Bringing a end to the perfect storm
With June now over, we can say that the S&P 500 has suffered its toughest first half since Richard Nixon was in the White House. It was a rout for the history books, with the equity gauge down about 21%. Investors in consumer stocks witnessed a wipeout of $1.8...
Housing Market Cracks
The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006. It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer with home-purchase mortgage applications...
Investing for a recession – Part Deux
The fact that the Fed misread inflation last year is widely accepted. Fed Chair Powell has repeatedly confessed in subsequent meetings “We have to be humble about our ability to understand the data”. Last week, Treasury Secretary Janet Yellen said “I was wrong about...
Investing for a recession
Persistent inflation, another Fed policy mistake, and recession fears have unnerved investors. It has been several decades since the stock market has had such a long streak of heavy losses. US stocks continue to be vulnerable to further losses until the Fed indicates...
The Fed’s work has been done by the stock market
The Federal Reserve minutes of the May meeting, released earlier this week, gave investors a pretty clear roadmap for the summer. The minutes highlighted the Fed’s focus on inflation and with rate hikes of 50 basis points in the June and July meetings. The stock...
The Fed is cutting loose from the stock market
The U.S. economy could be heading for a recession in the next year, according to growing warnings from banks and economists, as a sudden bout of pessimism hammered financial markets this week. Of note was comments from Fed Chair Jay Powell earlier this week, that...
Inflation is headed lower but beware of being eaten alive
The good news is that inflation in April fell to 8.3% from 8.5% in March. The bad news is that it still stayed above 8%. The task at hand, for the Fed, is to bring inflation down to its 2% target without pushing the economy into a recession. It gives us no comfort...
We are in a bear market – Will the Fed get us out of it?
Very few Fed meetings have been as important as one on Wednesday this week. After Fed Chair Jay Powell’s prepared comments, the perfect question from the CNBC reporter during the Q&A session that turned the markets around was “Will there be a 75 basis point...
Climbing the wall of worry – The good news and the bad news
The bad news - stocks closed out their worst month in years, as investors battled a host of headwinds, including monetary tightening from the Federal Reserve, rising interest rates, worsening inflation, COVID lockdowns in China and the ongoing war in Ukraine. The...