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Fed's Hawkish Rate Cut Triggers Pausing Tantrum

Dec 18, 2024 3 min read paid

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today, as widely expected. That takes the target range for the overnight rate down from 5.25%-5.50% to 4.25%-4.50%, a full percentage point lower since the Fed's rate cutting cycle started on September 18. A cut was all but guaranteed. Yet the S&P 500 fell almost 3%

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 12/18/24

Dec 18, 2024 1 min read paid

Lots of crosscurrents are converging to determine the course of inflation in 2025. So projecting that course takes seeing where those currents are headed, predicting with the aid of historical correlations how they’ll likely impact inflation, then overlaying potential economic scenarios to see how they change the narrative. The result: Dr Ed’s three inflation scenarios—the Good, the Bad, and the Ugly. In the Good, rising productivity growth

Ed Yardeni
Eric Wallerstein

Still Betting on US Consumers

Dec 17, 2024 3 min read paid

Consumer spending rose again in November, with real retail sales rising more than 3.0% y/y (chart). Rising real labor and nonlabor incomes, plus a strong wealth effect from record highs in stock and home prices, have boosted spending for the past two years. The GOP election sweep also means the 2017 Tax Cuts and Jobs Act will likely be extended in full, and there's talk in

Ed Yardeni
Eric Wallerstein

Is the Fed Inflating? Is China Deflating?

Dec 16, 2024 3 min read paid

Last Thursday, we wrote, "After today's PPI, we won't be surprised if Fed officials plant a story in The Wall Street Journal over the weekend titled something like "Fed Officials Might Vote To Pause Rate Cutting Following Hot Inflation Data." We were close. Nick Timiraos, the WSJ's ace Fed watcher, posted after midnight today an article titled "The Fed’s

Ed Yardeni

CALENDAR: The Economic Week Ahead (Dec. 16-20)

Dec 15, 2024 3 min read paid

The main focus of the economic week ahead is the FOMC's interest-rate decision on Wednesday. The most likely outcome will be a 25bps cut of the federal funds rate (FFR) to a target range of 4.25% -4.50%. After a full 100bps of cuts since September 18, we expect Fed Chair Jerome Powell will use his press conference after the FOMC meets to signal that the Fed

Ed Yardeni
Eric Wallerstein

MARKET CALL: Game of Drones

Dec 15, 2024 3 min read

Look up in the sky. It's a bird. It's a plane. It's Superman! Nope, it's lots of drones flying over New Jersey, New York, and Maryland typically between 6 p.m. and 11 p.m. They are reportedly the size of an SUV, so they aren't likely to be owned by hobbyists. Some folks are getting panicky about all these

Ed Yardeni
Eric Wallerstein

DEEP DIVE: Roaring 2020s Tour Deep In The Heart of Texas

Dec 14, 2024 4 min read paid

This is an excerpt from the Yardeni Research December 9, 2024 Morning Briefing. Taylor Swift’s “The Eras Tour” ended yesterday in Vancouver. The extraordinary singer started this sixth concert tour in Glendale, Arizona on March 17, 2023. The tour consisted of 149 shows spanning five continents. Two of my daughters enjoyed her show in Toronto last month. My “Roaring 2020s Tour” started in Dallas, Texas last Tuesday morning. That

Ed Yardeni
Eric Wallerstein

The Bond Vigilantes Are Fighting The Fed

Dec 12, 2024 3 min read paid

After today's PPI, we won't be surprised if Fed officials plant a story in The Wall Street Journal over the weekend titled something like "Fed Officials Might Vote To Pause Rate Cutting Following Hot Inflation Data." The current consensus seems to be that the Fed will cut the federal funds rate (FFR) by 25bps on December 18. But it might be a "hawkish

Ed Yardeni
Eric Wallerstein

Stay Ahead Of The Pack With QuickTakes

Dec 12, 2024 1 min read

We were among the only forecasters who predicted no recession over the past three years. We also predicted that inflation would fall sharply since the summer of 2022. We called the start of the current bull market in October 2022. At the beginning of this year and last year, we were ahead of the pack too and raised our S&P 500 targets along the way, which kept us

Ed Yardeni
Eric Wallerstein

Will Rate Cuts Continue Unless Inflation Behaves Badly?

Dec 11, 2024 4 min read

Today's CPI report for November matched expectations. The CME FedWatch tool shows 95% odds that the FOMC will cut the federal funds rate (FFR) by 25bps next week, and the Fed doesn't like to surprise market expectations. The Nasdaq front-ran our forecast to reach 20,000 by mid-2025 by reaching that milestone today (chart). Now we are aiming for 22,000 by mid-2025. Our yearend target

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 12/11/24

Dec 11, 2024 1 min read paid

As Taylor Swift ends her Eras tour, Dr Ed starts his Roaring 2020s Tour to meet with our accounts. Last week in Texas, they shared their concerns about the “known unknowns,” as the new administration represents a significant policy regime change. On balance, Trump 2.0 should perpetuate our Roaring 2020s scenario. Fortunately, the US economy and financial markets are resilient and tend to outperform globally whomever occupies the White

Ed Yardeni
Eric Wallerstein

Supercomputers vs Supercore Inflation

Dec 10, 2024 3 min read paid

The stock market appeared calm ahead of tomorrow's November CPI report, which is likely to show that supercore inflation (i.e., CPI services less shelter) remains stuck around 4.5% (chart). However, there was plenty of action just below the surface of the stock market's calm. Oracle dropped 6.7% on disappointing earnings results. Google rallied 5.3% on a new state-of-the-art chip "Willow,"

Ed Yardeni
Eric Wallerstein