Fed

The Stock Market's Latest Bungee Jump

Oct 3, 2022 1 min read

The S&P 500 fell 2.9% last week. Today, it rallied 2.6% to 3678.43, back above the June 16 low of 3666. Why did it do so well today? Because sentiment is so bearish. More fundamentally, bad news about the economy is good news for bonds and stocks. And this morning at 10:00 am the market moved higher on news that September's M-PMI

Ed Yardeni

Is Something About To Break?

Oct 2, 2022 1 min read paid

The 2-year/10-year Treasury yield curve has been inverted in recent weeks. The yield curve has a history of inverting during Fed monetary tightening cycles when investors start to believe that the rise in interest rates may be about to cause a financial crisis, which quickly turns into a widespread credit crunch and a recession. Is something about to break now? Not according to the VIX and high-yield corporate bond

Ed Yardeni

Opera & The Fed

Sep 30, 2022 1 min read paid

They say that "the opera ain't over 'til the fat lady sings." Similarly, the current bear market ain't over until Fed Chair Jerome Powell pivots yet again. Since the late summer, Powell & Co. have been squawking like hawks about their commitment to bring inflation down no matter how high interest rates must go. They should all be wearing Volcker 2.0 T-shirts.

Ed Yardeni

Oh No: The Fed Is Making Another Big Mistake!

Sep 27, 2022 2 min read

Are Fed officials making another big mistake? They were behind the inflation curve during 2020 and the first half of 2021 because they prioritized lowering the unemployment rate relative to keeping inflation down. Now they are scrambling to get ahead of the inflation curve, or at least catch up with it. So they raised the federal funds by 75bps at each of the last three FOMC meetings to a range

Ed Yardeni

Another Awful Risk-Off Week

Sep 24, 2022 1 min read paid

The bad news for the stock market this past week actually started on September 16 in the morning after FedEx delivered a terrible preannouncement about the current quarter. The package delivery giant said in a statement the night before that it expects Q1 earnings, excluding some items, to be $3.44 per share, or roughly 33% below the average analyst estimate of $5.10. In addition, FedEx withdrew its earnings

Ed Yardeni

TINA-TAR: There Is No Alternative To A Recession?

Sep 23, 2022 2 min read

The financial markets seem to have concluded that Fed Chair Jerome Powell has decided to go Volcker on us. During 1979-1981, then-Fed Chair Paul Volcker let interest rates soar to levels that caused a recession. He did so to bring inflation down (charts below). During his press conference on Wednesday, Powell unambiguously reiterated the hawkish message of his Jackson Hole speech on August 26. In other words, he strongly suggested

Ed Yardeni

Leading To A Recession?

Sep 22, 2022 1 min read paid

Ed Yardeni

Fed Stays On Tightening Course

Sep 21, 2022 2 min read

The Fed lifted the federal funds rate range by 75bps to 3.00%-3.25%. Stocks sold off as Fed Chair Jerome Powell reiterated during his presser today the main points he made in his hawkish speech at Jackson Hole in late August. He stressed that monetary policy may have to be restrictive for a while to bring inflation down, and that the process may be painful. There wasn'

Ed Yardeni

Housing Already Hard Hit By Fed Tightening

Sep 20, 2022 1 min read

Fed officials have been saying that they are aiming to raise the federal funds rate from an accommodative level to a restrictive one to bring inflation down. In their latest Summary of Economic Projections (SEP) released by the FOMC on June 15, they indicated that they believe that the neutral federal funds rate is 2.50%, which is the upper end of the current target range. Odds are that it

Ed Yardeni

Major Housing Crash?

Sep 19, 2022 1 min read paid

Billionaire real estate investor Barry Sternlicht said he believes the economy is "braking hard" and that the continuation of rate hikes is likely to cause a "major crash" in housing. The chairman and CEO of Starwood Capital Group said so in a CNBC interview on Thursday. “If the Fed keeps this up they are going to have a serious recession and people will lose their jobs.

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

Lots Of Jobs, But...

Sep 2, 2022 1 min read

This morning's jobs report for August was a good one even though the unemployment rate rose to 3.7% from 3.5%. It did so because 786,000 workers entered the labor force, while the household measure of employment rose 442,000. The new entrants shouldn't have any problem finding jobs, while an increase in job seekers may take the pressure off employers to raise wages

Ed Yardeni

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