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The Economic Week Ahead: August 5-9

Aug 4, 2024 3 min read paid

The week ahead is relatively light in terms of economic reports. It's also light on talking Fed heads. But, we won't be surprised if one or two of them pops up on CNBC. We think they might push back against the rate-cut mob that is calling for a 50bps cut in the federal funds rate in September. It would be a shame if they joined in

Ed Yardeni
Eric Wallerstein

Beryling Toward Rate Cuts

Aug 2, 2024 2 min read

Some macroeconomic storm clouds are brewing. Markets are fleeing for shelter in Treasuries, leaving behind almost everything else, including their prized LargeCap tech stocks and recently acquired SMidCaps. Here's the market action as of midday: * The Nasdaq officially entered a correction, down more than 10% from its record high reached roughly a month ago. * The CBOE Volatility Index (VIX) popped to 29, which hasn’t been seen since

Ed Yardeni
Eric Wallerstein

Risk On, Risk Off

Aug 1, 2024 2 min read paid

Today was a good day for the diehard hard-landers and the "stag-disinflationists." They're probably high fiving each other. We are in neither camp–we expect a continuation of “immaculate disinflation,” i.e., a growing economy with subdued inflation. We're high fiving over today’s productivity and labor costs report. In any event, bond investors are certainly enjoying themselves; the 10-year yield fell 12 basis

Ed Yardeni
Eric Wallerstein

Powell Says Economy Is Normalizing & September Rate Cut Is On The Table

Jul 31, 2024 3 min read paid

The Federal Open Market Committee (FOMC) left the federal funds rate (FFR) unchanged between 5.25%-5.50% at today's meeting, as expected. Fed Chair Jerome Powell did signal that a 25bps rate cut is highly likely at the September meeting now that the labor market is "normalizing" and inflation is cooling. The 2-year and 10-year US Treasury yields slid by about 6 basis points during

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 7/31/24

Jul 31, 2024 1 min read paid

If economic performance were an Olympic sport, America would sweep up gold medals. The US economy hit record-high real GDP, real consumer spending, and real consumption per household (a barometer for standards of living) last quarter. It has achieved the feat of “immaculate disinflation”—falling inflation without recessionary fallout—as PCED inflation is fast approaching the Fed’s 2.0% target. Real capital spending by businesses also stood at a

Ed Yardeni
Eric Wallerstein

Rotating Market Betting On Pivoting Powell

Jul 30, 2024 3 min read paid

This is what Fed Chair Jerome Powell is likely to say at his presser tomorrow: "The economy has been stronger than we expected and the labor market remains solid. Inflation is getting closer to our 2.0% target, but it isn't there yet. We didn't cut the federal funds rate at this meeting of the FOMC, but we might do so at the September 17-18

Ed Yardeni
Eric Wallerstein

Big Mac Confirms Weak Global Economy Is Facing More Deflation

Jul 29, 2024 3 min read paid

Consumers around the world have cut back on buying Big Macs at McDonald's. The company reported its first worldwide sales decline in 13 quarters today. The company's CEO said, "Consumer sentiment in most of our major markets remains low." Yet, the stock price rose nearly 4% today after the company said that its $5 meal deal is a big hit and will be extended.

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: July 29-Aug 2

Jul 28, 2024 2 min read paid

The week ahead is packed with economic indicators, but all eyes will be on the Fed's interest rate decision on Wednesday and payroll employment on Friday. We don't expect the Fed will alter the stance of monetary policy at the July meeting, but Fed Chair Jerome Powell could signal that a September cut to the federal funds rate (FFR) is likely. That's because as

Ed Yardeni
Eric Wallerstein

Market Call: Burning Or Churning?

Jul 28, 2024 3 min read

Geopolitical risk increased on Saturday after a rocket strike from Lebanon killed 12 people in Israel's Golan Heights. Israel retaliated with a strike on Hezbollah weapons caches and infrastructure on Sunday. This is all stoking fear of a wider war in the Middle East. So far, the region's turmoil since October 7, 2023 (when Hamas terrorists attacked and massacred Israelis) hasn't weighed on the

Ed Yardeni
Eric Wallerstein

DEEP DIVE: The Fed Faces Some Challenges

Jul 28, 2024 3 min read paid

The financial markets and most economists seem to agree that the Fed’s next move will be to cut the federal funds rate (FFR) by 25bps following the September 17-18 meeting of the FOMC. However, there is still a debate about whether restrictive monetary policy operates with a “long and variable” lag, thus requiring more rate cuts this year to avert a recession later this year or in 2025. If

Ed Yardeni
Eric Wallerstein

Lots of Moving Parts

Jul 25, 2024 3 min read paid

The stock market started to rotate out of LargeCaps and into SMidCaps after June's CPI was released on July 11 (chart). It showed lower-than-expected inflation, which increased the odds that the Fed would start cutting the federal funds rate (FFR) in September and triggered the rotation because small companies tend to depend more on floating-rate debt than large ones. Easier monetary policy would also reduce the likelihood of

Ed Yardeni
Eric Wallerstein

Valuation-Led Selloff Led by Magnificent-7

Jul 24, 2024 2 min read paid

Today's stock market rout was led by the Magnificent-7. The Roundhill Magnificent Seven ETF (MAGS) was down 6.1% today, and down 8.3% since the S&P 500 peaked at a record high during July 16 (chart). The S&P 500 is down 4.2% since then to 5427.13, just below its 50-day moving average (chart).

Ed Yardeni
Eric Wallerstein