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Higher (forward-looking) implied volatility suggests rates have moved to a durably higher regime. This means investors’ risk appetite will remain soft for the time being, and central banks should refrain from active asset sales. Fears of more lockdowns in China are bringing...
Preliminary PMI survey data showed economic growth slowing in the US and UK as strong pandemic rebounds showed signs of fading. In contrast, a reopening of economies in the eurozone and Japan helped drive improvements, helping to offset weakened manufacturing performances arising from...
A fall of 20% from a former peak is called a bear market, a decline of 10% is labeled a correction, and a smaller decline is called a market phase. Today, the three popular US stock market indices can each be labeled with a different name. No wonder there is confusion concerning the c...
A yield curve inversion is not a necessary prerequisite for a recession. In the post-World War II era, several recessions happened without the Fed raising rates significantly, if at all. Rather, these recessions followed the old inflationary Boom followed by the deflationary Bust ...
Only one major asset was up last week: REITs. There were some negative developments that might explain the selling. With the drop in commodities and fears about the impact of the China slowdown, the immediate effect should be for inflation and growth expectations to moderate. We didn&...
Historically, a recession followed when 50% or more of the tracked yield curves became inverted. Every time. Interestingly, many of the data points suggesting the “economy is booming” are lagging indicators subject to significant negative revisions in the future. Eve...
The invasion of Ukraine is an inflationary shock to an already inflationary system. The International Energy Agency has warned that the impact on oil supply will peak only from May onwards. Since the war broke out, core government bonds have suffered sustained price declines unsee...
With a little over 100 S&P 500 companies having reported Q1 results so far, the consensus estimate for earnings per share growth for the quarter is now 6.6 percent, up from 4.5 percent just three weeks ago. The improved profitability outlook would seem to be good news for anyone w...
The market is pricing in 50 bps rate hike at the next two meetings. This is a bit quicker than it would like and indicates that the Fed, who thought inflation was transitory, is now behind the curve and more likely to spin the economy into a hard landing. The higher that stocks go, th...
S&P 500 rolls over as both growth and value are hit hard late in the week. IPO activity has dried up while the equity put:call ratio spikes. Insider buying also stalls, but buybacks still expected to be strong. For further details see: Weekly S&P 500 ChartStorm -...