In the wake of the August Payroll Report, let’s review the Fed’s dilemma and the views of Fed Governor Chris Waller, one of the frontrunners to be the next Fed Chair. Is monetary policy restrictive? Yes, by a number of measures. The Cleveland Fed recently published a study that estimated r-star, or the neutral...
Mid-week market update: I rhetorically asked last weekend if a bond market tantrum could derail stock prices. I highlighted the weakness in the long Treasury bond ETF (TLT), which has failed to rally despite a recycle of the stochastic from oversold to neutral. TLT weakened on Monday as global bonds sold off, but it rebounded...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
The Fed’s annual Jackson Hole symposium is intended for participants to discuss the challenges they face and the long-term implications of different ways of thinking about monetary policy. Much like the ASSA conference held every January or the annual ECB conference in Sintra, it’s full of academics giving papers with Greek letters lying on their...
Mid-week market update: I was a little hesitant about jumping to instant conclusions about the upside breakout of several market indices in reaction to Chair Powell's speech on Friday, and I wanted to wait for signs of confirmation. We have it now. The Dow and the equal-weighted S&P 500 staged upside breakouts, and they are holding...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
The purpose of the Fed’s annual Jackson Hole symposium isn’t to make decisions about the short-term direction of monetary policy, but to consider the long run implications of policy. It is in that spirit that I consider the short- and long-run implications of Trump’s America First policies. The primary purpose of Trump’s policy initiatives...
Mid-week market update: Is the much anticipated market pullback starting? The U.S. equity market recently saw a violent rotation from growth to value, led by downdrafts in market darlings like NVIDIA and Palantir. Notwithstanding the change in leadership, I have been monitoring the evolution of the VVIX, or the volatility of the VIX, which spiked...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Trump’s pressure for a rate cut from the Federal Reserve is growing. Treasury Secretary Scott Bessent said in a TV interview last week, “If you look at any model for the Fed Funds rate, it suggests that we should probably be 150, 175 basis points lower.” Stephen Miran, who is Trump’s pick to fill...
Mid-week market update: Yesterday's July CPI report came in roughly in line with market expectations. Headline CPI was a hair below consensus, while core CPI was a hair above consensus. Even as the bond market greeted the report with caution, the stock market responded with a risk-on stampede in the expectation of a September rate cut....
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Last week, I outlined the case for fiscal dominance (see Will the Next Fed Chair Matter Much to Policy?). U.S. debt to GDP is rising and not stabilizing. In all likelihood, the Fed will follow the path of the BoJ of cutting short rates, restarting quantitative easing and yield curve control to suppress long rates,...
Mid-week market update: Two components of my Bottom Spotting Model flashed buy signals last Friday. The VIX Index spiked over its upper Bollinger Band, and the NYSE McClellan Oscillator reached an oversold condition. In the past, the triggers of two or more component buy signals were signs of tactical bottoms. This time, my inner...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
As reporters tried to elicit the Fed’s reaction function from Jerome Powell during the July post-FOMC press conference, Bloomberg’s Michael McKee asked a very different question relating to the juxtaposition of fiscal and monetary policy in the years ahead: McKEE: Do you have concerns about the cost to the government of keeping rates elevated for...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
Q2 earnings season was supposed to be a key test of how the Trump tariffs would affect corporate earnings and margins. The coming week will see the bulk of the S&P 500 by weight report results. So far, the preliminary verdict has been relatively benign. Negative effects from tariffs seem to be the exception rather...
Mid-week market update: One key development that I had been monitoring is the upside or downside resolution of the sideways consolidation that often occurs after the market ends an upper Bollinger Band ride. Investors may have a tentative answer. It's an upside breakout. The S&P 500 and equal-weighted S&P 500 finally staged an upside breakout...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend...
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