Bond markets (and the US dollar) appear to be reacting to the likelihood the Fed has ‘more work to do’ on bringing inflation down to its 2.0% target. For e.g., the US 2-year treasury has surged almost 50 bps the past couple of weeks on stronger than expected economic data (eg surging jobs and higher wages). Meanwhile, JP Morgan’s CEO – Jamie Dimon – said it’s too early to declare victory on inflation. What does this mean for stocks?
"Interest Rates / Bonds"
Powell Leans Dovish – Sending Stocks Higher
The market was worried about an overly hawkish Fed heading into the Feb FOMC meeting. However, Fed Chair Powell appeared to lean the other way… hinting at dovish tones. New language like ‘disinflation’ were introduced… suggesting the cash rate may not need to get to 5.0%. It didn’t take much for stocks to rally as a result…
Thinking Through Both the Bull & Bear Case
Are you a bull or a bear? That answer will largely depend on your timeframe. However, there are solid arguments for both the bull and bear case in the near term (next 12 months). This post looks at each and why I still lean bearish in the near-term. However, I will treat any meaningful dip (eg 10%) as a buying opportunity.
Is Bad News finally Bad News?
Soft landing? That’s the market consensus. I am not buying it. For example, retail data for December was horrible – it’s third straight month of declines. Are US consumers tapped out? Their savings rates are now at all time lows? Keep your eye on credit quality – how is that looking?
For a full list of posts from 2017…