What we learned from the Federal Reserve yesterday was just how tightly the market holds on to every word from Fed Chairman Jerome Powell. No sooner did he alter his language on potential rate cuts and markets sold off, especially the speculative Nasdaq. Look at the long-term path of interest rates above and the DJIA, and you can see the connection between interest rates and prices. Now we’re stuck in this no man’s land where finally fixed income investors can get some interest on their savings, and sure enough, the market has a fit. Interest rates are hardly in need of a cut. … [Read more...]
Europe’s Economy Falls Further Behind U.S.
Paul Hannon and Yuka Hayashi of The Wall Street Journal are reporting a growth gap between the U.S. and the eurozone. One factor threatening to weigh further on the European economy is its proximity to geopolitical flashpoints. They write: Europe’s economy stagnated in the final three months of last year, expanding a divide between a booming U.S. economy and a European continent that is increasingly left behind. The fresh economic data showed higher borrowing costs had compounded the earlier impact of higher energy prices in the wake of Russia’s invasion of Ukraine. By contrast, the … [Read more...]
Are Interest Rate Cuts on the Horizon?
Steve Matthews of Bloomberg reports that the Federal Open Market Committee is poised to hold rates but may start considering cuts. Matthews writes: The Federal Reserve will likely hold interest rates steady for a fourth straight meeting but avoid signaling an imminent interest-rate cut. The Federal Open Market Committee is poised to keep rates in a range of 5.25% to 5.5% at its two-day policy meeting ending Wednesday, a 22-year high first reached in July. The rate decision and accompanying statement will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press … [Read more...]
Consumer Confidence Climbs to Two-Year High
Jeffry Bartash of MarketWatch is reporting that the U.S. consumer confidence index climbed to a two-year high. Bartash writes: Consumer confidence jumped in January to a two-year high of 114.8, a survey showed, reflecting slower inflation, a record stock market and improved growth in the economy. The closely followed index advanced from a revised 108.0 in December, the Conference Board said Tuesday. Economists polled by the Wall Street Journal had forecast the index to register 115.0. The last time the index was higher was in December 2021. [...] And the next move by the Federal … [Read more...]
Three of My Favorite Charts
Your Survival Guy studies these charts daily: Action Line: Keep your eye on what’s happening, and let’s talk. Originally posted on Your Survival Guy. … [Read more...]
Durable-Goods Unchanged in December
Economists expected a slight rise in durable goods orders, but they were dragged down by the transportation sector and by capital goods in the defense sector, reports Joshua Kirby of The Wall Street Journal. He writes: Orders for longer-lasting goods in the U.S. were unchanged in December, pointing to little movement in manufacturing as the year ended. New orders for products meant to last at three years, such as appliances, computers, cars and other manufactured goods, were stable on month, adjusted seasonally, according to Commerce Department figures set out Thursday. [...] Orders … [Read more...]
Is Inflation Improving? It Depends on Who You Ask
Americans have suffered through three years of Bidenflation, and by all accounts, the rate of inflation is improving. But some people, mostly those affiliated with the current administration, are taking a victory lap based mostly on the PCE price index, while other inflation measurements are still coming in at distressingly high levels. Gwynn Guilford reports for The Wall Street Journal: The core index of the Federal Reserve’s preferred inflation metric, the personal consumption expenditures price index, increased 2% from the prior quarter, the same as in the third quarter and in line with … [Read more...]
Surveys Show Economic Growth and Waning Inflation
Jeffry Bartash of MarketWatch tells his readers that recent S&P surveys ‘send a clear and welcome message of resilient economic growth and sharply waning inflation’. Bartash writes: The U.S. economy got off to a good start as growth sped up in January a pair of S&P business surveys showed, indicating a recession still appears far off. The S&P flash U.S. services PMI climbed to a seven-month high of 52.9 in January from 51.4 in the prior month, S&P said Wednesday. The flash U.S. manufacturing PMI, meanwhile, jumped to a 15-month high of 50.3 this month from 48.2 in … [Read more...]
U.S. Banks Reported Higher Credit Card Spending
Angel Au-Yeung of The Wall Street Journal is reporting the four biggest U.S. banks reported higher credit card spending in 2023, up from the previous year. She writes: From fuel and groceries to hotels and airline tickets, consumers are putting more purchases on credit cards—and taking longer to pay them off. The four biggest U.S. banks reported higher credit card spending in 2023 compared with the previous year. In fact, since 2020, credit card spending has steadily increased at three of the four. The exception is Citigroup, where credit card spending hit a recent peak in 2021. [...] The … [Read more...]
Citigroup to Layoff 20,000, Schwab Stock Down 24%
When Citigroup lays off 20,000 employees, as it announced last week it will do by 2026, then Your Survival Guy concludes: not all is right with the financial world. When Charle’s Schwab’s stock, the largest publicly traded U.S. brokerage, declines by 17% as it did last year and was down seven percent through Friday of this year, not all is good in the financial world. When Citi announced its exit from the municipal bond market, as it did recently, who will be the buyer of last resort as it was for so many? When Citi got into a Second Amendment battle, some states, Texas being the big … [Read more...]
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