Technical Analysis

Technical Review

The Economy Is Slowing

May 7, 2024

The FOMC meeting and Chair Powell’s press conference overshadowed economic data last week. Going into the FOMC meeting Wall Street was concerned that after 3 months of not good inflation data the FOMC might consider a rate hike, rather than numerous cuts in 2024. The idea that the FOMC would...

Global Economic Report

Rate Cuts in 2024 Postponed

May 1, 2024

In the April Macro Tides I reviewed previous statements Chair Powell had made in speeches and during his post FOMC meeting press conferences and highlighted the emphasis he placed on the importance of confidence. “In speeches, testimony before Congress,...

Technical Review

GDP Strength and Sticky PCE Inflation

April 30, 2024

GDP growth slowed in the first quarter to 1.6% down from 2.4% in the fourth quarter and a strong 4.9% in the third quarter. On the surface it looked like the economy had decelerated far more than expectations, but a closer look revealed that inventories (-0.3%) and imports (-0.9%) suppressed...

Technical Review

Job Growth Eclipses and Dims Rate Cut Optimism

April 9, 2024

The Labor Department reported an increase of 303,000 jobs in March which was well above the Wall Street’s estimate of 200,000. Other aspects of the report were improved with the average work week ticking up to 34.4 hours from 34.3, and the Unemployment Rate falling to 3.8% from 3.9% in February...

Technical Review

‘There’s Still No Rush’

April 2, 2024

On March 27 Fed Governor Chris Waller gave a speech to the Economic Club of New York entitled ‘ There’s Still No Rush’ . Governor Waller discussed how strong the labor market continues to be, the resilience of the economy, and recent disappointing inflation data as justification for waiting...

Technical Review

FOMC – SEP vs. the Dots

March 26, 2024

I thought that the Median projection for rate cuts in 2024 would fall from 3 to 2. It turns out I was only about half right. In the March Summary of Economic Projections (SEP), the Median estimate for the Funds rate at the end of 2024 was 4.6% and no different than the December SEP. This is why...

Technical Review

Focus on the FOMC

March 19, 2024

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...

Technical Review

Key Reversals in Key Stocks and Market Averages

March 11, 2024

In last week’s WTR I reviewed a number of economic reports which showed a softening in the economy, CNN’s Fear & Greed index showing investment sentiment had entered the Extreme Greed Zone, and Warren Buffet’s view that “ markets now exhibit far more casino-like behavior than they did when...

Technical Review

A.I. – Nothing Else Matters

March 5, 2024

There was economic data released last week and most of it was softer. Unemployment Claims and Continuing Claims increased more than expected. Durable Goods orders for January fell - 6.1%, have declined in 3 of past 4 months, and New Orders dropped by -7.3% excluding defense. Consumer Confidence...

Global Economic Report

Peak Optimism?

March 4, 2024

The Atlanta Fed’s GDP Now estimate for the first quarter GDP is for the economy to grow by 2.1%, so no sign of a real slowdown yet, and Wall Street expects earnings to be up by 15% by the first quarter of 2025. Wall Street has adjusted to the new reality that the FOMC won...

Technical Review

Nvidia vs. the FOMC Minutes

February 23, 2024

On February 21 Nvidia reported earnings and the minutes from the FOMC meeting on January 31 were published. With all the hype surrounding Nvidia’s earnings report the FOMC minutes were ignored. Nvidia’s earnings and subsequent rally (+16.4% on February 22) and impact on the S&P 500 are the...

Technical Review

Sticky Inflation and Cold Weather

February 16, 2024

In January the Headline Consumer Price Index (CPI) fell from 3.4% to 3.1% but Core inflation held steady at 3.9%. Wall Street expected Headline inflation to drop to 2.9% and 3.6% for the Core. The sticky part was the monthly increase was 0.3% versus 0.2% in December for the Headline and 0.4%...

Technical Review

Waiting for the Economic Slowdown

February 13, 2024

At the end of December the Federal Funds rate futures pegged the odds of a rate cut at the March FOMC meeting at 90%. Last week the odds the FOMC would lower the Funds rate in March was less than 20%. In January Wall Street was projecting the FOMC would lower the Funds rate 7 times in 2024 with...

Technical Review

What No Cut in March!?!

February 6, 2024

The FOMC statement was particularly direct in summing up the mindset of the FOMC. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

During the press conference...

Technical Review

Special Update - TLT and S&P 500

February 4, 2024
1

TLT was expected to rally to 96.50 – 97.50 for wave b, before declining below 93.10 for wave c to complete the correction from 100.57. TLT exceeded the target range for wave b on February 1 by a small amount. In response to the January Employment report Treasury yields are ramping higher and...

Global Economic Report

The Longer Term View

February 1, 2024

Tracking the paths created by financial markets is a different form of hunting. Most investors rely on economic data to determine whether it’s a good time to invest or not. They follow economic data as if data were Tea Leaves providing...

Technical Review

Will Powell Provide Any Hints?

January 30, 2024

The FOMC won’t make a change to the Funds rate on Wednesday and will likely only change a few words in the FOMC Statement. Markets will focus on Chair Powell’s press conference for any indication that the FOMC is leaning to lowering the Funds rate at the March 20 meeting. President Truman...

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