In the United States, Core PCE Inflation is still 5.0% after a recent reversal in disinflation. This measure is followed by the Fed and excludes volatile food and energy inflation. It has remained elevated on an annualized quarterly basis, with a 1-year percent change of...
We got consumer price reports for many European countries this week. The main story for the Eurozone is still one of sticky inflation driven by elevated food and fuel prices, though there are some differences emerging among the major European economies. In this analysis we...
In a recent San Francisco Federal Reserve Publication titled “Monetary Policy Stance is Tighter Than Fed Funds Rate,” the authors argue that the “all in” policy rate is actually higher than the Fed Funds rate would suggest. They open: “The Federal Reserve’s use of forward...
Over the weekend, we got a slew of data showing a generally weak economy. Below are the actual data compared with the expectations from Bloomberg. Of course, the headline grabber was the -31.4% drop in residential property sales, but across the board, from industrial production to...
We think we could see a bullish back half of the year for equity markets. Our analysis follows in our Quarterly Strategy Report. Prefer to download this presentation in PDF? Please click here. 1. Summary -In the first half of 2022, markets experienced the largest wealth destruction...
All year inflation has been the narrative driving markets. Since December 2021, once the Bloomberg Commodity Index (BCOM) took off, rates have risen in tandem. But, interestingly enough the BCOM has been flat since peaking on March 8, 2022. Every day we seem to be blasted...
For a confluence of reasons ranging from COVID to property sector problems, China has been experiencing slower growth. Many cross-asset relationships suggest that a devaluation in China could help spur growth. Whether this will happen is another story, but if the Chinese Yuan began a...
Tomorrow we get the consumer price index year-over-year for January, with expectations for 7.25%. This would take the CPI to a new high for the cycle, rising from 7% year-over-year from December. We would like to see the print undershoot and offer several reasons why it...
Since May 2020, the Chinese Yuan has defied the path of other emerging market currencies, strengthening by almost 12%. This has left it overvalued compared to other emerging market countries. While Yuan strength made sense in 2020 when the USD was weakening. It is curious that in...
A basic tautology that economists consider when thinking about monetary policy is the velocity of money. MV=PQ translates into Money*Velocity=Price*Quantity. Of course, price*quantity is nominal GDP while “M” is the money supply (for example, M2) while “V” is velocity, or the number of times the...
In this Mid-Quarter Update, we discuss our analysis on the following topics: -Recent readings on consumer confidence have rolled over. The surveys are validated by the stagnation in real consumer spending in the last few months. -In conjunction with the slowdown in house sales and durable goods...
