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Chinese Pavlov Traders Are Hungry For Stimulus
Chinese stocks (CSI 300) opened Tuesday morning following their week-long Golden Week holiday, with a massive 11% pop higher. However, shortly after opening, the index gave up half of the surge as China’s economic planning agency did not offer additional economic, monetary, or financial stimulus. As shown below, Chinese stocks have been soaring since mid-September […]
Oct 9, 2024
Are Employment And CPI Reports That Important To Markets?
The Fed has begun cutting interest rates with the timing and amount of future cuts predicated on incoming employment and CPI data. As the Fed likes to say, they are data-dependent in determining their course of action. Given the importance of Fed policy on the markets, one would presume that on the day of the […]
Oct 8, 2024
Goldilocks Employment Data Soothes Investors
Investors are betting on Goldilocks, meaning slow but steady economic and employment growth. This scenario allows the Fed to cut rates further without a recession that frequently accompanies rate cuts. Concurrent with the market’s Goldilocks logic, investors were hoping Friday’s BLS report was weak enough to support a 50 bps rate cut but not too […]
Oct 7, 2024
Public Companies Fall By The Wayside
The number of publicly listed U.S. companies has significantly decreased, from 7,300 to 4,300 in the last 30 years. At the same time, the number of private companies has risen fivefold. Per a Bloomberg article entitled The Stock Market Is Becoming A Dumping Ground, Jamie Dimon attributes the decline in the number of public companies […]
Oct 4, 2024
Powell Resets Market Expectations
Following the Fed’s somewhat aggressive 50 bps rate cut two weeks ago, the stock and Fed Funds futures markets started to get ahead of themselves. Accordingly, market participants expected the aggressive pace of easing to continue through the remainder of 2024. At one point the Fed Funds futures market was implying the Fed could cut […]
Oct 2, 2024
China Stocks Are On Fire, Will It Spread?
Over the last month, China has injected its economy with an incredible amount of monetary and fiscal stimulus, which has resulted in extreme optimism in its stock market. As we share below, the Hang Seng Tech index and the broader China stock market CSI 300 index are up 30-40% over the last few weeks. The […]
Oct 1, 2024
PCE Inflation Nears The Feds Target
The Fed got a welcome bit of news on Friday with the PCE price index. The Fed’s preferred measure of inflation fell to 2.2% on a year-over-year basis. That is the lowest reading since February 2021. The Fed’s 2% inflation target for PCE is now within reach by as early as year-end. However, the core […]
Sep 30, 2024
China Balance Sheet Recession: A Lesson For The US
Bloomberg cites economist Richard Koo, who claims China is in a balance sheet recession. A balance sheet recession, as defined by Koo, is as follows: He defines a balance-sheet recession as a situation in which households and businesses divert more of their income toward paying down debt, rather than consuming or investing. Koo argues that […]
Sep 27, 2024
Two Labor Market Warnings
At last week’s FOMC meeting, Jerome Powell clearly stated that recent signs of labor market weakness were an important factor in cutting rates. Therefore, assuming inflation continues to decline, the strength or weakness of the labor market will likely determine how much more they cut the Fed Funds rate. The well-followed BLS, ADP, Jobless Claims, […]
Sep 26, 2024
The Fed Will Spur Another Round Of Inflation They Say
“The Fed will spur another round of inflation with rate cuts.” That line and similar sentiments have been plastered all over social media following the Fed’s aggressive 50 bps rate cut. Given the importance of inflation on asset returns, it is worth looking back at the last 40 years and appreciating the relationship between Fed […]
Sep 25, 2024
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