Using a simple model that compares the history of the Fed funds rate to unemployment and consumer inflation also suggests that the current level of interest rates is sufficiently restrictive relative to the macro conditions. In the chart below, the current level of Fed funds is close to an esti...
The chart below shows a variant of a chart I’ve periodically shared. Here, the blue line is the estimated loss in the S&P 500 that would be needed for MarketCap/GVA to reach run-of-the-mill valuation norms historically associated with subsequent total returns averaging 10% annually. At pr...
"We waited a whole year for the Fed to pivot and finally as a Christmas present they gave us a pivot," JPMorgan's chief global strategist told CNBC's "Power Lunch" on Wednesday. "I am a little worried that the most dangerous time for the economy is when a tight Fed begins to ease...
In a broader sense, there hasn’t been any progress on inflation since May (black box in the chart below), with the Fed’s favored inflation measures well above its 2% target, confirmingthe Fed’s pivot this week to a wait-and-...
Chart: Nasdaq 100 Outpaced Late 2021 Highs SPY ETF’s $500B Breakthrough The SPDR S&P 500 ETF Trust, known by its stock ticker symbol ‘SPY,’ is on the verge of a historic achievement, set to become the first ETF to reach $500 billion, thanks to the S&P 500’s ...
Many,like Jim Cramer,assume that as soon as the Fed “pivots,”such will be bullish for equities. Historically, when the Fed cuts interest rates, such is not the end of equity“bear markets,”but rather the beginning. Such is shown in the chart below of previous“Fed pivots.” ...
1. Most tech executives still say that they would be expanding their operations and burning more cash in 2023. Clearly these guys were not in charge in 2007 or 2000 and have no experience of a real tightening. Or they are still hoping for instant p...
US Yield Curve Chart 3. Economic growth concerns still abound. Also, the resurgence of Covid-19 in China and the imposition of strict lockdowns have heightened the concerns for global economic growth. The escalation of the war in Ukraine is also a global geopolitical concern. ...
As such, the short term could be choppy, with this potential support now representing potential resistance looming overhead in the SPX 6,000-6,010 area. Plus, a new “B” on the chart below emerged last Wednesday that marks bearish “outside days.” Such candles foreshadowed short-term we...
Let’s look at some recent examples using the chart below, which depicts the fed funds rate since January 2000. In late 2000 into 2001, thedot-com bubbleburst, sending the U.S. economy into a mild recession. Toward the end of 2000 and through 2004, the Fed pivoted to a loose monetary...