Ed Yardeni

A Bad Week For Stocks

Sep 16, 2022 1 min read paid

This past week, the stock market took a dive on Tuesday following the release of August's CPI because its core rate rose 0.6%, twice as fast as expected. The 2-year Treasury yield jumped 30bps during the week to 3.86% as investors continued to raise their projection of the peak federal funds rate during the current monetary tightening cycle. Friday was also a bad day for stocks

Ed Yardeni

Slow Moving Economy

Sep 15, 2022 1 min read

August's industrial production and inflation-adjusted retail sales reports today show that the US economy is growing, but just barely. The former was down a bit, while the latter was up a bit (charts below). Both are included in the Coincident Economic Indicators. Consumers went on a spending spree after the lockdown recession in early 2020. They spent mostly on goods because many services were still not open for

Ed Yardeni

NY & Philly Surveys Show Growth Recession & Peaking Inflation

Sep 15, 2022 1 min read paid

The regional business surveys conducted by the NY & Philly Federal Reserve Banks are consistent with our "growth recession" scenario and provide more evidence that inflationary pressures peaked around mid-year. These September surveys are among the most current readings of the economy and tend to be highly correlated with three other comparable surveys that will be released before the end of the month. They are also highly correlated

Ed Yardeni

CPI Tends To Overstate Inflation Relative To PCED

Sep 14, 2022 1 min read

August's CPI unnerved the stock market because its core inflation rate was higher than expected. August's PCED will be released on September 30 and is likely to show a lower rate of inflation. Consider the following: (1) The core CPI inflation rate tends to be higher than the core PCED. That's because the inflation rates of both durable goods (especially furniture & bedding) and

Ed Yardeni

BBR Edges Up To 1.15

Sep 14, 2022 1 min read paid

We are predicting that the S&P 500 will remain range-bound for a while between the June 16 low of 3666 and the August 16 high of 4300. The index closed at 3946 today, around the middle of the range. Sentiment remains very bearish, which is bullish from a contrarian perspective: (1) The Bull-Bear Ratio climbed to 1.15 this week after falling the prior three weeks from 1.

Ed Yardeni

Inflation Shocks The Markets

Sep 13, 2022 1 min read paid

August's CPI report shocked the financial markets. It was widely expected to confirm that inflation peaked around June based on the drop in gasoline prices during July and August and mounting evidence that durable goods inflation is moderating. The problem is that in the nondurable goods category of the CPI, food inflation remains high, offsetting some of the improvement in energy-related prices (table below). While overall goods inflation

Ed Yardeni

Inflation Expectations Falling Fast Along With Pump Price

Sep 12, 2022 1 min read

We believe that it is the pump price of gasoline prominently posted daily at every service station in America that has the most immediate and largest effect on inflationary expectations. It soared earlier this year and so did inflationary expectations, which fell sharply during July and August along with gasoline prices (chart below). August's CPI is out tomorrow morning and is expected to be down 0.1% m/

Ed Yardeni

Market Call: Home In The Range

Sep 11, 2022 1 min read paid

August's CPI will be released Tuesday morning. We think that last week's 3.6% rally in the S&P 500 occurred because investors started to anticipate a significant easing of inflationary pressures (table below). We know that gasoline prices plummeted and used car prices declined last month. There are even a few signs that rent inflation may be cooling off. If the market rallies on

Ed Yardeni

The Economic Week Ahead, September 12-16

Sep 10, 2022 1 min read

It's another action packed week ahead. On the inflation front, we are expecting that, on Monday, the FRB-NY survey of consumer inflationary expectations will show some moderation, reflecting the plunge in gasoline prices, while food inflation remained elevated. On Tuesday, August's CPI should do the same. August's NFIB survey of small business owners (released on Wednesday) is likely to show that lots of them

Ed Yardeni

DEEP DIVE: Is Divine Disinflation Possible?

Sep 9, 2022 2 min read paid

This is an excerpt from our Sept 6 Morning Briefing.Deep Dives (for paid members of QuickTakes) are occasional excerpts from our flagship research service which is available on a complimentary trial basis here. Is disinflation possible without an economy-wide recession? History shows that inflation rarely falls on its own without a recession (Fig. 3). But we don’t think history necessarily has to repeat itself (despite how often it

Ed Yardeni

One-Week Winning Streak

Sep 9, 2022 1 min read paid

The DJIA, Nasdaq, and S&P 500 snapped a three-week losing streak today. Why? After all, on Thursday, Fed Chair Powell in an interview at Cato Institute reiterate that the Fed won't back down on planned rate increases. "We need to act now, forthrightly, strongly as we have been doing, and we need to keep at it until the job is done," he said. "

Ed Yardeni

S&P 500 Analysts Shaving Their Profit Margin Estimates

Sep 8, 2022 1 min read

Previously, we observed that industry analysts covering the S&P 500 (as well as the S&P 400 and S&P 600) shaved their 2022 and 2023 during the Q2 earnings reporting season that started in July and ended in August. That may be it for now until they get another round of guidance from company managements for Q3 starting in October. Analysts remain mostly bullish on

Ed Yardeni

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