Fed

The Calm Before The Storm?

Aug 25, 2022 1 min read

They say that the stock market tends to climb a wall of worry. It has been doing just that since the S&P 500 bottomed at 3666.77 on June 16. It rose 1.4% today even though Fed Chair Jerome Powell will speak at the Fed's annual Jackson Hole conference tomorrow, and might sound more hawkish to compensate for sounding too dovish at his prior speaking

Ed Yardeni

The Chairman's Speech: What Will Jerome Powell Say?

Aug 24, 2022 2 min read

Have you heard? Fed Chair Jerome Powell will speak on Friday morning at the Federal Reserve Bank of Kansas City’s annual Economic Policy Symposium, which is held at a nice resort at Jackson Hole, Wyoming. Odds are he won't change his tune much from what he said in his prepared remarks at his July 27 presser, which was less than a month ago. Since then: July'

Ed Yardeni

The Most Bearish Two Charts In Our Collection

Aug 23, 2022 1 min read

On our website, thousands of our charts are automatically updated as new data become available. The most bearish of the lot are shown below. The first one shows the Fed's holdings of securities versus the S&P 500. The second shows the former versus the forward P/E of the S&P 500. We added a dotted line to track the Fed’s QT2, which ramps

Ed Yardeni

Market Call: Risk Off

Aug 21, 2022 1 min read

The stock market is overbought. Since June 16, the S&P 500 is up 15% including its 1.2% decline last week back to 4228, failing to rise above its 200-day moving average, which was 4306 on Friday. Over the same period, the Nasdaq is up 19% after giving back 2% last week. Meanwhile, the 10-year US Treasury bond yield is up 41bps from a recent low

Ed Yardeni

Where Are The Bond Vigilantes?

Jul 31, 2022 1 min read

The wage-price-rent spiral continues to spiral. Yet, the Bond Vigilantes, who were very vigilant at the start of the year, seem to be taking a siesta now. The US Treasury bond yield peaked this year (so far) at 3.49% on June 14, falling to 2.67% on Friday. That’s surprising given that inflation remains so high. But we aren’t surprised. As we’ve pointed out

Ed Yardeni

Tomorrow's ECI Could Be Bad News

Jul 28, 2022 1 min read paid

Q2's Employment Cost Index (ECI) comes out tomorrow morning. In his press conference yesterday, Fed Chair Jerome Powell assessed inflationary pressures in the labor market. He said: "There's some evidence that wages, if you look at average hourly earnings [AHE], they appear to be moderating. Not so yet from the other wage measures. And we'll be getting the employment compensation index measurement I

Ed Yardeni

Jamie's Hurricane

Jul 14, 2022 1 min read

The stock market is down this morning on worse-than-expected PPI inflation news, heightening fears of more aggressive Fed tightening and a recession. The yield curve spread between the 2-year and 10-year Treasuries is solidly inverted at -24bps. In addition, JP Morgan Chase reported that Q2 profits slumped as the bank built reserves for bad loans by $428 million and "temporarily" suspended share buybacks. The

Ed Yardeni

The Rent Is Too D@mn High!

Jul 13, 2022 1 min read

The Fed's ultra-easy monetary policies, in response to the pandemic, caused home prices to soar, and now rents are soaring. Over the 24 months through May, the median single-family home price is up a whopping 44.5%. This year's jump in mortgage rates only exacerbated the affordability problem facing first-time would-be homebuyers. As a result, many of them have no choice but

Ed Yardeni

Protracted Inflation

Jun 10, 2022 2 min read

Inflation is no longer transitory or persistent. It is protracted. The headline and core CPI inflation rates have yet to peak because rapidly rising energy prices continue to put upward pressure on the headline rate directly and on the core rate indirectly by boosting energy-related costs like transportation. The headline and core rates for May were 8.6% y/y and 6.0% y/y. Here are a few

Ed Yardeni

More Central Bank Tightening

Jun 9, 2022 1 min read paid

Don't fight the central banks when they are fighting inflation. Stock prices dropped today on news that the European Central Bank will end quantitative easing on July 1, then raise interest rates by 25bps on July 21. It will then hike again on September 8. At -0.5%, the ECB's deposit rate has been in negative territory since 2014. Unlike the Fed, the ECB remains committed

Ed Yardeni

Quantitative Tightening Begins

Jun 5, 2022 1 min read paid

In recent conversations with our accounts, we have been hearing more concern about the Fed’s second round of quantitative tightening (QT2), which started this month. QT1, which lasted from October 1, 2017 to July 31, 2019, pared the Fed’s balance sheet by $675 billion. Under QT2, the Fed will reduce its balance sheet by running off maturing securities. From June through August, that will involve dropping its holdings

Ed Yardeni

Market Is Up Despite Hawkish Powell Interview

May 13, 2022 2 min read paid

Can the stock market finally overcome bad news? Imagine if Fed Chair Jerome Powell pivots further to the hawkish, dark side and says that he cannot guarantee that the Fed’s monetary tightening won’t cause a recession.

Ed Yardeni

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