Operating at the Intersection of Technology and the Capital Markets
Tag: inflation
If you missed the latest episode of our TEK2day Podcast, you may access it at the YouTube link below. Episode 443 covers Ad-driven and Consulting-focused business models from the perspective of how they fare when the macro-environment softens. Episode 443 is a follow-up to our recent TEK2day article: Get Ready for EPS Misses https://youtu.be/PV6QdIPurHA
The New York Fed released its quarterly report on Household Debt and Credit this past week. Consumer strength is waning, not gaining. Loan delinquencies and foreclosures are up across auto loans and mortgage debt which is primarily where debt expansion has occurred in prior months. There are a number of charts between pages 3-40 that … Continue reading Consumer Strength Is Waning
Over the past several months we have written that the new economic normal means a target CPI in the 3-4% range and muted Real GDP in the 0-2% range. Interest rates can't go back to the Volcker days as Treasury would not be able to refinance its debt at double-digit rates. We could however see … Continue reading What Will The “New Normal” Look Like?
Inflation, interest rates and OpEx are climbing while demand softens for many companies. One glance at the table below shows that layoffs over the past two months are fairly widespread across industries. We believe that more layoffs are coming as inflation and interest rates rise. Rates will accelerate higher in June should the Fed make … Continue reading More Layoffs Are Coming
On March 31st we told investors to be prepared for weak earnings. After almost 30 years in the capital markets one lesson learned is that sellsiders are slow to publish bad news. Therefore it is not terribly difficult to predict that the sellside will lower EPS estimates for 2023 and beyond when the June and … Continue reading Earnings Estimates Will Be Revised Downward
Inflation as measured by the CPI will persist above the Fed's target rate of 2% over the long-term. Why? Because as Milton Friedman said: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in … Continue reading CPI Will Persist Above The Fed’s Target
We expect a 50 basis point increase in the Fed Funds rate tomorrow. More importantly over the next number of months will be the Fed's actions with respect to its balance sheet. Our focus will be on the Fed's balance sheet over the next number of months (see chart below), which has ticked down recently … Continue reading Tomorrow’s Fed Decision
It is tough to be a fixed income investor in this market. Yields are rising, but in real terms even high yield securities are in negative territory given the inflated CPI environment. Some fixed income portfolio managers are spinning that now is a great time to be a fixed income investor because high yield securities … Continue reading Tough To Be A Fixed Income Investor
Our view is that the Fed will reset its 2% inflation target approximately one year from now if it wants to salvage the last vestiges of its credibility. While April's CPI number may come down some due to the retreat in the price of oil, we could continue to see core inflation march higher for … Continue reading The Fed Will Reset Its 2% Inflation Target
Federal Reserve officials tout the U.S. economy's strength as the reason why Fed tightening will not tip the economy into recession. The unemployment rate is the preferred metric of Fed officials who are spinning the tale of a strong economy. We provide an alternative. The Fed is expert at one thing - pulling the wool … Continue reading Fed Spin and U.S. Jobs
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