OCTOBER/NOVEMBER RATE DECISION WILL LIKELY DEPEND IMPORTANTLY ON THREE CPI AND FOUR PCE PRICE INDEX REPORTS PRECEEDING THAT MEETING—CLOSE CALL BUT EXPECT FUNDS RATE UNCHANGED IN NOVEMBER In its September meeting, the Fed kept an unchanged but hawkish hold on its target range of 5.25-5.50%. Out of the nineteen members of the Open Market Committee, twelve looked for another increase …
Fed Manages Unprecedented Tightening Cycle—core Inflation Outlook Trending Favorably–declining Wage Increases Will Likely Reflect Pass-through Of Lower Future Inflation—history Shows Relative Stable Equity Markets In Presidential Election Year — July Funds Rate The Peak Rate?—peak Rate Continues Some Time Into 2024
Fed Manages Unprecedented Tightening Cycle—so Far Successfully—reduced Inflation While Unemployment Remained Historcally Low The Recent July Consumer Price Index (Cpi) Report Underscores The Fed’s Apparent Success, So Far, In Effectively Managing Inflation While Simultaneously Keeping Historically Low Unemployment Rates. This Achievement Would Mark An Unprecedented Tightening Cycle. The Uniqueness Comes Primarily From The Unprecedented Speed At Which Interest Rates Rose …
Economic Momentum Perplexes Forecasters—interest Sensitive Sectors Defy Fed’s Rate Increases–consumer Spending Slowed After January—dwindling Excess Consumer Savings Clouds Holiday Spending— Encouraging Inflation Signs—could July Rate Hike Be The Peak?
Economic Momentum Perplexes Forecasters The Covid Pandemic Caused, In Part, Disruptions And Accelerated Changes That Continue To Puzzle Economic Forecasters In The Current Economic Environment. A Clear Example Of This Can Be Seen In The Better Than Expected 2% Growth For The Final Estimate Of First Quarter’s Real Gdp Growth. However, The Growth Disparity Between Gdp And Gdi Rates Suggests …
Post-covid Disruptions Produce Both Greater Economic Uncertainties And New Investment Opportunities—excess Savings Supports Consumer Spending Through The Holiday Season——fed Should Stabilize Inflation By Setting A Range Rather Than A Single Point Inflation Goal—investors Should Expand Ther Focus Into 2024 To Take Advantage Of Narrow Breadth Market Rally
Post-covid Disruptions Produce Greater Economic Uncertainties The May Jobs Report Surprised Everyone By Substantially Exceeding All Forecasts. This Example Highlights The Frustrations Economists Face Attempting To Forecast The Current Economic Outlook. The Most Forecasted Recession In History Remains Just That, With Its Likelihood Pushed Further Out. The Greater Than Normal Economic Uncertainty Likely Reflects Disruptive Changes Either Caused Or Accelerated …
Fed Dancing Between The Raindrops—fighting Inflation While Avoiding Economic Hit—5-5.25% Likely Peak Funds Rate–core Services Inflation Trending Lower—positive Impact On Pce Price Index–shelter Inflation Likely Trending Lower In The Second Half— Positive Impact On Cpi
Fed Dancing Between The Raindrops—fighting Inflation—avoiding Recession— Fed To Keep Funds Rate Steady Until Year-end—strongly Committed To 2 Percent Inflation Objective—5-5.25% Likely Peak Funds Rate Act One Of The Hiking Cycle Likely Ended With The Fed Increasing Its Funds By 25 Bps To 5-5.25 Percent. The Fed Signaled This Funds Rate Will Likely Prove To Be The Peak/terminal Rate When …
Debt Ceiling–april Tax Collections Fall Short—debt Ceiling X-date Moves Closer—slim Republican Majority—swing District Republicans Likely To Vote For A Higher Debt Ceiling–debate May Increase Equity Market Volatility—seek Out Investment Opportunities That May Result
Debt Ceiling Uncertainties—extraordinary Measures Will End Soon Uncertainty Continues To Grow Concerning The Outcome Of The Debt Ceiling Debate. Treasury Reached The $31.4 Trillion Debt Ceiling Borrowing Limit January 19th Without Congress Passing An Increase. Since Then, Treasury Employs “extraordinary Measures” To Pay Its Bills And Delay Bumping Up Against X-date—when The Government Cannot Fully Pay Its Obligations. Among Its …
Fed “may’ In May—powell No Rate Cuts This Year– Markets Look For Cuts At Every Fed Meeting— Systematic Cause For Bank Deposit Runs, The Fed Itself– Reduced Mid-sized Bank Deposits Restrain Credit And Economic Growth–a Shortage Of Growth Favors Growth Equities—focus On Upcoming Banks Quarterly April Earnings Releases—commercial Real Estate Loans Dominate Mid-sized Banks—most Mid- Sized Banks Meet Federal Risk Tests——fed Needs To Catch Up To Systematic Communications Revolution
Fed “may” In May, Rates Peak, Powell No Rate Cuts This Year, Financial Futures Markets Look For Rate Cuts At Every Fed Meeting Post May The Fed indicated at its March meeting that, “if appropriate,” it will raise the funds rate at its next meeting in May another 25 bps to 5.0-5.25%. The Fed’s policy statement in March also shifted …
Fed Fights Itself—restrictive Rates Vs Qe–banks Awash In Deposits—baby Boomers Retiring—removes Key Job Skills And Knowledge—impacts Productivity— Automation Technologies A Substitute— Rapidly Growing Boomer Social Security And Medicare Costs— Funded By Higher Taxes After The Presidential Election
The Fed Fights The Fed—restrictive Fed Proxy Funds Rate While Financial Markets Fight The Fed, At The Same Time, The Fed Fights Itself With Both Restrictive Fed Proxy Rates And Excess Bank Deposits Resulting From Its Quantitative Easing During The Pandemic (Qe.) Currently, Financial Markets Look For The Fed To Raise Fed Funds Rate To Close To 5 1/2 Percent …
Geopolitical Restructuring December Commentary
The Year Ahead– Looking Beyond 2023 At this time of the year, traditional year-ahead forecasts emanate from “Wall Street. Our Commentary, in two parts, will first look into next year. Then, more critically, beyond 2023 to take advantage of long-term investment opportunities created by ongoing economic uncertainties and financial market volatility. Geopolitical Restructuring—economic and Investment Environment Differs from the Last …
Inflation Moderation Lags Economic Slowing—Increases Uncertainties for Fed Decisions—M2 Money Stock Growth Rate Declining Rapidly—If Sustained–Economy May Slow Sooner Than Forecasts—Fed Pivoting Sooner?—Treasury Market Depth Below Historic Norms–Third Year of a Presidential Term—a Very Good Year for Stock Market Performance–Presidential Campaign Begins November 9th—Could Bring Pressure on Chair Powell to Pivot
Fed Recognizes Risks to the Economy from its Rapid Rate Increases—Result-Lower Rate Increases at a Measured Pace As broadly noted, monetary policy impacts demand and inflation with long and variable lags. As important, if not more so, monetary changes take much longer to impact prices than to effect economic output. If this delay proves prescient, then the Fed will face …