Posted on September 22, 2014 by Sam Wardwell
The Fed’s statement from its meeting last week contained few surprises but was slightly hawkish on a close reading. “Don’t fight the Fed” has been good advice in the past. Maybe it’s different this time. Maybe not. The year-end 2015 and 2016 “dot plot” forecasts for rates rose roughly 0.25% amidst slightly lower growth and inflation forecasts. Moderate economic growth continues, but homebuilding is not looking like a big GDP growth driver in 2014, yet inflation remains low, and there is little pressure on the Fed to hurry. Its balance sheet won’t shrink anytime soon, however. Continue reading
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Posted on September 16, 2014 by Giordano Lombardo
Economic fundamentals (the “real economy”) have been struggling to catch up with the buoyant behavior of financial markets and, eventually, these diverging patterns (gaps) will have to be reconciled. On the economic side, the main global structural imbalances (a mountain of debt, a lack of aggregate demand) remain very much in place and the multiple transitions that all the major economic areas are facing are far from being completed. The recent market dynamics would be inconceivable in a “normal” market cycle, but nothing is impossible in the fantastic world of Quantitative Easing (QE) and money printing. Continue reading
Filed under: Equity Market Insights, Macroeconomics, Giordano Lombardo, Europe, United States, U.S. Dollar, ECB, Inflation | Tagged: Abenomics, Central Banks, China, debt, deflation, ECB, economy, emerging markets, equity markets, Europe, European markets, Eurozone, India, inflation, markets, QE, QE Tapering, Slow growth | Comments Off
Posted on September 16, 2014 by Sam Wardwell
Last week in the capital markets: Bonds sold off globally in the week before the Fed meeting.
It was a quiet week for economic news, and the geopolitical front was relatively quiet (less fighting but more sanctions in Europe, moving toward a bigger effort against ISIS) but fears that the Fed is behind the curve seemed to be the ones that led investors and traders to act last week. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, Macroeconomics, Sam Wardwell, Europe, GDP, United States, U.S. Dollar, ECB, Inflation | Tagged: emerging markets, currencies, ECB, US GDP, Interest rates, inflation, Fed Action, Capital Markets, Sam Wardwell, Bonds | Leave a comment »
Posted on September 8, 2014 by Sam Wardwell
Concerns about the Ukraine and Islamic State remained high last week, but diminished at week-end on news of a cease-fire in Ukraine and NATO resolve to address the Islamic State. The European Central Bank (ECB) surprised markets (bullishly), and U.S. economic news was biased to the positive.
Filed under: Equity Market Insights, Fixed Income Market Insights, GDP, Macroeconomics, Sam Wardwell, U.S. Dollar | Tagged: Capital Markets, currencies, ECB, Europe, Fed policy, Sam Wardwell, Ukraine | Leave a comment »
Posted on September 2, 2014 by Sam Wardwell
Last week in the capital markets: A Quiet Last Week of August. Economic news again suggested the U.S. economy is fine, while Asia and Europe are facing headwinds. Mario Draghi’s dovish-sounding speech at Jackson Hole a week ago was probably more market-moving than anything that happened last week. Continue reading
Filed under: ECB, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Inflation, Macroeconomics, Political, Sam Wardwell, United States | Tagged: Bonds, Capital Markets, Central Banks, European markets, Eurozone, GDP, inflation, Japan | Leave a comment »
Posted on August 25, 2014 by Sam Wardwell
As the economy and labor market improve, quantitative easing (QE) is wound down and the first rate hike draws nearer, the language of the Fed evolves accordingly. Both the minutes of the June FOMC meeting and the remarks of Fed Chair Janet Yellen at Jackson Hole were incrementally less dovish than earlier language. The pace of these changes suggests that the Fed is comfortable “the ball is in the fairway”…the likelihood of a surprise policy shift is low. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, Inflation, Macroeconomics, Sam Wardwell, U.S. Dollar, United States | Tagged: Bonds, Capital Markets, Fed policy, Fed tapering, inflation, Interest rates, QE Tapering, the Fed, Unemployment | Leave a comment »
Posted on August 18, 2014 by Sam Wardwell
Last week’s data provided a mixed picture of the economy. Businesses produced more, but demand growth was soft. That combination suggests slower future economic growth, not acceleration (but still growth, not recession). Some points to note:
- The NFIB Small Business Optimism Index ticked up from 95.0 to 95.7.
- The Empire State (NY Fed) Index slipped, but remains strong at 14.7.
- Industrial production rose, led by auto production, and capacity utilization ticked up slightly as well.
- Business inventories rose modestly…slightly faster than sales.
- Consumer confidence slipped, despite good job market data…too many war/conflict/disease stories in the paper? That said, retail sales managed a 0.2% increase month over month (m/m) – still below expectations.
- Mortgage applications ticked down week over week (w/w); the generic rate dropped to 4.24%.
- Inflation remains comfortably below trigger levels for Fed tightening
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