Tag: fed funds rate

Now Maybe The Market Gets It?

Now Maybe The Market Gets It?

Perhaps now the equity market understands that it would be impossible for the Fed to normalize rates if the central bank was to take rates back down to zero in short order due to the Banking crisis or for any other reason. Wednesday's FOMC projections show that the Fed plans to keep rates elevated and … Continue reading Now Maybe The Market Gets It?

The Fed’s Balance Sheet Reduction (QT) Update

The Fed’s Balance Sheet Reduction (QT) Update

The Fed essentially did nothing this past week in terms of tightening the money supply. QT hasn't been nearly as aggressive as the Fed's QE efforts - especially when you consider the cumulative effect of QE from 2009-early 2022. This Fed's ideology is not aligned with getting CPI down to 2% as I wrote back … Continue reading The Fed’s Balance Sheet Reduction (QT) Update

Tomorrow’s CPI = Noise

Tomorrow’s CPI = Noise

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

Why The Fed Should Hike By 50 BPS

Why The Fed Should Hike By 50 BPS

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

Technology Stocks Are Not Yet In The Clear

Technology Stocks Are Not Yet In The Clear

The NASDAQ Composite has had a nice little run, up more than 9% year-to-date. However, I would exercise caution ahead of Tech earnings and the Fed's January 31st / February 1st FOMC meeting. We have written on numerous occasions that we expect management teams to take a conservative approach to 2023 Revenue and EPS guidance. … Continue reading Technology Stocks Are Not Yet In The Clear

CPI: A Long Way To Go To 2%

CPI: A Long Way To Go To 2%

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%