Dudley Remains Hawkish Despite Disinflation

On Monday, William Dudley stated he expects the Fed to raise rates 1 more time this year and 3 more times within the next 2 years while unwinding the balance sheet. My initial opinion on the Fed’s rate hike was it was a hawkish hike. However, the market didn’t perceive it that way. The market…

Tech Stocks Are The New Consumer Staples

Tech Dominates Factor ETFs Today was a rare day because as the S&P 500 rose 0.83% to a new record high, the Shiller PE went above 30 for the first time in this bull market. Since the 1880s, the Shiller PE has only been above 30 from August to September 1929, from June 1997 to…

Earnings Look Good For Now: Q3 Headwinds Coming

The great Q1 earnings season is driving the bullish narrative as investors see this as an all clear sign to buy stocks hand over fist. However, the bulls argued during the earnings recession that the temporary blip lower was because of energy. Now, the temporary blip higher is driven by energy, but they are still…

Can NVIDIA Stock Rally Forever?

This article will serve to clarify some of the unclear points I have made in the past few articles. It’s important to analyze how you can be wrong to avoid sticking to bad bets when the tide begins to turn. For example, if you’re bearish on oil, but know which factors could push it higher,…

Central Banks’ Unwind To Start In Mid 2018?

The biggest question facing investors looking at monetary policy is when the central banks will start unwinding their balance sheets. If the Fed shrinks its balance sheet and the ECB continues its bond purchases, it’s equivalent to shuffling papers. As you can see in the chart below, the JCB, ECB, and the Fed have collectively…

Frackers Feel The Pain As Oil Collapses

Record Streak For Nasdaq 100 I am attempting to contextualize the recent rally in tech stocks. In doing so there will be some bearish points and some bullish points. Also, keep in mind that some tech stocks have better fundamentals than others. I consider it to be bearish when new records are made in terms…

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…