Forecasts

Growth estimates for the full year are now diving to under 3% due to weakness in early Q2 data. Meanwhile the Federal Reserve is having difficulty deciphering what this means for interest rate policy. For now, however, policy divergence,…

Yesterday, the big news for US data was poor post-winter retail sales. I believe US consumption growth still supports a 2 or even 3%ish level of GDP growth. It is actually elsewhere where the US economy has shifted down: inventories,…

Two notable events regarding stock and bond markets have occurred in the last twenty-four hours. One is comments from Fed Chair Janet Yellen that suggest she sees U.S. equity prices as elevated. The second is a wide-spread backup in yields…

I don’t think we got any new information from the economy or the Fed yesterday. While the GDP report was below expectations, it was exactly where the Atlanta Fed said it would be. And the Fed has not altered its stance. It is prepared to…

Yesterday was a big conference day in Washington, D.C., with the IMF and World Bank meeting and with the Brookings Institution holding an event featuring the Greek and German finance ministers. While I attended the Brookings event, the…

The question of whether markets are prepared for the default of such a large debtor is a good one to ask in thinking about tail risk as the situation at Petrobras encapsulates the intersection of emerging market US dollar corporate debt,…

A number of stories over the past week that I don’t have a full analysis for are interesting enough that I want to mention them in a potpourri post of market news. I don’t have a view on all of these stories but I do think these are some of…

Yesterday I made up the phrase “The Four Horsemen of this rally” when discussing the bull market rally with a colleague. What I was trying to get at was the unsustainable nature of a divergence between top line revenue growth and the…

The biggest question facing the Federal reserve is whether their data dependency means looking through weak Q1 data and raising rates this summer anyway. Given the key elements of the Fed’s reaction function as I laid them out yesterday,…

The title of this post is what the Fed wants us to believe. It wants us to believe that it is prepared to raise interest rates this year but that it will increase them slowly by assessing the data, hiking once and re-assessing, and then…