Iran Attacks Israel - How Could Markets Be Impacted?

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.

The Tides Of Time: The Impact Of Aging Demographics

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

Weekly Report: what happened at SPXL last week (0408-0412)?

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.

A Black Swan In Plain Sight: The 10-Year Treasury Yield To 6%

Treasury yields are near 20-year highs, with implications for housing, autos, banks, tech, and the stock market. We could easily reach 6% for 10-year Treasury yields, 9% for mortgages, and 8% for car loans in 2024. This is a potential black swan for markets expecting a return to ultra-easy monetary policy.

A Stronger Dollar May Drive The S&P 500 Much Lower

Stronger dollar will affect financial conditions, earnings estimates for multinational companies, and lead to a contraction in the S&P 500's PE ratio. US CPI report and ECB policy meeting highlight divergent paths for the Fed and ECB, driving further dollar strength. Widening spreads between central banks and interest rates could send the euro lower and impact other currency pairs.

U.S. Resilience Scuppers The Case For Early Rate Cuts

US economy continues to grow strongly, but inflation is running too high for comfort. Inflation is still higher than the Fed's 2% target. Business surveys suggest the economy is weaker than reported by official data. Ongoing strength means a June rate cut looks unlikely for the U.S.

The U.S. Economy In Peril: Part 2 - Inflation

Inflation concerns and hotter-than-expected inflation data are reducing the outlook for rate cuts by the Fed. Wages remain high, adding to inflationary pressures and potentially hurting small businesses. The Fed has no control over spending on "green energy" and other factors that contribute to inflation. The latest CPI report is the third in a row with hotter than expected inflation.

Sideways, With A Splash Of Uncertainty

The S&P 500 established its last record high on the last Thursday in March, right before the long Easter weekend. The market has bounced around in a mostly directionless manner since then. The Q1 earnings season is officially underway as of Friday. The recent decline in stock prices has taken a relatively short-lived effect.

Business Profit Opportunities In The Tight Labor Market

Businesses will profit by evaluating whether labor-intensive activities are valued by the customer. Bill Conerly says the persistent tightness in the labor market will last through 2030. He says some businesses will gain market share and profits in the tight labor market. Businesses can cut their own labor costs more effectively than competitors, he says.

Federal Reserve Policy Rate Path: An Evolving Picture

Strong economic data has led to significant shifts in market expectations for when the Federal Reserve will begin cutting policy rates. Financial market expectations have now shifted from six rate cuts to just two cuts this year. The first rate reduction is now expected to come in September. The Fed continues to expect to cut rates this year, but there is a risk to this forecast.

Flash Insights: March Inflation - Yet Another Reason To Delay Easing

US headline and core Consumer Price Index topped expectations - both rising 0.4%. Transportation, medical and other personal services largely drove the rise. Core goods CPI turned negative once again - down 0.2% m/m. On a six-month annualized basis, core CPI is now near 4%, while supercore CPI is above 6%.

Where We Stand

Easy For Some, Harder For Most

Q1 2024 Earnings Preview: Will Reports Be Good Enough To Turn Markets Positive

Q1 earnings season kicks off with Q1 2024 S&P 500 EPS growth expected to come in at 3.2%. The second quarter got off to a rocky start as major indices closed lower last week. Buybacks and dividend increases were on the rise in Q1. The Consumer Price Index for March was higher than expected.

Dollar Consolidates But Adjustment Is Not Over

Higher than expected US CPI for the third consecutive month drove US interest rates sharply higher and lifted the greenback broadly. The market appears to be catching its breath today, but the shallow consolidation suggests the moves are not over. The dollar has reached nearly JPY153.30. Gold fell by about $18.75 an ounce yesterday, its largest loss in about a month.