Since the Fed’s announcement last week to pause interest rate hikes for a third time, the stock and bond markets have started a broad rally. This is a welcome sign because for most of this year, the breadth of the market has been extremely narrow and the Treasury Yield Curve has been inverted indicating potential … Read more
The financial markets are rebounding from the 2022 market correction, but this year’s rally has been about a handful of MegaTechs driving market indices to double-digit returns. The advent of a new “Artificial Intelligence Era” explains the move with six companies accounting for almost 70% of the Nasdaq 100’s rally (Apple, Microsoft, Meta, Amazon, Google … Read more
Economic data is cloudy as to the health of the economy and though 99% of CEOs expect an economic downturn, half think it will be mild in the US according to Ernst Young ’23 survey. This outlook is shared by most public company CFOs as they expect only a mild recession in 2023, according to … Read more
Year-to-Date economic data is mixed and centered on the health of the economy. 99% of CEOs now expect an economic downturn though half think it will be mild in the US according to Ernst Young ’23 survey. This outlook is shared by most CFOs at public companies as they expect only a mild recession in … Read more
The failures of Silicon Valley, Silvergate, and Signature Banks were due to multiple factors but chief among them was the Fed’s aggressive interest rate hikes. Debt securities lose value when interest rise—if a bank bought a 2.0%, 10-year bond last year but could now get a 4.0% yield if they purchased the same bond, their … Read more
2022 was a correction year in the markets. The cause of the correction was Inflation and the Fed aggressively raising interest rates having thought inflation would pass after supply chain disruptions passed following the Covid-19 pandemic. Looking forward into 2023 the consensus of economists forecast is for a Recession. We have already had 2 back-to-back … Read more
At its July 27th meeting, the Federal Reserve raised interest rates by .75% for the second time saying, “The 2.25%-2.50% range for the federal funds rate is now around the neutral level that is neither supportive nor restrictive on activity.” The FOMC also vowed to continue to fight inflation until it meets their 2% target … Read more
The .75% rate hike by the Federal Reserve and their promise to move “aggressively and expeditiously both to raise interest rates and reduce its balance sheet,” (i.e. reduce purchases of treasuries and mortgage bonds) based upon how the economy and prices react reversed the yield curve ‘contango’ which had made short term rates higher than … Read more
It seems clear now that we are entering an across the board “Bear Market” marked by the Dow Jones and S&P500 indices nearing 20% losses from their highs. The Nasdaq has already fallen 31%. The question is where is the bottom? The fact is no one can say for certain. We can only estimate based … Read more
The risk profile of the market has changed with stock & bond valuations reaching all-time highs, inflation on the rise, and our national debt passing $30 trillion. The Federal Reserve has begun removing stimulus by tapering their treasury and mortgage bond purchases and has signaled they will raise interest rates as soon a March to … Read more