inadvertently impact FOMC decision for "higher for longer"? Dec 2022 "dot plots"? Explains why 2-yr see fewer Fed hikes in 2023. Surge in Earnings Yield past year supports strong gains in 2023.
Equities sold off sharply in the days following the December FOMC. Investors told us they were disappointed:Despite visible progress on inflation (2 consecutive very soft inflation prints)Fed increased the inflation forecasts for 2022 and 2023 by +30bp and +40bp in their SEP (summary economic projections)And as a result, Fed decided...
- First Word
The bond market called inflation right in 2022 and now says Fed will be dovish in 2023... even if Fed doesn't know it yet
We hosted our 2023 Outlook webinar Wednesday and a replay is available (see banner above). The bottom line is we see the highest probability for double-digit gains since 2020. This call is fundamental (falling inflation) and Fed-based (Fed gets dovish). _THE BOND MARKET CALLED FED RIGHT IN 2022 AND NOW...
First Word
Investors more "bearish" in front of Wed Fed Chair Powell at Brookings Institution, but other key macro offsets this...
In the first two trading days of this week, equities have been soft. Ostensibly, there are 3 near-term factors that are weighing on equities:Concerns about...
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First Word
88% of Americans eat turkey tomo... less "consensus" than % who see recession in 2023. Markets are not "fighting the Fed" if inflation is set to cool.
The conviction that the US is hurtling towards/or already in a recession is ubiquitous. Many can cite a litany of statistics such as:inverted curve,Fed hikes...
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US Policy
Fed Minutes and Lame Duck Congress
While Wednesday may be a slow news day as investors and everyone else make final preparations for putting turkeys in the oven, for financial markets...
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- First Word
Nov's PCE inflation release will highlight why 2023 is more opportunities, and less crisis. We see downside surprises to PCE inflation = less hawkish path forward for Fed
Equities are struggling in December, capping what has proven to be a horrible year for equities. In our view, US core inflation has apexed (mid-2022) and now running at closer to 2%. But due to lags in how price-level series works (inflation is a price level), inflation will not be...
US Policy
Fed and election focus of week ahead
After weeks of guessing what the Fed’s Federal Open Markets Committee (FOMC) may do on interest rates, Wednesday is decision day, and the all-important post-meeting...
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First Word
S&P 500 ~30% loss in "real terms" staggering, leaving room for rally. Not priced for perfection. Since 1930, median P/E when 10Y 3.5% to 4.5% is 19X, and 18.5X when Fed tightening.
Stocks have continued to strengthen, and in our view, this is more than just a "dead cat bounce" (aka bear rally) as we have outlined...
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First Word
Inflation less of a "blackhole of pain" and Fed sees that = why risk assets YE rally could exceed June +23 days/+16% meaningfully.
In the past week, risk assets staged one of the best gains in 2022. Over that same time frame, there was little "hard" economic data...
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Your Weekly Roadmap
Markets Rally on Hopes for Fed Pause, Earnings Have Been Mixed
Markets had their best day since June in a furious rally that was led by Materials, Financials and Technology. This was the third positive week...