Recession

The Fed Has Done Enough

Mar 21, 2023 2 min read

The banking crisis might be equivalent to a 100bps hike in the federal funds rate. We are just guessing, but financial conditions have surely tightened a lot as a result of the SVB earthquake and its aftershocks. Further hikes in the federal funds rate are no longer necessary to get it into restrictive territory as Fed officials have been aiming to do since they started the latest monetary policy tightening

Ed Yardeni

Capital Spending Getting A Lift From Washington

Feb 28, 2023 1 min read paid

Inflation-adjusted capital spending rose 4% y/y during Q4. That was a solid increase. However, it may be starting to slow. The CEO Outlook Index compiled by the Business Roundtable fell most of last year as the Fed's interest rate hikes heightened recession concerns (chart). Nondefense capital goods orders excluding aircraft have stalled at a record high in recent months through January (chart). The weakness in primary metals,

Ed Yardeni

The Economic Week Ahead, Feb. 27 - Mar. 3

Feb 26, 2023 1 min read

The economic indicators this week are likely to confirm that the economy is experiencing a rolling recession. Single-family housing is still in a recession. That's likely to be confirmed by January's pending existing home sales (Mon) and 2/24 mortgage applications (Wed). Manufacturing growth stalled last year through January. February's Dallas and Richmond Fed regional business surveys (Mon & Tue)--along with last week&

Ed Yardeni

Regional Puzzle Pieces Showing Slowing Economy & Inflation

Dec 28, 2022 2 min read

Almost everyone working on Wall Street is on vacation, except for the bears. They've been munching on stock prices, especially those of some of the MegaCaps like Tesla and Apple. There was a Santa Claus rally, sort of, when the S&P 500 climbed 14% from October 12 through November 30. But it has fizzled since then as investors fretted about further Fed tightening and a recession

Ed Yardeni

2023: Another Year of Living Dangerously?

Dec 26, 2022 2 min read

With the benefit of hindsight, the title of this QT certainly applied to 2022. It was a tough year for investors. The consensus view is that 2023 could be as tough: (1) A December NYT opinion piece by Peter Coy is titled, "A Strong Signal That Recession Is Looming." He focuses on the inverted yield curve, which often in the past accurately predicted a financial crisis that morphed

Ed Yardeni

What Are We Rooting For?

Dec 22, 2022 2 min read

On Tuesday, the stock market sold off on fears of a hard landing. On Wednesday, the market rallied on better-than-expected earnings reports from Nike and FedEx and better-than-expected consumer confidence. Today, the market sold off on news that the labor market remains tight, raising fears of higher-for-longer Fed rate hiking. On the other hand, the Index of Leading Economic Indicators, released today, was very weak. After the close yesterday, Micron

Ed Yardeni

Is Santa Making A Comeback?

Dec 21, 2022 1 min read paid

Stock prices rebounded solidly from yesterday's selloff. Better-than-expected news from Nike and FedEx helped reduce fears of a hard landing with free-falling earnings. So did a better-than-expected rebound in December's preliminary reading on the Consumer Sentiment Index (chart).

Ed Yardeni

Fireworks Before Christmas?

Dec 20, 2022 2 min read

Santa is on his back foot. Fed Chair Powell's presser was hawkish last Wednesday. Thursday's batch of economic indicators seemed to support the hard-landing scenario. Could the Santa Claus rally make a comeback before Christmas despite the Grinch at the Fed? It could, depending on November's personal income report to be released on Friday. We think that it will confirm that inflation is moderating

Ed Yardeni

Looking Forward to 2024!

Dec 18, 2022 1 min read paid

There's certainly lots of pessimism about 2023. That's the bad news. We certainly aren't as pessimistic as the consensus seems to be currently. The good news is that the stock market looks ahead by about 12 months. So the outlook for 2024 will matter more and more, while 2023's outcome will matter less and less as next year progresses. We are optimistic

Ed Yardeni

The Economic Week Ahead: Dec. 19 - Dec. 24

Dec 17, 2022 2 min read

Last Tuesday's good CPI news wasn't good enough according to Fed Chair Jerome Powell. In his Wednesday presser, he remained hawkish suggesting that the federal funds rate would be raised early next year to 5.00%-5.25% (bracketing the latest median forecast of the FOMC) and maintained at that restrictive level until inflation moderated significantly. Friday morning, Federal Reserve Bank of New York President John

Ed Yardeni

Retail Sales Clobber Stock Prices

Dec 15, 2022 2 min read paid

Yesterday, Fed Chair Jerome Powell was more hawkish than expected. He reiterated that the Fed needs to be more restrictive to moderate inflation, and to remain restrictive until the job has been done. The FOMC Summary of Economic Projections now sees the federal funds rate rising from 4.25%-4.50% currently to 5.00%-5.25% next year and staying there. Meanwhile, the 2-year Treasury note fell to 4.

Ed Yardeni

The Economic Week Ahead: Dec. 12-16

Dec 11, 2022 1 min read paid

All we want for Christmas is a lower-than-expected November CPI (Tue.) and a less hawkish press conference (Wed.) by Fed Chair Jerome Powell. The Santa Claus rally depends on this seasonally happy scenario. The week ahead starts with the NY Fed's November survey of consumer expectations (Mon.). The recent drop in gasoline prices should moderate inflationary expectations. November's NFIB small business survey (Tue.) should provide additional

Ed Yardeni

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