Many Technology investors got religion on August 26th as it relates to interest rate increases (more to come) and a Fed pivot (not any time soon). The message of "higher for longer" was reiterated yesterday by Fed Chair Powell. The Fed tends to undershoot when it comes to inflation and its Fed Funds target. We … Continue reading It Always Makes Sense To Invest In Quality Names
Tag: Stagflation Is Imminent
Despite hawkish rhetoric the Federal Reserve's monetary policy remains accommodative. Real interest rates remain negative by a wide margin (8.50% CPI compared to a 2.25-2.50% Fed Funds Rate range) and we are nowhere near a "neutral" rate. Our outlook calls for muted Real GDP growth and high prices (i.e. Stagflation) for years to come. Commodities … Continue reading The Fed Remains Accommodative. Inflation Remains Persistent.
The Cleveland Fed's current August year-over-year CPI estimate is 8.3%, down 0.2% from July's 8.5% level. The bank estimates August Core CPI at 6.3%, up from July's 5.9% level (while oil prices have fallen, food prices continue to rise). We quote the Cleveland Fed as the bank's view on CPI and Core CPI is in-line … Continue reading August CPI To Remain Robust
So much for the Fed trimming its Balance Sheet by $95 billion per month. The Fed has expanded its asset base during the month of August. Fed assets stood at $8.9 trillion as of Wednesday August 10th. It is difficult to allocate this Federal Reserve any credibility as it relates to mitigating price inflation or … Continue reading QT or QE?
If voted into law the Inflation Reduction Act will ensure more deficit spending, more Federal debt, more taxes, negligible Real GDP growth, low interest rates and high inflation - a recipe for continued Stagflation. What does stagflation look like? You are living it. The earmarks of stagflation are high inflation, high Federal debt and negligible … Continue reading Inflation Reduction Act Ensures Stagflation
It would seem to us that the Fed is stalling its QT effort. Inflation will not materially decline unless the Fed materially shrinks the money supply. Looking at the Fed's balance sheet it appears the Fed has stalled its QT effort, especially when one considers that the Fed had planned to reach a $95 billion … Continue reading The Fed Is Blinking
We are getting closer to finding a bottom but are a long way off from capitulation across the equity markets. Equity Bottom: We believe a bottom will not be found before the Fed achieves its QT run rate of $95 billion per month which is likely to occur around Labor Day. Recession: We expect the … Continue reading It’s No Longer Enough To Buy The Narrative
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
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