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The Feds Forecast Makes Little Sense
With a staff of over 400 economic Ph.D.s and seasoned leadership, many believe the Fed has a firm grasp on future economic and inflation trends. Accordingly, they must have a good idea of what the future holds for interest rates. Unfortunately, we share a little secret: the Fed’s latest Fed Funds forecast makes little sense. […]
Sep 24, 2024
The Potential for Nuclear Power in Meeting AI Demand
We’ve previously written that electricity demand is projected to outpace capacity over the next decade. The 20-year power purchase agreement signed between Microsoft and Constellation Energy, announced last Friday, highlights the potential for nuclear energy to meet the surging power demands from AI data centers. Constellation Energy will reopen the Three Mile Island reactor shuttered […]
Sep 23, 2024
Government Dysfunction Is Back On The Calendar
The federal government’s fiscal year ends on September 30, and with it, a budget extension is needed to keep the government running beyond that date. Accordingly, as seems to be the norm, government dysfunction is back on full display. House Speaker Mike Johnson failed to pass a budget extension bill on Wednesday. Moreover, he doesn’t […]
Sep 20, 2024
The Easing Campaign Begins
On Wednesday, the Fed embarked on an easing campaign with a somewhat surprising 50 bps cut in the Fed Funds rate. The shift toward an easy money policy follows a 2.5-year tight monetary policy regime. 11 members voted for the rate cut, with one member dissenting. The dissent was the first dissent in almost 20 […]
Sep 19, 2024
The VIX Index Is Not Confirming Record Highs
The VIX Index, often called the “fear gauge,” measures implied market volatility based on S&P 500 put and call options. Most often, the VIX rises when the stock market declines as investors tend to be willing to pay a higher premium for option hedges. Conversely, the VIX falls or hovers at very low levels as […]
Sep 18, 2024
A 50 bps Fed Cut Is Now Expected
As we share below, the market is betting on a 50 bps Fed rate cut at tomorrow’s FOMC meeting. Given tame inflation and labor data, the question is why there is a sudden change in expectations. Might the Fed think the labor market is weakening more substantially than the market? Moreover, deflation could be a […]
Sep 17, 2024
The Yen And Fed Funds Futures Warn Against Complacency
Despite improving investor sentiment as the markets approach all-time highs, recent price action in the yen and Fed Funds futures warns that it may be too early to think the recent volatility is over. Let’s start with the yen and what it has done since wreaking havoc on the markets in early August. The graph […]
Sep 16, 2024
Oil Prices Fall As China Slows
As we share in the graph below, crude oil prices peaked at $95 a barrel a year ago. More recently, in July, they were as high as $85. Today, they are below $70 and threatening to take out long-term support. So, why are oil prices falling so rapidly? We lean on the International Energy Agency […]
Sep 13, 2024
Online Prices Point To Deflation
The Adobe Digital Price Index claims to use data from over one trillion online consumer transactions comprising over 100 million unique product SKUs. While those are massive numbers, Statista estimates only 16% of retail sales will come from online transactions in 2024. Despite the relatively small percentage, over 75% of adults shop online, and over […]
Sep 12, 2024
Is Bitcoin A Valuable Asset To Own During Fed Rate Cuts?
Yesterday’s commentary answered a question from a reader about our thoughts on owning gold or gold miners during a bull steepening period. Hours after publishing the commentary, we got a similar question asking how bitcoin might do when the Fed cuts rates. If bitcoin trades as a proxy of monetary policy and the dollar’s viability, […]
Sep 11, 2024
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