Fed

Core Inflation: The True Story

Jun 18, 2023 2 min read paid

A few of our QT members asked us to explain why core CPI inflation, which has been so sticky over the past year, should moderate over the rest of this year. The headline CPI inflation rate has dropped significantly since last summer from around 9.0% to 4.0% in May (chart). But the core inflation rate has been stuck around 6.00% since early last year. The core CPI

Ed Yardeni

A Hawkish Skip at the Fed

Jun 14, 2023 2 min read paid

In this past Sunday's QT, we wrote: "On Wednesday, Fed Chair Jerome Powell will update us on the committee's latest views. Odds are the FOMC will skip another rate hike, but hint that rate hiking might not be over." Sure enough, the FOMC skipped and the committee's statement noted: "Holding the target range steady at this meeting allows the Committee to

Ed Yardeni

The Bull Was Pleasantly Surprised by May's CPI Today

Jun 13, 2023 2 min read paid

Stock prices rallied from the open today on May's CPI report. It wasn't surprisingly good. But investors and traders feared that it might be surprisingly bad. That's been the modus operandi of this bull market since October 12. It's been rallying on all the bad things that aren't happening. So far, there's been no recession, no earnings collapse,

Ed Yardeni

The Economic Week Ahead: June 12-16

Jun 10, 2023 2 min read paid

This will be a head spinning week. It could also be another rollercoaster ride in the financial markets. Maybe we should go on vacation and come back on Friday following the deluge of economic indicators from Monday through Thursday, and a FOMC meeting on Tuesday and Wednesday to boot. May's CPI will be released on Tuesday morning just as the FOMC convenes for a two-day meeting, which will

Ed Yardeni

Two Known Knowns About the Economy

May 31, 2023 2 min read paid

Investors are confused: Is the economy strong or is it weak? The answer is "Yes." The labor market is strong, but the manufacturing side of the economy is weak. We've all known that for a while. Today's indicators confirmed what we know. On the weak side today was the ISM Chicago Business Survey as evidenced by the drop in its Purchasing Managers Index (PMI)

Ed Yardeni

What's Driving Bond Yields?

May 22, 2023 2 min read paid

Two of our favorite technical indicators for the 10-year Treasury bond yield are currently bullish. The yield tends to be highly correlated with the ratio of the nearby futures prices of copper to gold (chart). The ratio suggests that the yield, which is currently 3.70%, should be much closer to 2.00%. We view the ratio as a risk-on versus a risk-off indicator. The Citigroup Economic Surprise Index (CESI)

Ed Yardeni

Credit Crunch Ahead?

May 9, 2023 2 min read

SLOOS was on the loose today, yet stock prices continued to snooze. The Fed's Senior Loan Officer Opinion Survey was released yesterday after the market's close. It showed that banks continued to tighten their lending standards following the banking crisis that started during the second week of March (chart). Yet the DJIA barely budged falling 56.88 points and the S&P 500 lost just

Ed Yardeni

Keep Your Seatbelt on and Get a Neck Brace

May 5, 2023 2 min read paid

The S&P 500 rallied along with regional bank stocks today. It found support yesterday at its 50-day moving average. Shares of Western Alliance, Comerica, and Zions Bancorp were upgraded to the equivalent of a buy recommendation by analysts at JP Morgan. They said "with too many on one side of the boat, we move to the middle." Also giving the market a lift: Apple's

Ed Yardeni

Powell's Plateau

May 3, 2023 2 min read

The current consensus in the financial markets seems to be that the FOMC is done hiking the federal funds rate (FFR) after having raised it today by 25bps to 5.00%-5.25%. Furthermore, markets seem to be anticipating that the FFR will be falling soon. That's consistent with the widely held view that a recession is coming soon. It isn't consistent with Fed Chair Jerome

Ed Yardeni

Markets' Message to the Fed: Just Say No to More Rate Hikes

May 2, 2023 2 min read paid

The stock market sent a message to the FOMC today: Cease and desist from any more rate hikes, please. The stock market selloff was led by another rout of the Financials sectors of the S&P 1500. Here is what they did today and since March 8, the day before SVB imploded: S&P 500 LargeCaps (-2.3%, -7.3%), S&P 400 MidCaps (-3.2, -14.

Ed Yardeni

The Economic Week Ahead: May 1-5

Apr 29, 2023 1 min read paid

This is another big week for earnings reports, which have been mostly better than expected so far. In addition, the FOMC meets on Tuesday and Wednesday, when Fed Chair Jerome Powell holds his après-meeting presser at 2:30 p.m. In our opinion, it's a toss-up whether the Fed will do none or one 25bps rate hike. But our subjective odds of an announced pause is 75% either

Ed Yardeni

Another Week Without a Banking Crisis

Apr 29, 2023 2 min read

Our mantra since the start of the banking crisis on March 10 has been that any day without a banking crisis is a good day for the stock market. Now our mantra is that any week without a banking crisis is a good week for the stock market. It was a good week for stock prices last week, especially on Friday, even though First Republic Bank continued its meltdown, which

Ed Yardeni

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