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We prefer equities even as bond yields have sprinted higher. Global growth is still solid, and we see central banks ultimately living with inflation. U.S. 10-year yields hit new three-year highs last week, and stocks fell. The European Central Bank affirmed our view it will normalize ...
Claims continue to bounce around a week to week but have posted declines in nine of the last thirteen weeks. Despite some volatility, initial claims have trended lower in recent weeks and remain at an extremely low level by historical comparison. The start of a new Fed tightening ...
St. Louis Fed President James Bullard, in an interview with the FT last week, said it is a “fantasy” to believe that the Fed can bring down inflation sufficiently without raising key interest rates to a level where they will constrain economic growth. The good news is th...
Everything about the COVID-19 recession and its subsequent recovery has been extreme. The big, open question here is if the Fed can slow the economy without killing the cycle. We have gradually transitioned our positioning from a risk-on posture earlier in the cycle to a more neut...
With prices rising and many uncertainties facing the U.S. economy, the risks of stagflation – that is, 1970s-like elevated inflation with slow growth or even a recession – are rising. There was massive fiscal stimulus in 2020 and 2021 during the pandemic, and those stimu...
While analyzing the shorter-term probabilities of a further advance or decline, the case for a more significant lurking bear market within the next 18 months solidified. Corporate earnings estimates remain elevated as we head into a monetary tightening campaign. Notably, after the...
The seasonally adjusted Producer Price Index for final demand rose 1.4% in March. The producer price index for final demand for goods, previously called ‘finished goods’, was a 2.3% higher in March. The price index for intermediate unprocessed goods fell 1.4% in Marc...
The short-term debt markets are ill-prepared for coming increasing interest rates and inflation. Bank and dealer intermediation in these markets has been reduced due to regulation-based post-Financial Crisis capital charges. Here is a prescription for markets to expand the capacit...
Financial markets have absorbed a tremendous amount of negative news on multiple fronts this year. As a result, consumer and investors sentiment are near historic lows. Yet rates of change are starting to move in a positive direction. Risk assets should perform well over the c...
There is no scientific way to determine the consensus or when to embrace it or fade it. With real rates rising recently, the commodity bull may be getting long in the tooth. Stocks were mostly lower last week with small and mid-cap value the exceptions. For further details s...