The data last week does give fuel to those expecting a recession in the second half. Those forecasters who are claiming or predicting we are in or close to entering a recession got plenty of data last week. Personal spending only increased 0.2% in May. After adjusting for inflation, real spending declined for the first…
read article →Investors fear a recession but the data does not signal that yet. Volatility in financial markets does go both ways. Stock prices moved higher last week, bouncing off cyclical lows and market interest rates declined from cyclical highs. We have reached an official bear market in stocks with a 20% decline from the peak reached…
read article →The Fed remains behind the curve and is more hawkish than three months ago. The Federal Reserve continued its move to a much more hawkish position last week. They moved managed interest rates up 75 basis points. This is the third such move since March with each move more than the previous one. This is a total of…
read article →The economic data reported continues to reflect solid overall growth. The May labor market report came in better than expected. Non-farm payrolls grew by 390,000, well above the non-farm forecast of 325,000. Growth was in all sectors except retailing, so it was a broad-based report. The 60,700 decline in retailing jobs reflects the shift in…
read article →Final demand has remained strong through May in spite of higher inflation fears. Despite the surge in inflation, the personal spending and income data from April was strong. Personal consumption expenditures grew by 0.9% for the first month of the second quarter. Even after adjusting for higher prices, consumer spending increased by 0.7% and is…
read article →Economic activity is still strong even as investors fear the worse. While financial markets have been highly volatile, economic fundamentals have remained consistently solid. They are expected to remain solid with the data due out this week. The issue is not current conditions, but the risk economic conditions will deteriorate in the next six months….
read article →Inflation data from last week was lower than the huge increases in March. The Fed is between a rock and a hard place. They no longer have confidence in their forecasts as they have been wrong consistently for the past two years. They are at a point where they are going to need hard evidence…
read article →The Fed did raise rates as expected but limited further moves to 50 basis points. Capital markets are always driven by one of three emotions. It is either greed (an overpriced market), fear (an underpriced market) or apathy (fair value). These emotions are a function of investors’ views of the future economic fundamentals. Currently, the…
read article →The FOMC is expected to move more aggressively this week. The FOMC meets this week with expectations they will continue the process of changing monetary policy. They are forecast to raise managed rates by 50 basis points and announce the speed and timing of shrinking their balance sheet. This easing of accommodative policy is being…
read article →The wealth of economic data due out this week will impact forecasts going forward. Many forecasters believe the inflation is peaking and will begin to moderate in the coming months. This forecast is based on a slowing of real consumption spending as inflation reduces the real spending by both consumers and corporations. They also believe…
read article →Inflation data was huge, but we expect it to represent a peak in the data. Market interest rates moved much higher last week as the inflation data for March surged again. That data does mean the Fed will move managed rates up a full 50 basis points at their meeting the first week in May….
read article →The inversion in the curve was eliminated with the news from last week. The bond market was driven by comments made by Fed members and the release of the minutes from the last FOMC meeting. The tone of the speeches made last week by five Fed governors was very hawkish. Strong indications of a 50-basis…
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