Markets Waking Up to Fed Reality

The market continued to work its way lower this week - waking up to the reality of the road ahead with respect to higher rates and inflation. However, some believe the Fed should pause immediately...

Fed Faces a Long Fight with Sticky Inflation

CPI and Core PCE continued to rise over August. Core PCE - the Fed's preferred measure - was more than double expectations and 3x the Fed's target rate. Rates are to remain higher for longer.

A Foolish Forecast

The business of forecasting is very difficult... what I think is a fool's errand. But when it comes to forecasting the economics of 330M people - their behaviour - and the specific impact on stock prices - it's near impossible.

Tech May Catch a Short Term Bid – But It’s Expensive

Stocks look set to rally a little in the near-term from oversold levels. However, act with caution, as they are looking expensive given the environment of expected EPS decline.

Wage Growth of 5.2% to Strengthen Fed’s Resolve

The US economy added 315K jobs in August. Good news. However, wage inflation ripped higher at 5.2% YoY. Based on this, it's likely the Fed will continue with a period of 'unusually high' rate hikes to reduce demand and wage inflation.

August Wasn’t Kind… Don’t Expect Sept to be Better

August wasn't kind for stocks - with the S&P 500 losing 4.2%. The market is now just 8.8% off the June 3636 low... expect this to be retested

The Case for Retesting the June Lows

It would be remiss of investors to rule out a retest of the June lows. This post explains my reasons not just technically (which has served us well) -- but more so fundamentally. Have we fully priced in the impact of where rates are likely to head in addition to QT?

Trees Never Grow to the Sky

Over the past three decades - I've developed a strong appreciation for market cycles. For example, I know that it's impossible to predict the future with any certainty. However, what I can do is prepare based on what I know to be true.

Powell Delivers a Blunt Message

If it wasn't already clear - it is now. Interest rates are going sharply higher and for longer. Powell's 8-minute Jackson Hole speech was carefully scripted - using words like "pain" to prepare the market for what lies ahead.

Don’t Fight the Fed

Marty Zweig's 1970 book "Winning on Wall Street" popularized the term "don't fight the fed". Today we have an environment where: (a) liquidity is contracting; and (b) rates are tightening. That's not conducive for higher prices.

The Pendulum Swings

When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so - Howard Marks

Markets Big Bet on a Dovish Fed

The S&P 500 is pushing into an area of clear technical resistance. What's more - fundamentally it's no longer cheap at approx 18.5x forward earnings. My thinking is the market is not an attractive risk/reward bet at these levels... and are under-appreciating the task in front of the Fed.