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: ECB, Equity Market Insights, Europe, Giordano Lombardo, Inflation, Macroeconomics, U.S. Dollar, United States | 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 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 July 28, 2014 by Sam Wardwell
The Yellen Fed is wary of tightening too soon. It wants to see significant improvement in labor markets. (We’re seeing it.) It also wants to see evidence that U.S. inflation has formed a bottom. This precondition for a tighter Fed policy is also being fulfilled – CPI inflation has been steady and slow…but not slowing.
U.S. Economic Activity Looks Good
- Initial unemployment claims dropped to 284k, the first reading this cycle below 300k and the lowest since early 2006. These are boom-time readings, not recovering economy readings.
- CPI came in at 2.1% y/y; Core was 1.9%.
- About 200 S&P 500 companies have reported so far; more than 70% (slightly better than average) have beaten consensus.
- The Chicago Fed National Activity Index, a gauge of economic activity, was slightly above-trend.
- The Markit U.S. manufacturing PMI softened a bit, to 56.3…still strong (50 is break-even).
- The Richmond Fed’s manufacturing index (zero is break-even) rose from 4 to 7–solid; hiring was notably strong.
- The Kansas City Fed manufacturing index rose from 6 to 9, lifted by durable goods producers and employment. Rising quit rates particularly among machinists and welders were cited.
Filed under: Equity Market Insights, Europe, GDP, Macroeconomics, Sam Wardwell | Tagged: Europe, inflation, Japan, QE Tapering, Sam Wardwell, SEC Money Market Rules, the Fed | Leave a comment »
Posted on July 24, 2014 by Giordano Lombardo
Pioneer’s Head of Global Asset Allocation Research, Monica Defend, along with U.S. and Latin America Global Asset Allocation Research Economist, Annalisa Usardi, recently released an update on the U.S. economy. The update was based on the Bureau of Economic Analysis’ (BEA) release of the third and final estimates 1Q14 gross domestic product (GDP), which came in lower than expected. The forecast update focuses on three areas: growth, inflation and central bank policy. Below are some highlights from their report. To read the full report, click here. Continue reading
Filed under: GDP, Giordano Lombardo, Inflation, Macroeconomics, United States | Tagged: Fed policy, inflation, Interest rates, QE Tapering, US GDP | Leave a comment »
Posted on May 13, 2014 by Giordano Lombardo
The last decade may well be remembered as the golden era for Emerging Markets (EM). These economies emerged from the crisis of the 90s and experienced a success story of restructuring and strong growth early in the millennium. Cheap labor markets and massive capital inflows, along with extraordinarily loose monetary policies put in place globally to fight recession, were behind the EM renaissance. Continue reading
Filed under: Equity Market Insights, Fixed Income Market Insights, Giordano Lombardo, Macroeconomics | Tagged: Capital Markets, Central Banks, China, emerging markets, Giordano Lombardo, QE Tapering, tapering | Leave a comment »
Posted on February 24, 2014 by Giordano Lombardo
As we begin 2014, economies in developed countries are gathering momentum and central banks are retaining accommodative monetary policies, which extend support for risky assets. U.S. corporate capital (CAPEX) expenditure is being revived, marking an improvement necessary for upgrading the overall economic growth. In this respect, recent disappointing figures on the job market seem more of a transient occurrence than a trend reversal. Nevertheless, key macro figures are still under close watch amid concerns that the economy is actually getting stronger and can withstand the gradual withdrawal of the exceptional monetary stimulus. Continue reading
Filed under: Europe, Giordano Lombardo, Macroeconomics, United States | Tagged: Central Banks, deflation, ECB, emerging markets, Fed Action, Fed policy, Fed tapering, GDP, Giordano Lombardo, global economy, inflation, monetary policy, QE, QE Tapering, tapering, the Fed | Leave a comment »
Posted on February 18, 2014 by Sam Wardwell
The weather has certainly been bad . . . but some of last week’s economic data suggests that the weakness is not just weather-related (e.g. construction jobs have held up relatively well, online sales have been weaker than those of bricks-and-mortar.)
- January retail sales fell, and December was revised down.
- With sales soft, the retail inventory:sales ratio ticked up. The factory-level ratio has also ticked up; the wholesale ratio has not.
- Industrial production fell 0.3% in January. Manufacturing output fell 0.8%, while the cold weather boosted utility output 4.1%.
- Capacity utilization slipped from 78.9% to 78.5%.
- Bucking the negative trend, the NFIB small business sentiment index rose 0.2 to 94.1.
It’s not weak enough yet for the Fed to signal they might slow the QE taper, but the stock market seemed to display a “bad news is good news” complacency.
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Macroeconomics, Sam Wardwell, U.S. Dollar, United States | Tagged: Capital Markets, Central Banks, China, currencies, ECB, emerging markets, Europe, Fed Action, Italy, Japan, QE Tapering, Sam Wardwell | Leave a comment »