The economy remained in a steady, modest growth mode. Likewise, inflation, while not posting further declines, also is not rising despite ongoing concerns over tariffs. That left the door open for the real driver of the financial markets, a Fed rate cut. Though the 0.25% (aka 25 basis points or 25 bps) reduction was much anticipated, it stoked optimism for further rate cuts. Meanwhile, the momentum trade for artificial intelligence (AI)....
Weekly Commentary
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Renewed concerns over the ultimate profitability of the massive spending on AI drove the S&P 500 to a loss, led by the selloff in technology stocks. By contrast, more traditional stocks tied the rest of the economy rose. The economic news showed a continuing rebound in manufacturing and a still steady services sector. Overseas, the economic news showed a sluggish.....
One of the financial markets’ favorite obsessions came back into the spotlight; Fed Watching. The occasion was the first press conference of the new Fed Chairman, Kevin Warsh. While there were some interesting new operational changes announced, the markets chose to focus on their recent speculation for interest rate “hikes”. Toward that end, nine of the Fed governors speculated there could be one rate “hike” before.....
The price of oil declined further in response to increased flows of oil through the Strait of Hormuz and, primarily, optimism that a peace deal with Iran was close at hand. That also allowed financial markets to look past the May CPI headline number and focus on the still tame “core Inflation” (ex-food and energy). Overseas, the economic data remained relatively the same.....
The economic news added further confirmation to our view of solid growth in the US economy. Manufacturing’s rebound is strengthening, the services sector is very solid, and the jobs market is much stronger than expected, reporting a third month of substantial job growth in May. However, instead of celebrating this good news, the financial markets chose a negative interpretation. That view sees higher inflation from......
Despite the politicking about the Iran War and the price of gasoline, financial markets seem to be viewing those as “transitory events”. The real economic news is providing support for that view. Manufacturing is continuing to register improved growth, while the services sector is holding onto moderate growth. Housing is reinforcing the existence of strong underlying demand, despite the challenges in supply and stubbornly higher......
The financial markets told President Trump he does not have unlimited time to end the Iran War and open the Strait of Hormuz. With his trip to China concluding on last Friday and no announcement of a firm agreement with China on how to reopen the Strait, the bond market ran out of patience. Now it has begun to price higher oil prices for longer. That inflation fear shot up interest rates on bonds globally.....
Renewed optimism on the latest developments in the Iran War allowed financial markets to focus on economic fundamentals. The April Jobs Report helped cement the view that the economy is in solid shape. That further encouraged the recent resurgence in the AI trade technology rally, along with significant earnings reports from key tech companies integral to the AI infrastructure build out. Overseas, China and Brazil reported solid.....
US economic news reported more upward momentum in manufacturing, a housing market that is plugging along, a steady jobs market and a still solid consumer. Yet there remains an uneasy tension in the financial markets around the Iran War between the extension of the ceasefire and the continuation of the naval blockade. That tension drove up oil prices which drove down the business outlook in Germany and Japan.....
Monthly Commentary
The real economic news showed the economy was still in steady growth mode including solid job hirings. Treasury Bond yields declined for the month which affirmed that oil price inflation is indeed transient. The chaos in the headlines really had more to do with concerns over the profitability of the massive AI buildout and trying to support the last two months S&P 500 rally on the back of the AI trade. Overseas, despite the earlier concerns ...
Continuing enthusiasm for the Artificial Intelligence (AI) trade coupled with a steady stream of solid economic news, helped financial markets to mostly look past the Iran War. Positive comments from President Trump and Treasury Secretary Bessent in the final week of the month regarding progress in the Iran War negotiations, further helped markets look past the War. Overseas, China and Brazil reported positive.....
What the Iran War taketh away in March, it giveth in April. A declared ceasefire and Iran stating that the Strait of Hormuz is completely open sent stock and bond markets on a fierce rally. Solid US economic news gave the rally a strong underpinning. Manufacturing reported consistent and increasing growth. The services sectors are still solid. The jobs market is still steady. The housing market shows solid underlying ....
As might be expected, the Iran War dominated the headlines, and the headlines dominated the financial markets. Meanwhile, we do not see the economy showing any ill effects from the war and from the surge in oil prices. Manufacturing continues its slow and steady rebound, the services sector is still solid, the consumer is holding...
The market volatility masked solid underlying economic data and strong performance from more economically sensitive asset classes. Perhaps most importantly for the economy is a solid rebound in manufacturing while the services sector remains...
The month started out with a bang with US Small Cap Equities far outperforming US Large Cap based upon bullish sentiment for the US economy and expectations for further rate cuts from an incoming new Federal Reserve Chairman in May. The economic data supported that bullish sentiment. Manufacturing looks to be at the beginning stages of a rebound. The services economy remained steady.....
Two themes dominated financial market action throughout the year. It started out with a sell off in technology stocks tied to the Artificial Intelligence (AI) trade, prompted by the announcement of Chinese company DeepSeek’s new AI technology. With AI stocks priced for perfection, they were vulnerable to any challenges to their future assumptions. Then in March, talk of tariffs resurfaced with the upcoming Liberation Day unveiling of Trump’s new tariff policy, which promptly....
After months of warning signals about a potential bubble from the announcements of escalating Artificial Intelligence (AI) investments (Cap Ex), technology stocks finally sold off. Interestingly, another bubble concern sold off with crypto currencies suffering double digit losses. Perhaps the extended government shutdown provided the catalyst for the sell off. Meanwhile, the economy continues to move forward...
The economy remained in a steady, modest growth mode. Likewise, inflation, while not posting further declines, also is not rising despite ongoing concerns over tariffs. That left the door open for the real driver of the financial markets, a Fed rate cut. Though the 0.25% (aka 25 basis points or 25 bps) reduction was much anticipated, it stoked optimism for further rate cuts. Meanwhile, the momentum trade for artificial intelligence (AI)....
There has been much concern in society at large, and the financial markets in particular, about the escalation of
geopolitical tensions between China and the US. These tensions have centered primarily around the increasing
rhetoric and saber rattling over Taiwan’s statehood status. Chinese equities remain.....