Tag: Jerome Powell

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

The Fed Can’t Afford To Be Dovish

The Fed Can’t Afford To Be Dovish

Our view is that it will be difficult for the Fed to take a dovish position with CPI above 7% given a CPI target of 2%. Further, the entire Treasury yield curve remains in negative territory. Recall that Powell wants to see positive real rates across the yield curve as he said in his September … Continue reading The Fed Can’t Afford To Be Dovish

The Fed’s Balance Sheet Reduction (QT) Update

The Fed’s Balance Sheet Reduction (QT) Update

The Fed reduced its Treasury and Government Agency security holdings by $32.9 billion over the week ended November 30th. The Fed has reduced its balance sheet holdings by $79.7 billion over the last 4 weeks. Fed Balance Sheet – Treasuries: The Fed’s Treasury security holdings were $19.6 billion lower over the last week and $60.0 … Continue reading The Fed’s Balance Sheet Reduction (QT) Update

Stocks To The Moon, Fundamentals Be Damned

Stocks To The Moon, Fundamentals Be Damned

"Did Powell just say that the pace of Fed Funds Rate increases may slow? Let's run stocks higher through year-end, fundamentals be damned!" I've never seen a more lazy equity market in my life. Fundamentals have not mattered since the COVID lockdowns and Fed policy matters far too much. The market is to blame as … Continue reading Stocks To The Moon, Fundamentals Be Damned

Tech Layoffs Are Spiking

Tech Layoffs Are Spiking

More than 24,000 Technology sector employees have been laid off month-to-date making November the worst month of the year for layoffs as Technology companies prepare 2023 budgets. Q4 2022 could rival Q2 2020 when more than 60,000 Technology sector employees were laid off. Q4 2022 is tracking at approximately 37,000 Technology sector employee layoffs. Our … Continue reading Tech Layoffs Are Spiking

Powell Should Raise By 100 Basis Points

Powell Should Raise By 100 Basis Points

The 2-Year Treasury yield sits at approximately 3.42%. Therefore the Fed ought to raise the Fed Funds Rate by 100 bps which would put the Fed Funds Rate lower and upper bound at 3.25-3.50%. The next FOMC meeting will be held September 20th and 21st. Simultaneously, the Fed ought to stick to its plan of … Continue reading Powell Should Raise By 100 Basis Points

Fix The Problem Rather Than Dance At The Edges

Fix The Problem Rather Than Dance At The Edges

What Fed Chair Powell spouts Friday in Jackson Hole WY will be meaningless in the long-term. The longer the Fed allows price inflation to persist, the longer the economy will remain in this stagflationary environment of high prices and low economic growth (if any real growth at all). It's simple math. For every incremental dollar … Continue reading Fix The Problem Rather Than Dance At The Edges

Treasury Yields Up; Risk Assets Down

Treasury Yields Up; Risk Assets Down

Treasury Yields moved higher and therefore equity indices moved lower. The Fed is not done tightening, not even close. The Fed won't tighten as much as it should, but it will tighten for much longer than many market participants expect - especially those who expect the Fed to reverse course and lower rates sometime between … Continue reading Treasury Yields Up; Risk Assets Down