Fundamental Analysis

During Chair Powell’s December 18 press conference, Powell used the word uncertainty 10 times as he discussed the outlook for the labor market, inflation, the level of the neutral rate, and how President Trump’s agenda could impact monetary policy.

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The evolution of rate cut enthusiasm in 2024 is an example of investors anticipating what will happen only to be proven wrong. The irony is that professionals on Wall Street frequently cite the Federal Funds rate futures as a basis for their outlook for monetary...

Coming into this year Wall Street expected the FOMC to lower the Funds rate 6-7 times even though the Unemployment Rate was near a 50 year low and GDP averaged 3.1% in 2023. This was clearly not going to happen. The disappointment of fewer rate cuts was replaced by the prospect of Artificial...

Heading into 2024 Wall Street and most investors are positive about the economy and the outlook for stock prices. Inflation is expected to decline as consumer spending holds up. The drop in inflation will allow the FOMC to lower the Funds rate as economic growth...

There is always a Bull market in herd thinking on Wall Street, often allowing Wall Street to dismiss data that may not jibe with the ‘narrative’. Wall Street believes the economy will avoid a recession and the FOMC will cut the Funds rate 4-5 times in 2024. In November a 199,000 jobs were...

Wall Street is forecasting that GDP will slow in the first half of 2024 with growth averaging 0.35%, so a recession will be avoided. Wall Street expects the FOMC to cut the Funds rate by 0.25% in March and 4 more times by the end of 2024. The FOMC...

Consumer Price (CPI) inflation peaked in 1981 and then trended lower for 40 years, and after 1997, Core Consumer inflation held below 2.5%. In April 2021 inflation broke out of this 24 year base with the headline CPI pushing above 4.0% and the...