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Hooray: Inflation Cooled Off In July!

Aug 10, 2022 1 min read

July's headline and core CPI inflation rates were lower than expected at 0.0% and 0.3% (table below). The y/y rates were down to 8.5% and 5.9% below recent peaks of 9.1% (in June) and 6.5% in March). That's consistent with our view that inflation is peaking, but remains too high. So we expect that the Fed will hike the

Ed Yardeni

Mixed Inflation Indicators

Aug 9, 2022 1 min read

Today we learned that July's survey of small business owners showed that inflation might have peaked. On the other hand, there was no peak in today's productivity and unit labor costs report for Q2: (1) The small business owners survey found that 56% of them are raising prices, while 37.0% are planning to do so. Both are down from their peaks earlier this year. However,

Ed Yardeni

Analysts Cutting Earnings Estimates

Aug 9, 2022 1 min read paid

Industry analysts weren't bullish enough about the Q2 earnings of the S&P 500. So far, 87% of S&P 500 companies have reported revenues and earnings for Q2. The revenue and earnings surprises are historically strong but near their lowest readings since the pandemic recovery began. Revenues are beating the consensus forecast by 2.8% and earnings by 6.0%.

Ed Yardeni

Dr Ed's Video Webcast 8/8/22

Aug 8, 2022 1 min read

July’s surprisingly strong payroll employment report points to a strong July reading for the Index of Coincident Economic Indicators. Below is exclusive early access to Dr Ed's Webcast for paid members. This post and video will open to the public on a later date. This is good news for the economy, bad news for the fixed-income market, and mixed news for the stock market. While it squashes

Ed Yardeni

Inflation Expectations Looking Peakish

Aug 8, 2022 1 min read

July's survey of consumer expectations (SCE), conducted by the Federal Reserve Bank of NY, had some good news for Fed Chair Jerome Powell and the financial markets too: (1) Median one- and three-year-ahead inflation expectations both declined sharply in July, from 6.8% and 3.6% in June to 6.2% and 3.2%, respectively. The press release noted: "Both decreases were broad-based across income groups, but

Ed Yardeni

Valuation-Led Rally Could Sputter This Week

Aug 7, 2022 1 min read paid

The bull runs in the bond market since June 14 and the stock market since June 16 could stall this week. Both markets have probably discounted that July's CPI report (on Wednesday) should be moderated by falling gasoline prices and durable goods prices, while rent inflation could be more troublesome. The markets may not have fully discounted the likelihood that July's strong employment report (reported this

Ed Yardeni

The Economic Week Ahead, August 8-12

Aug 7, 2022 1 min read

It's a big week for inflation indicators. The fun starts on Monday, when the FRB-NY releases its July survey of consumer expectations for inflation over the next 12 months and 36 months. Falling gasoline prices last month might have reduced expectations for inflation a bit. Then on Tuesday, Q2's productivity and labor costs release is likely to show another big drop in the former and sharp

Ed Yardeni

Lots of Jobs, But Inflation Eroding Wage Gains

Aug 5, 2022 1 min read paid

July's payroll employment in July blew past forecasts, and there were upward revisions to the prior two months, boosting payrolls back up to pre-pandemic levels and a new record high. The bad news is that the wage-price spiral is still spiraling and reducing the purchasing power of consumers:

Ed Yardeni

Q2 Earnings Season Is Unsurprising So Far

Aug 4, 2022 1 min read

As of mid-day Wednesday, 356 (or 71%) of the S&P 500 companies reported their Q2 results. Both the revenues and earnings surprises were positive, but relatively low for the third quarter in a row: (1) Revenues are beating the consensus forecast by 2.5%, and earnings have exceeded estimates by 5.6% so far (chart below). (2) Collectively, the companies have a y/y revenue gain of 15.

Ed Yardeni

DEEP DIVE: Switching Planets: Investors Now From Venus, Analysts From Mars

Aug 4, 2022 3 min read paid

Since our June 24 QuickTakes, we’ve been making the case that the bear market in the S&P 500 might have ended on June 16, when it was down 23.6% to 3666 from its record high of 4796 on January 3. We wrote: “[S]entiment indicators were so bearish that they were bullish. … On a fundamental basis, we’ve noted that commodity prices are showing signs of

Ed Yardeni

The Best Cure For High Gasoline Prices

Aug 4, 2022 1 min read paid

The best cure for high gasoline prices is high gasoline prices. Gas prices have tumbled by 86 cents since hitting a record average high of $5.02 on June 14. Over the past month alone the national average is down by 65 cents. Americans cut back on driving when gas prices spiked above $5 a gallon. The 4-week moving average of gasoline usage dropped 9.5% to 8.6 million

Ed Yardeni

From FODA To FOMO

Aug 3, 2022 1 min read

During the first half of this year, investors were driven by fear of delusional analysts (FODA). They believed that the analysts were much too optimistic about earnings. Now that the analysts are finally shaving their earnings estimates, FOMO (fear of missing out) is driving investors into a bullish frenzy. The S&P 500 is up 13.3% since it bottomed at 3666 on June 16. One week after it

Ed Yardeni