The minutes of the March 17-18 Federal Open Market Committee (FOMC) meeting were generally interpreted as dovish and showed continuing divisions within the Fed as to when hikes should start, and it still seems far from a consensus to act. The minutes also reinforced expectations that the path of rate hikes will be “fairly gradual.”
The New Fed “Oracle” Dovish as Well
When he was chairman of the Fed, Alan Greenspan earned the nickname “The Oracle.” Greenspan was a master at anticipating the flow, but operated behind a cloak of secrecy and obfuscation (my favorite quote: “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant”).
The thickness of his briefcase was the most that reporters and investors had to go on in forecasting rates. There were no press conferences, meeting minutes, or policy statements. Continue reading
Over the past six months, the dollar has appreciated around 15 percent against a basket of currencies. If sustained, the International Monetary Fund (IMF) estimates that U.S. GDP growth and inflation would each be around 1% lower than otherwise.
In manufacturing, we saw mixed signals last week. The Markit manufacturing PMI (which has consistently been more upbeat than other indicators) rose to a 5-month high of 55.7, despite softening export orders. However, the ISM manufacturing PMI fell 1.4 to 51.5, lowest since May 2013. New export orders were below 50 (falling) for the third consecutive month. Continue reading
European equities rallied impressively during Q1, delivering just short of 15% – a move driven by the announcement (finally!) that the European Central Bank would enact Quantitative Easing (QE). This support, coupled with renewed signs of life in the European economy, paved the way for significant shift of assets into European equity markets. But after a return of this magnitude, the question investors are asking us in the European Equity team is; where can the asset class go from here? Continue reading
Both the House and Senate passed budget resolutions but they still have to reconcile them. This is huge progress relative to the gridlock that prevailed in prior years. Additionally, the House passed “doc fix” legislation, which will end the annual charade of pretending Medicare payments to doctors will be cut radically next year. The bill is expected to be passed by the Senate and signed by the President. The push to hold investment advisors handling retirement assets to a “fiduciary” standard appears to be gathering steam in Washington. Continue reading
Last week the markets celebrated a dovish message from the Fed. The Fed says it is neither “patient” nor “impatient”… but doves were pleased. You can find the reaction of Pioneer’s Chief Investment Officer, U.S., Ken Taubes in his recent post (Dovish Fed Resets Outlook for Risk Assets). My additional observations are below.
Posted in Economy, Equity, Fixed Income, Markets
Tagged Capital Markets, equity markets, Europe, Fed, Fed Action, Fed policy, Fixed Income, Greece, Japan, monetary policy, Sam Wardwell, U.S. Economy, Unemployment