The Odds For Rate Hikes May Have Increased Dramatically

Inflation is accelerating, with core PCE and PCE Supercore rising at higher rates. Consumer inflation expectations are increasing. The current policy stance may need to shift from rate cuts to rate hikes if inflation continues to rise. The odds for rate cuts in 2024 are melting away.

Fed Meeting Preview: Unexpected Macro Data Likely To Alter Fedspeak

US economy grew at 1.6% in Q1 2024, the slowest rate of growth in seven quarters. The latest GDP print came in lower than expected while inflation has inched up. Changes in Fedspeak are anticipated as the Fed meets this week. The Fed's preferred measure of inflation is still the labor market.

Consumers Splurge On Services, Fixed Investment Surges, Imports Drag On GDP And There's A Blip In Government Spending

Wolf Richter: In Q1 2024, consumers spent very vigorously on services, but not so vigorously on goods. Imports and government spending dragged on GDP, but we think the slowdown in government spending was just a blip. Inflation re-accelerated sharply in Q1, and GDP grew less than in Q4. Gross private investment jumped at fastest rate in two years.

Between The Lines

Bears Come Out Of Hibernation

This week's AAII Sentiment Survey saw only 32.1% of respondents report as bullish, the lowest percentage since 11/2/23. Bearish sentiment has picked up to 34%. This is the highest bearish sentiment reading since last November. The bull-bear spread has been pushed into negative territory for the first time since 11-3.

Riding The Momentum - Looking Beyond The Tech Giants

Home Market Outlook Today's Market Riding The Momentum - Looking Beyond The Tech Giants. BlackRock Systematic's Systematic Equity Outlook explores macro and micro risks. The persistence of persistent market themes like AI has contributed to high equity index concentration and strong performance of the momentum factor. Inflation and rising geopolitical risks dominate the equity market narrative.

U.S. GDP Report Shows Stagflation Is Tightening Its Grip

U.S. GDP Report Shows Stagflation Is Tightening Its Grip. The soft landing narrative is dead as GDP growth falls below expectations and inflation rises. Traders are removing rate cuts from the outlook, leading to higher nominal Treasury rates and a stronger dollar. Rising rates and tightening financial conditions pose a significant risk to the equity market.

Economic Growth, Labor Productivity And Investment

Labor productivity-output per hour worked-drives long-run economic growth. Bill Conerly says the U.S. Can't expect the economy to grow by working longer hours. He says productivity growth has slowed since the Great Recession. Conerley says businesses need to focus on improving productivity to boost growth.

Trials And Tribulations

Bank of America projects that the United States will have a debt of $34 trillion by year-end. Mark Grant says the U.S. Spent $429 billion on interest payments alone in the last year. America sold $22 trillion in debt last year while the Fed raised interest rates to combat inflation. He says the Fed needs to consider the collateral damage to our economy.

Equities Play A Waiting Game

Consumption continued to drive growth in the first quarter. The waiting game continues for the U.S. Federal Reserve and other major central banks to cut interest rates this year. 2024 is shaping up to be a “normal” expansionary year with healthy levels of economic growth and inflation.

U.S. Q1 2024 GDP Growth Looks Set For Slowdown In Thursday's Release

US economy appears on track to post softer growth in the first-quarter GDP report scheduled for release on Thursday. The key debate is whether the economy will stabilize at a softer pace of growth vs. Decelerate further in the months ahead. A critical factor supporting the upbeat economic view: consumer spending is still solid.

Climbing Limo GDP Forecast For Q1 2024

On Thursday, the Bureau of Economic Analysis will publish its first estimate of the United States' Gross Domestic Product during the first quarter of 2024. It's a good opportunity to check in with how 2024-Q1's GDP tracks with what a momentum-based forecasting method projected it would be for this quarter. The Atlanta Fed's GDPNow forecast for 2024- Q1 could be the first in which actual GDP exceeds the momentum forecast.

Expect Equity Market Corrections

Home Market Outlook Today's Market Expect Equity Market Corrections Apr. 23, 2024. Market corrections are a normal function of the equity market. The S&P 500 Index is now outperforming the Nasdaq 100 Index. Company outlooks will be an important indication of the year ahead.

The Next Fed Meeting And The Potential Impact On 2024 Equity Returns

Federal Reserve's upcoming FOMC meeting will have a significant impact on the equity market and stock prices. I don't expect an interest rate cut at the meeting and see a possibility for higher 10-year rates in the next 1-2 years. I see a gloomy return profile for the S&P 500 index in 2024.

SPY: The Setup Looks Extremely Bearish

SPY has been on a strong run recently, but the outlook is very bearish right now. The S&P 500 is overvalued based on several valuation models. A weakening macroeconomic outlook also poses a severe headwind for SPY. SPY is facing a challenging economic environment and outlook.

The 'Mag Seven' Components Take Big Hits As Boring May Becoming Beautiful

Friday’s trade makes you wonder if the game is not over for the ‘Magnificent Seven’ The bulletproof case may be unwinding for Big Tech. The market seems to be getting comfortable with the Fed message of “higher for longer” Big Tech has become a parking lot for those seeking growth without economic sensitivity.

Global Growth Is Back As Fiscal Reckoning Looms In 2025

Jan van Eck says the global economy is now back on a growth trajectory, but there is a potential fiscal crisis to watch for in 2025. Global growth should make you rethink your commodity allocation, he says. Van Eck shares where he thinks investors should be allocated to the world economy.

Adapting To Economic Paradigm Shifts

Home Investing Strategy Portfolio Strategy Adapting To Economic Paradigm Shifts. Investors should look to real assets to diversify beyond the traditional 60/40 portfolio. The global economy may be shifting from a low inflationary paradigm driven by disinflationary forces to an inflationary one.

Potential Opportunities In Quantitative And Passive Investing

Julien Palardy, Managing Director and Head of Quantitative and Passive Investing at TD Asset Management, discusses the strategies his team uses to generate opportunities. The rise of geopolitical risks and uncertainty may lead some investors to consider different approaches to investing. Julien: Quantitative investing is different from passive investing.

Higher Bar For U.S. Earnings To Deliver

U.S. Stocks have slid from their highs as inflation proves sticky and geopolitical tensions rise. We eye whether corporate earnings can keep buoying sentiment. The bar is higher for tech firms to deliver on high earnings expectations. We see inflation and interest rates staying higher for longer. We still prefer artificial intelligence (AI) beneficiaries.