The Fed’s Unwind Is Canceled Out By The ECB

Besides oil pressuring inflation, it looks like shelter inflation is also starting to decline. As you can see from the chart below, both shelter inflation and rent inflation are coming down. This is logical because apartment real estate prices are starting to come down as it appears there were too many apartment buildings built. The…

Fed Goes Through With Hawkish Hike Despite Weak Inflation

My prediction for Fed policy was wrong. As a reminder, I was looking for a dovish hike based on the latest disinflation, but instead the Fed didn’t deviate much from its policy. There was a stark difference between reality and what the Fed spoke about today as the core CPI and the headline CPI missed…

Tech Stocks Rebound

Just as I forecasted, the tech stock selloff ended Wednesday as the Nasdaq rose 0.73%. The S&P 500, Russell 2000, and the Dow Jones Industrial Average all hit an all-time closing high. The ECB’s $60 billion in bond buying per month combined with investors putting money into ETFs with a “buy the dip” strategy means…

Is This A Normal Tightening Cycle?

The Fed is about to raise rates Wednesday. The yield curve will flatten even more in the next few days if the Fed stays consistent with its plan to raise rates 3 times this year. The current difference between the 2-year bond yield and the 10-year bond yield is 85 basis points. I have said…

Apple Stock Drags The Market Lower

Monday’s market action was like Friday’s action in that the S&P 500 closed nearly flat (down 0.1%) and the Nasdaq underperformed as it was down 0.52%. Adding to the weakness in the riskiest markets was bitcoin and ethereum which cratered in the afternoon. Bitcoin fell from $2,997 to $2,519. Some exchanges had bitcoin exceeding the…

Will Disinflation Affect The Fed’s Decision On Wednesday?

The chart below explains why inflation has been falling lately in Europe and in America. It shows the change in the year over year Bloomberg commodities index. There is a clear trend of disinflation led by oil. Wage inflation isn’t accelerating, so there’s no reason to expect any of the headline inflation numbers, whether it’s…

Tech Boom Turns To Bust As The Nasdaq Has Its Worst Week Of 2017

Friday was a great day for the market as most sectors were up. Energy and the financials did well as the S&P energy sector was 2.48% and the S&P financials sector was up 1.93%. However, in the afternoon the technology sector had a bit of a flash crash led by NVIDIA which was down 6.46%…

Atlanta Fed Downgrades Q2 GDP Growth Estimate To 3.0%

Regional Banks Soar It was interesting to see the financials rally on Friday given the problems with getting Dodd-Frank repealed. After falling 12.37% from its high on March 1st to its low on June 6th, the KRE regional bank index is up 7.13%. As I said, the Dodd-Frank repeal isn’t going as smoothly as the…

Consumer Comfort Remains High

The weekly Bloomberg Consumer Comfort index was released Thursday morning. It fell from 51.2 to 49.9. This was the first decline in 4 weeks. Confidence among Republicans decreased, while it increased among Democrats. This shows the partisan differences are disintegrating. This makes sense because now that the election is over, the questions can be answered…

ECB Lowers 2018 Inflation Forecast To 1.3%

The stock market was up modestly on Thursday after the big news surrounding the Comey testimony and the ECB statement were released. It’s now focusing on the U.K. elections which will affect Friday’s trading. The market has been so quiet, small moves that these events cause look like big moves because volatility has vanished this…