Tag: CPI

FOMC Minutes: More Fed Propaganda

FOMC Minutes: More Fed Propaganda

The two paragraphs below are excerpts from the Fed's "Staff Economic Outlook" section of the FOMC meeting minutes published today. The Fed is disingenuous in that it does not acknowledge the fact that it inflated the money supply, thus resulting in higher prices. In fact, years ago the Fed used to define inflation as "inflation … Continue reading FOMC Minutes: More Fed Propaganda

No QT as Far as The Eye Can See

No QT as Far as The Eye Can See

We wrote yesterday that we would be surprised if the Fed follows through on its stated plan to reduce its balance sheet by $95 billion per month as it seeks to unwind the heavy hand it played in 2020 and 2021 by subsidizing fiscal stimulus programs and executing its QE program. Robust Fed balance sheet … Continue reading No QT as Far as The Eye Can See

This Market’s Sentiment Feels A Lot Like 2008

This Market’s Sentiment Feels A Lot Like 2008

Today's market sentiment feels a lot like 2008 when investors where sanguine about the early days of the credit crunch which eventually ballooned into the Great Recession. My experience covering Technology companies in 2008 was that many Equity analysts and investors did not have a clue what a credit crunch was. All they knew was … Continue reading This Market’s Sentiment Feels A Lot Like 2008

CPI Housing Data Lags Real World Housing Data

CPI Housing Data Lags Real World Housing Data

CPI housing data as measured by Owners’ Equivalent Rent ("OER"), lags real world data by approximately six months given the methodology of the CPI Housing Survey. Therefore, softness in the housing market is unlikely to appear in CPI releases before December 2022. This is worth noting given that OER has a weighting of approximately 24% … Continue reading CPI Housing Data Lags Real World Housing Data

Management Teams Will Matter More To Investors

Management Teams Will Matter More To Investors

As growth slows and interest rates climb, management teams will command a greater weighting in investors' due diligence processes as compared to the 2009-2022 period of ultra-low interest rates and Quantitative Easing ("QE"). While it is too early to call peak inflation and far too early to talk about a Fed pivot, it is never … Continue reading Management Teams Will Matter More To Investors

The Fed Will Raise By 100 Basis Points In July

The Fed Will Raise By 100 Basis Points In July

Our view is that the Fed will raise the Fed Funds Rate by 100 basis points when it holds its FOMC meeting on July 26th and 27th. Today's CPI print of 9.1% creates significant political and economic pressure for the Fed to become increasingly aggressive in its approach to taming inflation. The Fed is behind … Continue reading The Fed Will Raise By 100 Basis Points In July

When The Fed Last Pulled Back Too Soon

When The Fed Last Pulled Back Too Soon

The consensus seems to be that the Fed will cut interest rates in 2023. The 1970's illustrate how inflation could run out-of-control should the Fed prematurely reverse course on its tightening cycle. Priority One: The Fed wants to avoid out-of-control inflation at all costs. Our view is that Fed Chair Powell will be willing to … Continue reading When The Fed Last Pulled Back Too Soon