Weekly Technical Reviews

Technical Review

Higher Treasury Yields in the First Quarter

December 29, 2023

The stock market is extremely overbought which develops when a bullish narrative is widely embraced. As I’ve noted Wall Street expects the economy to avoid a recession in 2024, earnings will be up 12%, and the FOMC will be aggressively cutting the Funds rate 6 times. It doesn’t get any...

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

Special Update - FOMC More Dovish than Expected

December 14, 2023

I thought the Summary of Economic Projections (SEP) would change modestly from the September SEP. For the most part that was correct. I thought the projection for the Unemployment Rate would hold at 4.1%, the estimate for headline PCE would dip to 2.4% from 2.5% in September, and the Core PCE...

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...

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...