Stocks Follow The Dollar Lower

On Tuesday, the stock market sold off as it finally followed the recent trend in the 10-year bond and dollar. I have mentioned in a previous article that the 10-year bond yield decline is a sign inflation expectations and GDP growth estimates have diminished. Some may have postulated the 10-year yield falling was a minor…

$131.11 In S&P 500 Earnings Expected In 2017

While the major stock indices remain near their record highs and show no sign of having their first 5% correction in a few months, there has been changes to the underlying drivers of equities. The changes afoot are that fiscal policy must replace monetary policy in supporting the market and that earnings growth is going…

Peak In The Labor Market?

Over the weekend, I was speaking with my cousin about a pawnshop he went to. He told me the owner told him that no one comes to the store to pawn items anymore. The owner said he should turn the store into a regular retailer. That is a sign of the economic times. Pawning an…

3 Reasons Why We’re Near A Top

There are a few major alarm bells ringing which signal a top in this bull cycle could occur in the next few months. I will review those ominous signals in this article. Then I will review the latest news in the battle to get healthcare reform passed Congress. The one obvious positive the GOP has…

Inflation Expectations Moderate

In my last article, I mentioned the big difference between the NY Fed and Atlanta Fed’s model for Q1 GDP growth. I tended to side with the Atlanta Fed’s model because it has a longer track record and was closer to the street’s average estimate. Today both estimates updated. The Atlanta Fed’s model stayed at…

Bank Loan Growth Slowing

In this article, I will review the latest bank loan growth data, but first I will discuss what’s driving this market higher and what the Q1 GDP growth may look like. It will be interesting to see what the actual Q1 GDP growth rate turns out to be because the Atlanta Fed GDP Now forecast…

FOMC Statement Review

As I mentioned in my previous article, the Fed didn’t unwind the balance sheet because it can’t. Interest rates would rise to such high levels the federal government would have a tough time paying off the interest on the debt. The idea that the Fed isn’t using the balance sheet to affect the economy is…

Fed Balance Sheet Stuck At $4.5 Trillion

The decision by the Fed was mainly covered by the press as the third rate hike since the financial crisis, but I contest the biggest story is the new stance to avoid shrinking the balance sheet in the medium-term. Heading into the meeting, I made a convoluted prediction in that I expected the Fed to…

Fed Raises Rates: Stocks & Bonds Rally

The Fed announced it raised rates 25 basis points in its March statement. Furthermore, it stated it would be raising rates two more times in 2017 and three times in 2018. Finally, Yellen stated there wouldn’t be any near-term movement to unwind the Fed’s $4.5 trillion balance sheet. There is a lot to unpack with…

Fed Hike Incoming

In this article, I will discuss my prediction of what the Fed will do on Wednesday. I am writing this article before the announcement, but you may be reading it afterwards. It’s still valuable insight because it gives you an idea of where the Fed is in the monetary cycle. The three parts to discuss…