The April CPI inflation headline number, most followed by the media, provided a pleasant downward inflation surprise. The year-over-year inflation number was 4.9%, .1% lower than expectations. This is the first time annual inflation has been below 5% in two years. The monthly change was +.4%, in line with expectations. We call it a “surprise” […]
Today’s Commentary focuses on passive investment strategies and how they are making difficult decisions for value investors. Passive investors tend to “buy the market.” By this, we mean they often focus on the largest passive ETFs. Some may buy the well-known index ETFs and call it a day. Other passive investors shift between stock factors […]
The Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) confirmed a widely expected tightening of bank lending standards in the first quarter. The share of banks with tighter standards on loans to medium and large businesses rose to 46% from 44.8% in the fourth quarter of 2022. Given the regional bank fallout […]
Friday’s employment report revealed that Nonfarm Payrolls rose 253,000 last month, crushing expectations of a 185,000 increase. Meanwhile, the unemployment rate fell to 3.4%— its lowest since 1969, and average hourly earnings rose 0.5%, their fastest pace in a year. Before Friday’s report, Fed Funds futures priced in a 60% chance of a rate cut […]
Yesterday’s Commentary, Is the Fed Done, contemplates whether or not Wednesday’s rate hike was the last for the cycle. If it was, as many seem to think, the next question for investors should be how long until the Fed cuts rates. Yesterday’s Commentary shared a table with market-implied Fed rate cut probabilities. A day after […]
The Fed raised rates by 25 basis points to 5.00-5.25%, hinting at a pause in future hikes. Weaker than expected Q1 GDP (+1.1%) and signs the labor market is finally cooling off argue the Fed may be done. However, higher inflation remains sticky, and the most recent ISM manufacturing survey shows the price paid component […]
Treasury bond prices fell sharply on Monday and rallied back strongly on Tuesday as traders nervously await today’s Fed rate decision. It appears bond traders are struggling with the implications of higher interest rates and a rush of Treasury issuance coming once the debt cap is lifted. Stoking fears, Janet Yellen increased the second quarter […]
Since Silicon Valley Bank’s collapse in early March, only one stock factor has mattered for performance: size. The graph below, courtesy of Bloomberg, shows investors began to play favorites based on size (market cap) once the bank stress among regional banks started. Recent performance implies that larger companies will not be affected by the tighter […]
The equity markets surged last Thursday and continued upward on Friday on poor economic news and bad breadth. GDP was 1.1%, well below the 2% expectation. The miss was due to higher-than-expected inflation and a drop in personal consumption. Consequently, Fed Funds imply investors are confident of a rate hike this week and a good […]