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

Dr Ed's Video Webcast 7/24/24

Jul 24, 2024 1 min read paid

Characterizing the investing backdrop at this juncture are big unknowns about the near-term future, such as which administration will be controlling fiscal policy six months from now and what monetary policy will be at that time. So it’s no wonder that multiple consensus viewpoints seem to be moving financial markets this way and that. Today, Dr. Ed and Eric Wallerstein examine what’s been driving the commodities, fixed income,

Ed Yardeni
Eric Wallerstein

Dow Theory Is So Yesterday

Jul 23, 2024 2 min read paid

The DJIA is down 2.1% from its record high of 41,198 reached last Wednesday (chart). The DJTA was down 1.6% today, remaining below its record high in early 2022. According to Dow Theory, the DJTA needs to break out to a record high to confirm the DJIA's rise to this point and support further advances. The theory is that a sustainable bull market in stocks

Ed Yardeni
Eric Wallerstein

An Earnings-Driven Bull Market

Jul 22, 2024 3 min read paid

Yesterday, we suggested that the stock market selloff since the July 16 record high in the S&P 500 might not last very long. So we were pleased by today's broad rally in the S&P 500 (1.1%), Nasdaq (1.6%), Russell 2000 (1.7%), and the MAGS (2.4%). We expect that a solid print in Q2's real GDP on Thursday and

Ed Yardeni
Eric Wallerstein

Market Call: Ups & Downs of the Stock Market Cycle

Jul 21, 2024 2 min read paid

The S&P 500 is down 2.9% from its record high of 5667.20 on Tuesday, July 16. The following day semiconductor stocks got whacked on news that the Biden administration is considering draconian measures to clamp down on foreign companies which manufacture chipmaking machinery from selling their products in China (chart). Of course, the pain spread quickly to the Magnificent-7 including Nvidia, which should find support north

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: July 22-26

Jul 21, 2024 3 min read paid

The week ahead is jampacked with key economic indicators, including the first read on Q2's real GDP and June's PCED inflation rate. We're expecting robust economic growth and further progress toward the Fed's 2.0% inflation target. The latest regional business survey might also confirm our forecast that the goods-producing sector is entering a rolling recovery. Here's our outlook for

Ed Yardeni
Eric Wallerstein

DEEP DIVE: Immaculate Disinflation

Jul 19, 2024 4 min read paid

During the spring of 2022, Debbie and I predicted that inflation was peaking: “In our scenario, the PCED headline inflation rate peaks during H1-2022 between 6%-7%. Led by consumer durable goods prices, it moderates to 4%-5% during H2-2022. Next year, it falls to 3%-4% as persistently rising rent inflation offsets moderation in other consumer prices.” We wrote that in our April 19, 2022 Morning Briefing. We expected

Ed Yardeni
Eric Wallerstein

Stock Market Rotates To Interest-Rate Sensitive Sectors

Jul 18, 2024 3 min read paid

The bull market in stocks has been quite volatile in recent days as it rotates and broadens. The triggering event was a better-than-expected June CPI report on Thursday, July 11. Since then, the financial markets priced in a 100% probability of a Fed rate cut in September. Investors responded by rotating out of the S&P 500's Magnificent-7 into the S&P 1493 (i.e., 1500

Ed Yardeni
Eric Wallerstein

Is The Bull Market Broadening Or Rotating?

Jul 17, 2024 2 min read paid

Many investors are wondering if the recent outperformance of the S&P 400 and the S&P 600 (i.e., the "SMidCaps") and the equal-weighted S&P 500 reflect a sustainable broadening of the bull market. Or is it a temporary rotation out of the Magnificent-7 into the S&P 493 and the SMidCaps? For now, we're in the camp that breadth

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 7/17/24

Jul 17, 2024 1 min read paid

In congressional testimony last week, Fed Chair Powell sounded more dovish than he has this tightening cycle. That clinched financial markets’ growing expectation that the Fed would cut the federal funds rate as early as September. We believe so too. Now that inflation is closing in on the Fed’s 2.0% target, Fed officials are increasingly focused on keeping the unemployment rate low. … From today’s vantage point, it’

Eric Wallerstein

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