Deep Dive

DEEP DIVE: The True Story About Long & Variable Lags In Monetary Policy

Jan 13, 2024 6 min read paid

How long is the lag between monetary policy tightening and recessions? In the past, the answer to that question depended on how long it took the federal funds rate to rise to levels that triggered financial crises that morphed into credit crunches, which quickly caused recessions. Past federal funds rate hiking cycles tended to peak when financial crises resulted from rising interest rates and tightening credit conditions (Fig. 1 below)

Ed Yardeni

DEEP DIVE: Another Year Of Living Dangerously

Jan 3, 2024 6 min read paid

The Roaring 2020s has been a wild decade so far. During 2020, we all had to deal with the first wave of Covid. During 2021, we had to deal with another wave or two of Covid. During 2022, Russia invaded Ukraine, inflation soared, and the most widely anticipated recession of all times remained widely anticipated. During 2023, that same story played out for most of the year but with a

Ed Yardeni

DEEP DIVE: The Fed - Tightening Or Merely Normalizing?

Dec 15, 2023 3 min read paid

Based on November’s employment report released on Friday, we can safely conclude that there is still no sign of an impending recession. The Godot recession is still a no-show. Our soft-landing (a.k.a. rolling recession) scenario remains intact, as it has since early last year. The diehard hard landers are still expecting a recession, as they have been since the Fed started to tighten in early 2022. But

Ed Yardeni

DEEP DIVE: Construction Is Booming!

Dec 8, 2023 3 min read paid

The US economy has been remarkably resilient in the face of the Fed’s aggressive tightening of monetary policy since early last year. One of the sectors that accounts for that resilience is the construction industry. In the past, rising interest rates always depressed construction, which exacerbated the resulting recessions (Fig. 1 and Fig. 2). This time, the weakness in residential construction has been offset by relatively strong private nonresidential

Ed Yardeni

DEEP DIVE: Disruptive Technologies - 3D Printing Gives Flexible Robotics a Hand

Nov 26, 2023 2 min read paid

A new method of 3-D printing can create flexible products, including for use in robotics. Human-like robotic hands and artificial organs can be built using this new method, according to researchers at ETH Zurich, a Swiss university; MIT; and Inkbit, a startup company spun out of MIT. Traditional 3-D inkjet printing uses a material that dries quickly and is then scraped to eliminate any imperfections before the next layer of

Ed Yardeni

DEEP DIVE: In Yellen We Trust

Nov 17, 2023 2 min read paid

When Janet Yellen was Fed chair from October 2010 through February 2014, I often fondly (and respectfully) referred to her as the “Fairy Godmother of the Bull Market.” I noticed that almost every time she spoke publicly about the outlook for monetary policy and the economy, the stock market moved higher. She hasn’t been as bullish for the stock market since January 2021, when she became the secretary of

Ed Yardeni

DEEP DIVE: Captain America!

Nov 10, 2023 5 min read paid

US Economy: Superhero. Like Captain America, the American economy seems to have an indestructible shield. The Fed has raised the federal funds rate aggressively by 525bps since March 2022 with the aim of tightening financial conditions to slow the economy and to raise the unemployment rate with the ultimate aim of bringing down price and wage inflation (Fig. 1 below). Yet real GDP jumped 4.9% (saar) and rose 2.

Ed Yardeni

DEEP DIVE: Inflation - Beware of the Devil in the Details

Nov 3, 2023 2 min read paid

Investors have been spooked by inflation since Halloween 2021 as the CPI soared to peak at 9.1% during June 2022. It was down to 3.7% during September of this year. Yet investors are still spooked, fearing that inflation will remain stuck above the Fed’s 2.0% target or will rebound as it did during the 1970s. Consider the following: (1/4) We’ve recently observed that the

Ed Yardeni

DEEP DIVE: What's Driving Bonds?

Oct 27, 2023 5 min read paid

In his interview Thursday with Bloomberg’s David Westin at the Economic Club of New York, Fed Chair Jerome Powell was asked about the bearish impact of the increasing supply of government debt on the bond market given that the Fed is no longer buying Treasury securities and that foreigners reportedly are reducing their purchases as well. Powell responded that buying by foreigners has “actually been pretty robust” this year.

Ed Yardeni

DEEP DIVE: Slicing & Dicing Inflation

Oct 20, 2023 7 min read paid

Most economists, including Debbie and me, believe that if the data don’t support our forecasts, then there must be something wrong with the data and that they will be revised to show we were right after all. Most economists, including yours truly, also often dismiss components of headline indicators that don’t support our story and look to the remaining “core” indicators for conformity to our outlook and therefore

Ed Yardeni

DEEP DIVE: What's Behind the Recent Bond Rout?

Oct 13, 2023 5 min read paid

Why did the 10-year Treasury bond yield soar from 3.97% on July 31 to 4.81% on October 3 (Fig. 1 below)? There are several explanations, and the answer is probably “all of the below.” Consider the following seven points: (1) Too much supply of Treasuries. We’ve been arguing that the deluge of Treasury supply has been the main driver of this rout in the bond market. The

Ed Yardeni

DEEP DIVE: The Debt Crisis Scenario

Oct 5, 2023 4 min read paid

Debt Crisis I: A Plausible Scenario? “We’re going to have a debt crisis in this country,” Ray Dalio, the founder of hedge fund Bridgewater Associates, warned in an interview with CNBC’s Sara Eisen that aired last Thursday. The two were speaking at a fireside chat at the Managed Funds Association. “How fast it transpires, I think, is going to be a function of that supply-demand issue, so I’

Ed Yardeni

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