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Q4 Productivity & Labor Costs Going Right Way

Mar 2, 2023 2 min read paid

Bond and stock prices opened weak this morning on good news from the labor market. Good news is bad news because the Fed is trying to slow the economy to bring down inflation. So good news increases the risk of higher-for-longer interest rates. The 10-year Treasury bond yield is back above 4.00%. At 4.95%, the 2-year Treasury yield reached levels not seen in more than a decade. The

Ed Yardeni

Fear Can Be Good For Stocks

Mar 1, 2023 1 min read

"Greed is good" is a catchphrase based on Gordon Gekko's quote "greed, for lack of a better word, is good" from the 1987 film Wall Street. That was the year that Fed Chair Alan Greenspan introduced the "Fed Put" as a way to stop panic selloffs in the stock market. For stock prices to go up, fear is sometimes better than greed.

Ed Yardeni

Performance Derby: Stocks YTD & In February

Mar 1, 2023 1 min read paid

The S&P 500 was up 3.4% ytd through the last day of February (chart). All of the 11 S&P 500 sectors with the exception of Information Technology gave back some of their January gains (or widened their losses) during February (chart). The market was discounting a soft landing in January. During February, the concern was an inflationary no-landing scenario. It's been a tug

Ed Yardeni

Dr Ed's Video Webcast 2/27/23

Mar 1, 2023 1 min read

The stock market beat a hasty retreat in February, spooked by reports of January’s economic strength and the Fed’s dreaded possible reaction. So today we look at what March’s releases of economic data for February might bring. 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. They could be

Ed Yardeni

Capital Spending Getting A Lift From Washington

Feb 28, 2023 1 min read paid

Inflation-adjusted capital spending rose 4% y/y during Q4. That was a solid increase. However, it may be starting to slow. The CEO Outlook Index compiled by the Business Roundtable fell most of last year as the Fed's interest rate hikes heightened recession concerns (chart). Nondefense capital goods orders excluding aircraft have stalled at a record high in recent months through January (chart). The weakness in primary metals,

Ed Yardeni

Labor Market Tight. Goods Market Not So.

Feb 28, 2023 1 min read paid

The Fed would like to see fewer job openings to help moderate wage inflation. The time series is reported in the JOLTS report. January's update comes out March 8. It could jolt the Fed into remaining hawkish. That's because it is highly correlated with the The Conference Board's "jobs plentiful" series that came out today and that's been up two

Ed Yardeni

The Rent Is Too Damn High!

Feb 27, 2023 1 min read paid

As a result of the pandemic, the demand for single-family homes soared, and so did their prices. Rising mortgage rates last year clobbered affordability for first-time homebuyers, forcing them to rent. So tenant rent inflation soared from about 2.0% y/y in early 2021 to 8.6% in the CPI during January of this year (chart). Rising mortgage rates also reduced the supply of homes. Since many homes have

Ed Yardeni

The Economic Week Ahead, Feb. 27 - Mar. 3

Feb 26, 2023 1 min read

The economic indicators this week are likely to confirm that the economy is experiencing a rolling recession. Single-family housing is still in a recession. That's likely to be confirmed by January's pending existing home sales (Mon) and 2/24 mortgage applications (Wed). Manufacturing growth stalled last year through January. February's Dallas and Richmond Fed regional business surveys (Mon & Tue)--along with last week&

Ed Yardeni

DEEP DIVE: US Economy - Soft, Hard, Or No Landing?

Feb 25, 2023 4 min read paid

We think we coined “rolling recession” back in the mid-1980s to describe the economic slowdown that many feared would turn into an economy-wide recession. We think the phrase accurately describes the performance of the US economy since early last year. It’s similar to a “growth recession,” “mid-cycle slowdown,” and “soft landing” but includes the concept that different areas of the economy are experiencing the slowdowns at different times. We

Ed Yardeni

Market Call

Feb 25, 2023 2 min read paid

The S&P 500 was up 16.9% from last year’s low of 3577.03 on October 12, 2022 through this year’s high of 4179.76 on February 2 (chart). We still view last year’s low as the end of the bear market that started on January 3, 2022. We believe that the rally since then is the start of a new bull market, though we

Stephen Rybka

Two Too-Hot No-Landing Indicators Hit Markets

Feb 24, 2023 2 min read

The stock and bond markets reacted badly to today's stronger-than-expected personal income data and hotter-than-expected PCED. Is the economy experiencing an inflationary no-landing scenario? If so, Fed officials might conclude that the only way to bring inflation down is to push interest rates up until they cause a hard landing. More likely in our opinion is that these two indicators along with January's other economic stats

Ed Yardeni

S&P 500 Dividends Rise To Record High

Feb 23, 2023 2 min read paid

Dividends are like plants. Both grow. But dividends can grow forever, while the size of plants is limited. Notwithstanding last year's bear market, S&P 500 dividends grew to a record high of $562.9 billion during 2022 (chart). Dividends tend to fall during recessions along with profits. There was no recession last year. There may not be one this year. Money invested in the S&

Ed Yardeni