Fed Interference Makes Markets Hard To Predict

The Fed has implemented backdoor quantitative easing through bank bailouts and subsidies in the overnight repo market, distorting the stock market. Promised rate cuts by the Fed may not materialize due to the record amount of Treasuries being sold and rising interest rates. The Biden administration has also distorted the energy landscape by selling off half of the US oil reserves.

Rate Cut Forecast Now Seen For September At Earliest

Rate Cut Forecast Now Seen For September At Earliest Apr. 19, 2024. September is now seen as the earliest date for policy easing. Fed funds futures on April 18 are estimating a roughly 71% probability that the Federal Reserve will reduce its current 5.25-5.50% target rate at the Sep. 18 meeting.

Belated March CPI Analysis

March CPI release convinced the Fed and the market that inflation has stalled. Boy Wirat says he thinks the great inflation bubble that started three years ago has long since popped. He says the main reason inflation is still high is because of the way shelter costs are calculated. Boy says housing price inflation has dropped significantly from its peak.

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Higher-For-Longer Risk For Rates Drives Up Treasury Yields

Federal Reserve Chairman Jerome Powell on Tuesday conceded that inflation progress has stalled and the case for rate cuts has weakened. The 10-year Treasury yield is paying attention and rose to 4.67%, the highest since Nov. 6. The Treasury market has convinced the crowd to demand a higher yield.

Teen Employment Numbers Improve In March 2024

According to the U.S. Bureau of Labor Statistics, teen employment surged in March 2024. The number of teens Age 16 to 19 counted as employed jumped by 224,000 to reach 5,832,000. Number of Americans Age 18 and 19 with jobs rose 161,000 from the previous month to 3,756,000, the highest since April 2008.

The Stock Market Sell-Off May Have Only Just Begun

The S&P 500 has pulled back 4% from recent highs, but it's not due to geopolitical tension. Rates, the dollar, yen, and oil are not reflecting typical flight to safety characteristics. Markets are correcting for their massive blunder. Financial conditions are tightening, and the market is correcting its errors.

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The World Is Overweight U.S. Assets

The world is now overweighting U.S. Assets by 40% of gross domestic product. By 2012, the private sector held a sizeable short position in the U.s. Dollar. As a share of GDP, the world has shifted from overweighting foreign assets to underweighting them. The world has experienced superior growth and asset market performance in the last decade.

U.K. Wage Growth Proves Sticky Despite Rising Unemployment

Private-sector pay up 12% annualised on a month-on-month basis. The unemployment rate notched up to 4.2% from 3.9%. Wage growth is temporarily stuck in the 6% area. The Bank of England will wait until August to cut rates for the first time.

Why Are U.S. Yields Rising? It's The Economy

Despite likely Fed rate cuts this year, U.S. Government bond yields have risen on the back of stronger-than-anticipated economic performance. Rising yields reflect the outperforming economy and the market's expectations for fewer interest rate cuts. The economy isn't showing any signs of slowing and the broader disinflation trend is intact.

Consumers Binge Despite Higher Interest Rates, And The Fed Watches Them Nervously

Retail sales in March increased by 0.7% seasonally adjusted, with a year-over-year jump of 4.0%. Total retail sales jumped 10.1% in March from February to $712 billion. Ecommerce, food services, and general merchandise retailers were the biggest drivers of growth.

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Rate Cuts Off The Table For Near-Term Outlook: Futures Market

Fed funds futures indicate that interest rate cuts are unlikely in the months ahead. The policy-sensitive US 2-year Treasury yield has downgraded prospects for a near-term rate cut. The implied probability is heavily skewed toward no rate cuts for the next two FOMC meetings in May and June.

Moderately Bullish On 2024: Markets To Overcome Pessimism And Challenges

Earnings Growth Not Just About Tech

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Iran Attacks Israel: What Middle East Turmoil Means For Markets

Iran launched missile and drone attacks against Israel over the weekend. Conflict in the Middle East has little effect on overall stock market performance but can impact the price of commodities, particularly oil. Continued tensions may benefit oil stocks, while gold is seen as a hedge against geopolitical chaos. The Middle East isn't likely to affect the overall markets.