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
Tag: Jerome Powell
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 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
"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
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
BoE Foreshadowing The Fed?
The Bank of England expanded the scope of its bond-buying program by purchasing inflation-linked Gilts. Our view is that the BoE will stay in the bond market somewhat permanently and will ignore its self-imposed QE deadline of October 14th. Our view is that the U.K. will be dealing with Stagflation for years to come given … Continue reading BoE Foreshadowing The Fed?
50 vs. 75 vs. 100 BPS
We believe there is a 50% probability that the Fed will raise its Fed Funds target range by 100 basis points when the FOMC meets on September 20th and 21st. 50% probability of a 100 basis point increase, 40% probability of a 75 basis point increase, 10% probability of a 50 basis point increase. July … Continue reading 50 vs. 75 vs. 100 BPS
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
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 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
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