Recession

What Are We Rooting For?

Dec 22, 2022 2 min read

On Tuesday, the stock market sold off on fears of a hard landing. On Wednesday, the market rallied on better-than-expected earnings reports from Nike and FedEx and better-than-expected consumer confidence. Today, the market sold off on news that the labor market remains tight, raising fears of higher-for-longer Fed rate hiking. On the other hand, the Index of Leading Economic Indicators, released today, was very weak. After the close yesterday, Micron

Ed Yardeni

Is Santa Making A Comeback?

Dec 21, 2022 1 min read paid

Stock prices rebounded solidly from yesterday's selloff. Better-than-expected news from Nike and FedEx helped reduce fears of a hard landing with free-falling earnings. So did a better-than-expected rebound in December's preliminary reading on the Consumer Sentiment Index (chart).

Ed Yardeni

Fireworks Before Christmas?

Dec 20, 2022 2 min read

Santa is on his back foot. Fed Chair Powell's presser was hawkish last Wednesday. Thursday's batch of economic indicators seemed to support the hard-landing scenario. Could the Santa Claus rally make a comeback before Christmas despite the Grinch at the Fed? It could, depending on November's personal income report to be released on Friday. We think that it will confirm that inflation is moderating

Ed Yardeni

Looking Forward to 2024!

Dec 18, 2022 1 min read paid

There's certainly lots of pessimism about 2023. That's the bad news. We certainly aren't as pessimistic as the consensus seems to be currently. The good news is that the stock market looks ahead by about 12 months. So the outlook for 2024 will matter more and more, while 2023's outcome will matter less and less as next year progresses. We are optimistic

Ed Yardeni

The Economic Week Ahead: Dec. 19 - Dec. 24

Dec 17, 2022 2 min read

Last Tuesday's good CPI news wasn't good enough according to Fed Chair Jerome Powell. In his Wednesday presser, he remained hawkish suggesting that the federal funds rate would be raised early next year to 5.00%-5.25% (bracketing the latest median forecast of the FOMC) and maintained at that restrictive level until inflation moderated significantly. Friday morning, Federal Reserve Bank of New York President John

Ed Yardeni

Retail Sales Clobber Stock Prices

Dec 15, 2022 2 min read paid

Yesterday, Fed Chair Jerome Powell was more hawkish than expected. He reiterated that the Fed needs to be more restrictive to moderate inflation, and to remain restrictive until the job has been done. The FOMC Summary of Economic Projections now sees the federal funds rate rising from 4.25%-4.50% currently to 5.00%-5.25% next year and staying there. Meanwhile, the 2-year Treasury note fell to 4.

Ed Yardeni

The Economic Week Ahead: Dec. 12-16

Dec 11, 2022 1 min read paid

All we want for Christmas is a lower-than-expected November CPI (Tue.) and a less hawkish press conference (Wed.) by Fed Chair Jerome Powell. The Santa Claus rally depends on this seasonally happy scenario. The week ahead starts with the NY Fed's November survey of consumer expectations (Mon.). The recent drop in gasoline prices should moderate inflationary expectations. November's NFIB small business survey (Tue.) should provide additional

Ed Yardeni

Fork In The Road

Dec 7, 2022 1 min read paid

It was another day of recession jitters in the stock market as the CEOs of Bank of America and Wells Fargo reported that they are seeing slowing consumer spending and borrowing. That may be so, but there wasn't any evidence of a slowdown in October's consumer credit data released by the Fed today. Total consumer credit rose $27.1 billion in October, up from a revised

Ed Yardeni

Yearend Jitters

Dec 6, 2022 2 min read

The stock market has the jitters as investors worry that the economy may be too strong and too weak at the same time. Yesterday the S&P 500 fell because November's non-manufacturing purchasing managers index was stronger than expected (chart). Investors concluded that the economy may be too strong requiring the Fed to raise interest rates still higher, increasing the risk of a recession. Today, stock prices

Ed Yardeni

Soft Landing

Dec 1, 2022 2 min read

The bears disparaged yesterday's stock market rally claiming that Fed Chair Jerome Powell's speech at the Brookings Institution was hawkish and didn't justify the market's bullish spin. We believe that the bulls correctly perceive that inflation peaked this summer and were relieved to hear Powell say that the Fed might be willing to let inflation subside without pushing the economy into a

Ed Yardeni

Most Widely Anticipated Recession Ever

Nov 28, 2022 2 min read

Our contrarian instincts give us more confidence in our “growth recession,” or “mid-cycle slowdown,” scenario. A recession next year would be the most widely anticipated downturn on record. Consider the following: (1) Philly Fed’s Anxious Index. The Philadelphia Federal Reserve Bank’s Survey of Professional Forecasters, which started during Q4-1968, includes the Anxious Index, which is the probability of a decline in real GDP (chart). The survey asks panelists

Ed Yardeni

Yield Curve Spread Signaling Rate Peak

Nov 27, 2022 2 min read

The yield curve spread between the 2-year US Treasury note and the 10-year US Treasury bond is a leading indictor of several cyclical financial and economic developments. It tends to invert (i.e., to turn negative) before economic downturns (chart). So it tends to predict recessions. We think that yield curve inversions actually predict that the Fed's monetary policy is getting too tight, which could trigger a financial

Ed Yardeni

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