Operating at the Intersection of Technology and the Capital Markets
Tag: CPI
Fed Chair Powell has the backbone of a jellyfish. Therefore it will be interesting to see what he and his band of banking flunkies do at their FOMC meeting later this month - especially if Financials continue to trade down and should consumer prices remain elevated as we expect (CPI release is Tuesday at 8:30am … Continue reading Powell’s Puzzle. Dimon A Winner.
I advocated for a 50 BPS increase by the Fed for its February FOMC meeting (it executed a 25 BPS increase). Perhaps the Fed will execute a 50 BPS increase in the Fed Funds rate when the FOMC meets on March 22nd. The current Fed Funds target range is 4.50-4.75%. With prices having accelerated sequentially … Continue reading A 50 BPS Increase In March
January Headline CPI increased at an accelerated rate (0.5%) and Core CPI increased by the same month-to-month rate (0.4%) as December's increase. Food prices increased at an accelerated rate (0.5%) and Energy prices increased (2.0%) after having declined for the two previous months. Inflation is proving to be sticky (as we predicted in April 2021). … Continue reading The Market Does Not Get It
Regardless of where CPI lands tomorrow, my view is that the Fed will hold rates higher for longer than the market believes. Higher interest rates combined with a shrinking money supply (QT), translates to: tighter monetary conditions, a higher cost of capital, less revenue visibility for companies, more employee layoffs and a deeper recession. The … Continue reading Tomorrow’s CPI = Noise
History rhymes. Today feels a lot like 2008 when many investors expected an economic rebound in the back half of 2008. When that did not happen, 2009 was to be the rebound year. 2010 then became the year when the economy would normalize after 2009 proved to be worse than 2008. 2010 presented only a … Continue reading It’s 2008 & Life’s The Same Except For My Shoes
The sooner the Fed gets to where it is going, the sooner it may pause and observe. In addition, Treasury yields remain negative across the yield curve which is not long-term healthy for the economy. The Effective Fed Funds rate range stands at 4.25-4.50%. If the Fed believes that the upper bound should sit at … Continue reading Why The Fed Should Hike By 50 BPS
Headline CPI came in at 6.5% year-over-year and down -0.1% for the month of December. Core CPI was up 5.7% year-over-year and up 0.3% for December, up from 0.2% in November. Readers know how we feel about price inflation - it is higher than what the government reports. Take "eggs" for example which we recently … Continue reading CPI: A Long Way To Go To 2%
Coinbase up 12% because the company is cutting staff? They can't cut quick enough as crypto trading falls off. ChatGPT at 145x revenue? There are plenty of Technology companies that continue to trade at 20x revenue. Despite the pronounced pullback in Tech valuations over the course of 2022, there is further room for valuations to … Continue reading Rates Going Higher. Equities Going Lower.
The Fed promotes "Core" inflation which excludes Food and Energy price increases - two of the largest expense categories for many Americans along with mortgage and car payments. I would be surprised if the two broad CPI components - Food and Energy - are not higher for the month of December with Food prices continuing … Continue reading Food & Energy Prices Aren’t Helping CPI
Back to the office, equities will sell off. We expect that equities will trade off when investors return to the office in January in anticipation of soft earnings. Technology stocks will be hit the hardest. Another leg down on EPS reports. When earnings are reported in January and early February, there will be another leg … Continue reading Equities Over The Next 2-3 Months
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