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Summary The animal spirits of the market are back. They are buying the worst performers from last year. The key to the markets right now is the realization that systematic strategies are now very long, and a turn lower would put excess pressure on the markets as those strategies would b...
Summary The transmission mechanism for higher rates to work on the economy would be through borrowing and lending. A reacceleration in NGDP could just mean an acceleration in real growth. Small caps have outperformed large caps since mid-March 2020 but the ride has been bumpier than...
Summary The market won’t bottom until we are in the depths of a recession - wrong! Recent market action on the upside has brought the "boo birds" out in force. Good news... bring it on! Sentiment continues to stink. Forget "hard landing" or "soft landing," "touch and go" ...
Summary With inflation deeply ingrained, it took Volcker's punishing tightening measures to finally quash pricing pressures and inflationary psychology. Central bank-induced distortions have unleashed historic borrowing, both in the public and private sectors, along with unprecedented s...
Summary A truly exceptional year, 2022 was dominated by historically high inflation, sharply rising interest rates and a surge in bond yields. With inflation now peaking and labor markets cooling, the environment enables central banks to slow and potentially pause interest-rate hikes. ...
Summary Inflation was arguably one of the biggest challenges faced in 2022. Although it doesn’t look to be going away in the early part of 2023, it does seem likely to slow as the year goes on. The December 2022 meetings by three of the most major central banks concluded a year o...
Summary On behalf of the capital markets, I would like to bid a good riddance to 2022, which on the back of rising bond yields and falling valuations generated one of the worst combinations of market returns in four decades. The story of 2023 has shaped up to be the question of what imp...
Summary The question as to whether nominal spreads today are properly priced or not ultimately comes down to one thing, and that one thing is inflation. Year-on-year core inflation has been trending down since it hit a peak of 6.6 percent last September. Our expectation is that the ...
Summary Money supply growth fell again in December, falling even further into negative territory after turning negative in November for the first time in twenty-eight years. During December 2022, YOY growth in the money supply was at –2.4 percent. That's down from November's rate...
Summary As expected, the FOMC raised the target range for the federal funds rate by 25 basis points to 4.5%–4.75%. Chairman Powell focused on the Committee’s commitment to getting inflation down to its 2% target and pushed back on any questions about when a pause might be ...