Inflation Expectations

“Prejudice is a great time saver. You can form opinions without having to get the facts.”

Newsletter /

All three key US equity indices made all-time new highs for the week on the notion that economic data was softer. We saw:
1. A slowdown in housing activity. (Existing home sales were down -1.9 %, and New Home Sales were down -4.7%, albeit from near-record high levels.)
2. Languishing consumer sentiment surveys (which were at 100 pre-pandemic and bottoming at 50 in 2022) have slipped from 80 in Q1/24 and are down to around 68-69.)
3. Slightly lower inflation expectations (1 year from now nudged lower to 3.3%.)
4. But, most interesting is a notable pick-up in U.S. service activity (the PMI services survey jumped to 54.8 from 51.3), which is where the bulk of the inflationary pressure is causing the greatest damage to households and businesses.

“Prejudice is a great time saver. You can form opinions without having to get the facts.” Read More »

“It was the best of times, it was the worst of times…”

Newsletter /

The economy is growing slowly and inflating quickly, which presents significant challenges to the economy, to unprofitable and indebted sectors of the market, and eventually to the government – but not at least until the election.
Heightened uncertainty, rising volatility, and rising indebtedness exert tremendous financial stress on broader portions of the economy. The government won’t let it break until after the election.
Perry Capital has anticipated rising inflation, which is helping corporate profitability, but, to date, has not resulted in higher yields –– although credit spreads are beginning to widen in weaker credits. Expect more.

“It was the best of times, it was the worst of times…” Read More »

If getting Inflation to 2% is truly the Fed’s objective, then why in the world would it cut in 2024?

Bulletin /

Fed Watch is on. No rate cut this week — for sure — and traders are not betting on one in March either, but Powell will probably keep the door open so that stocks and bonds do not face a drawdown.
• That means the first possibility of a cut will not present itself until May 1st.
• The Employment report comes out Friday, and earnings reports from some of the most important companies will filter in all week.
• Considering where we are with respect to valuations, the slightest negative surprise in any of the data could have outsized effects on markets.

If getting Inflation to 2% is truly the Fed’s objective, then why in the world would it cut in 2024? Read More »

“The health of nations is more important than the wealth of nations.”

Newsletter /

The U.S. Stock market reached an all-time high!
On the week: The Dow rose 1.5%. It is up 2.56% in 2024 to 38,654. The S&P 500 closed- up 1.4%. It is up 3.96% for 2024 to 4,958.The Nasdaq gained 1.7%. to 15,628. It is up 2.56% for 2024 to 15,628.
Last week marked the 4th week in a row of gains for the major benchmarks. Stocks have rallied 13 out of 14 weeks. The only down week was the first week of January. This is a serious Bull-snorting rally.
The catalyst for the gains were Big Cap Tech earnings, stronger employment growth, and rising optimism for growth even with a steady Fed, which left rates unchanged (5.50%) at its first meeting of the year. Traders have already taken the March Rate cut off the table.

“The health of nations is more important than the wealth of nations.” Read More »