We have been surprised over recent weeks to read a slue of commentary proclaiming that the economy is in great shape and Fed Chairman Powell is just pandering to markets by signaling rate cut(s) in July and beyond. Specifically, “strong” readings from the employment report,…
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All eyes will be on the payroll report on Friday for clues about what it means for the Fed’s next move. Indeed, the payroll report will be the most important US economic data point between now and the Fed’s next meeting at the end of…
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To cut or not to cut is no longer the question. Now the question is the quantity, magnitude and timing of rate cuts for the rest of the year. This week was an important one in that we were privy to several important Fed speeches…
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Tomorrow will obviously be one of the most important news days of the year for financial markets with the Fed expected at the very least to signal that a rate cutting cycle is in the offing. Indeed, since the Fed last raised rates the yield…
Read MoreAs expectations for a Fed easing cycle have gained momentum, we’ve seen an abundance of comparisons between the current period and the late 1990s. In that period the Fed cut rates and stocks simultaneously levitated into the stratosphere. If we are to follow the logic…
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In this mid-quarter update, entitled “Escalation,” we discuss the backdrop of escalating trade wars and our belief that the environment is more favorable for US Treasury bonds relative to stocks. The trade war is escalating at a time of weakening global growth, thereby weighing further…
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As we look into the second half of the year and into 2020, we are left with a fleeting feeling about the prospects for a cyclical uptick in growth and therefore earnings. The problem is not so much with the current pace of growth or…
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The announced tariffs have come at a rather inopportune time, economically speaking. Back in 2018 when the US was slapping tariffs on washer machines and solar panels (January ’18), steel and aluminum (March ’18) and Chinese goods broadly (July ’18) the economy looked to be…
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The relationship between the performance of emerging market stocks and the US dollar is one of the tightest macro relationships that exists in investing. As we can see in the first chart, the relative performance of EM stocks vs the S&P 500 is highly negatively…
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So far this week, we’ve received a few data points that reinforce the manufacturing slowdown taking place in the US. Below is a calendar of events for the last couple days. On Monday, we got the Empire State Survey, a survey of manufacturing in New…
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The tale from some of the most cyclical and predictive economic indicators are telling investors two very different things at the moment. Copper, the metal with a PhD in economics is giving us the all-clear sign while lumber, which is perhaps only regarded as having…
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Investors have been given another slug of wanting housing data this week. First it was building permits which surprised to the downside and today it was pending home sales, which fell 4.9% YoY vs expectations of a 1.8% drop. Both building permits and pending home…
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To the dismay of many observers, US treasury yields have been dead as a doorknob despite the 20% rally in stocks over the last three months. In fact, the US 10-year yield is on the verge of breaking below the 2.56% level it reached on…
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Last week we were presented with a fairly cold employment report with the number of job gains being lowest in 18 months and one of the lowest readings in the last decade. The problem is not necessarily the one weak employment report – which did…
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Stocks have been on a tear. Manufacturing has contracted, bringing down GDP and earnings estimates. Was the stock bounce real or just a short covering? Sentiment on stocks has shifted to bullish while sentiment on bonds has moved bearish. In this special video report, CIO Steve…
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