A weakening consumer likely leads to stagflation, with the credit card situation at small banks rising to the loftiest level in history, and a potential government shutdown serving a severe blow to what's left of consumer resilience.
Interactive Brokers Traders Insight
265 posts
As inflation reaches fresh '24 highs, rates are expected to continue their upward trend, making it a challenging environment for investors.
As we look back at our best and worst calls of 2022, it's clear that we got more correct than not. However, I wish we were more emphatic about some of them.
Powell reiterated that he doesn't think the Fed will cut rates at its March meeting, signaling that mid-year would likely be a better time to introduce a cut, citing the need for more data to illustrate that recent gains in controlling inflation aren't transitory.
The expansion marks the first month of growth in nine, with business confidence being a key driver, propelling the positive change as retailers briskly increased inventories in anticipation of improved future performance.
The optimism about a March rate cut has supported capital markets and has loosened financial conditions, but the author believes the optimism may be excessive and that the Fed may delay rate cuts until May or June.
The current Chair has a knack for making more market-friendly comments than his predecessors or many of his global peers, a trait that can be attributed to his 'Goldilocks' mentality, which is focused on what can go right.
I've been wrestling with what appears to be an obvious conundrum regarding the stock market's mentality. Equity investors say they are hopeful for a soft landing for the economy yet seem to relish signals of more overt weakness.
Traders have decided that even though it's still earning nearly 5%, cash is trash compared to quick profits in a wide variety of risk assets.
Builder discounts failed to propel transactions last month, with new home sales weakening in October despite price incentives and interest rate concessions.
The real estate market is poised to benefit significantly as inflation cools and the Fed begins cutting interest rates next year, leading to increased building, improved affordability, and a recovering volume of transactions.
Markets are on perpetual watch for an appearance of Goldilocks, and she might have made an appearance this morning.