Technical Analysis

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

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...

Technical Review

Two Faces of the Economy and Stocks

January 23, 2024

In November consumer borrowing zoomed by $23.75 billion boosted by an increase of $19.5 billion in spending on credit cards. In records going back to 1943 November was the third highest increase ever. The surge in consumer spending continued in December as the monthly increase in Retail Sales...

Technical Review

FOMC – No Hurry to Cut

January 17, 2024

The Consumer Price Index for December came in a little hotter than expected by Wall Street. The monthly increase for the Headline and Core was 0.3% compared to estimates of 0.2% for the Headline and 0.3% for Core. As a result the annual rate for the Headline CPI rose to 3.4% but the Core CPI...

Technical Review

The 17 year Cycle and 2024

January 3, 2024

The Table recounts a recurring 17 year cycle showing that in the five instances since 1939 the S&P 500 declined by more than -20% after a peak with plunges of -48.4% in the 1973 – 1974 bear market and -57.7% during the 2008 Financial Crisis. The length of time for each decline to unfold...

Technical Review

Powell Wasn’t as Dovish as Markets Believe

December 19, 2023

Financial markets and pundits were quick to conclude that Chair Powell had become a Dove since he didn’t push back against the aggressive 4-5 cuts in the Funds rate that Wall Street has been expecting in 2024. An economist at a major investment bank said, “ It was “12 doves a-leaping .” A...

Technical Review

Jobs, Inflation, the FOMC, and Chair Powell

December 12, 2023

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...

Global Economic Report

Monetary Policy in 2024

December 11, 2023

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...

Technical Review

The Difference between Hearing and Listening

December 5, 2023

Frequently the words hearing and listening are used interchangeably as if they are basically the same which isn’t accurate. Hearing is a passive, involuntary, sensory process in which our minds perceive words because our ears are functioning. Listening is an active, voluntary, and intentional...

Technical Review

The FOMC and Financial Conditions

November 28, 2023

In his opening statement after the FOMC meeting on November 1 Chair Powell discussed Financial Conditions specifically. “ Financial conditions have tightened significantly in recent months, driven by higher longer-term bond yields, among other factors. Because persistent...

Technical Review

Demand for Loans Is Weak

November 13, 2023

The Federal Reserve released the Senior Loan Officer Opinion Survey (SLOOS) last week and the results were interesting. The percentage of banks increasing their Lending Standards fell from 50.8% for the second quarter to 33.9% for the third quarter. On the surface the drop in the number of...

Technical Review

Goldilocks Data Spurs Amnesia

November 6, 2023

The economic data last week can be summarized as follows - Softer data, but not too weak to question the No Recession narrative. Chair Powell’s press conference went as I expected. He reiterated the same points he has for more than a year. The FOMC will continue until they are confident that...

Technical Review, Global Economic Report

Secular Bear Market in Treasury Bonds

November 3, 2023

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...

Technical Review

No FOMC Rate Hike, but Hawkish Bias

November 1, 2023

I thought the GDP report would make the economy looks stronger than it really is and it did. GDP grew 4.9% in the third quarter according to the Bureau of Economic Analysis’s first estimate. The increase was led by an increase of 4.0% in consumer spending that contributed 2.69% of the total. As...

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