The Fed Raises Rates. Again.
Don’t hold a surprise birthday party for Jerome Powell. He would hate it. And if you plan on visiting the Fed Chair, call first. He doesn’t like surprises. Powell delivered on his March promise at the most recent Fed meeting by increasing short-term rates by 0.25%, just as the financial markets expected. No surprise. “Economic […]
Market Assesses First Republic, GDP Report
Financial markets can be challenging to understand. And when markets enter a “bad news is good news” cycle, it becomes even more challenging to follow along. Stock prices rallied at the end of April after the Commerce Department reported that first-quarter gross domestic product (GDP) rose at a 1.1% annualized rate. That was well short […]
Searching for a Goldilocks Moment
If you’re an investor looking for something to worry about, you never have to go more than a few days on Wall Street. As you can see from the accompanying chart, 11 economic reports are scheduled for release during 19 trading days in April. Some have already moved the markets. Others likely will in the […]
Feds Managing SVB, Inflation
For the Federal Reserve, credibility is everything. And its credibility is being tested by how it plans to manage the banking system in the days leading up to its March 21-22 meeting. Last month, Fed Chair Powell confidently told Wall Street to prepare for a 25-basis point increase in short-term rates in March. But with […]
Recession Fears Fading?
Investors put the economy on recession watch when the Fed started its “higher in a hurry” push with short-term interest rates in mid-2022. After the 10-year/2-year Treasury curve inverted in July 2022, it was “all aboard” the recession bandwagon. Then the business community followed suit, with CEOs hunkering down and preparing companies for a slowdown […]
Words of Wisdom from Warren Buffett
The stock market can provide some head-scratching moments, which is why I like Warren Buffet’s quote, “…don’t watch the market closely.” Stocks have been strong this year, and they rallied sharply before and after the recent Fed meeting, which ended Wednesday, February 1. But the following day, after the market closed, a handful of Wall Street’s […]
Inflation Is Trending Lower. Now What?
The December inflation report had some encouraging news. It showed that consumer prices trended lower for the month, but more importantly, it confirmed that overall prices have been trending lower for the past six months. Now the ball is in the Fed’s court. The Fed Governors need to determine how much further they need to […]
Outlook 2023: What’s Next for Interest Rates?
What does the bond market know that the Fed isn’t telling us? Fed officials recently have said that short-term rates will need to climb to over 5 percent to bring inflation under control. But in the table below, you can see that the bond traders say short-term rates will top out at 4.5 percent in […]
Is the Fed Ready to Pause?
Over the years, the Fed has followed a similar pattern with interest rates. It raises interest rates, then pauses, so it can see how the economy is adjusting to the higher rates. The chart below shows the Fed’s pattern with short-term rates during the past 30 years. So, when will the Fed be ready to […]
Putting Interest Rates Into Perspective
Traditionally, I’ve been a little cautious when people say, “it’s different this time.” After all, the past few years have seen more financial “firsts” than most. But despite that skepticism, this year saw five interest rate increases in seven months — making it the quickest tightening cycle in modern history. And with two more rate […]