George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
The Federal Reserve has maintained near-zero interest rates for nearly two years, and by now, it is clear this extraordinary policy is no longer needed. Over the last several months, continued elevated inflation readings, coupled with a tightening labor market, have led the Fed to suggest rate hikes are coming both sooner and faster than previously expected.
Inflation was front and center this week with the release of the December Consumer Price Index (CPI) report. Inflation of 7% Headline and 5.5% Core (ex Food and Energy) were in line with consensus expectations.
Santa Claus came in the waning days of December and brought his namesake rally. But as the calendar turned, Santa left, and the markets started the year with a stumble.
A key economic data point this week was a flashback to the 1960s with initial unemployment claims at 198,000, which are levels we haven’t seen since that decade.
The holidays are upon us, and at Ferguson Wellman, that means giving thanks, being grateful, staying humble and wishing for the best . And while we take the time to enjoy the festivities, we also keep one eye on the markets to see what lies ahead as the year closes. From now to the end of the year, market participants wait to see what rewards the “Santa Claus Rally” brings.
In one of the most anticipated weeks of monetary policymaking in recent memory, the Bank of England became the first major central bank to raise interest rates off the near-zero bound and the U.S. Federal Reserve laid the groundwork for such a move by proclaiming the impending conclusion of its quantitative easing (QE) stimulus program by next March.
Americans are buying more than ever before. Despite supply actually surpassing above pre-COVID levels and dockworkers unloading ships as fast they can, the supply chain is unable to keep up with record consumer demand. Furthermore, the supply-demand gap may worsen as we head into the peak of holiday shopping season.
This week, volatility returned to capital markets due to the recent emergence of the Omicron variant. Initial reports indicate Omicron shows increased transmissibility and mild symptoms, a “mixed bag” of changes over Delta. And while it will be several weeks before we see a more accurate picture of its impact on human health, capital markets immediately responded with increased stock market volatility and lower interest rates.
After months of debate, President Biden chose to take the bipartisan route nominating Jerome Powell to serve a second four-year term as Federal Reserve Chairman.
This week, President Joe Biden is expected to announce his choice of Federal Reserve chair. The two favorites are the incumbent Jerome Powell and current Fed governor Lael Brainard. Within the last several weeks, odds showed that Chair Powell was a shoe-in. But more recent indications show Brainard’s favorability increasing.
The explosion of cryptocurrencies and their meteoric returns over the last several years is causing some investors FOMO (fear of missing out). While cryptocurrencies, mostly Bitcoin, are in the news every day, very few investors understand their potential and the technologies that enable them. Rather, many are attracted to the highly-publicized returns they have generated in a very short amount of time. This has created something of a flywheel effect -- some may call it a bubble -- in which more investors are chasing these returns, which then drives returns higher, which then attracts more investors.
This week, Federal Reserve Board Chair Jerome Powell announced that later this month the Fed will begin “tapering” its asset purchase program now that the economy has moved past the need for extraordinary stimulus. As a reminder, to combat the recessionary effects of the pandemic and stimulate the economy, the Fed reduced interest rates to 0% and reintroduced an asset purchase program to the tune of $120 billion per month. By any measure, this is a remarkably large stimulus program.
Last week while my wife was engaging in one of the favorite millennial pastimes of perusing Zillow.com, she blurted out, “Joe, come take a look at this!” At first, I didn’t believe what she was showing me. Our home, which we had purchased only a little more than a year ago, had appreciated a surprising amount according to the estimate.
After declining close to 6% between September 3 and October 4, the stock market is back at all time highs. Once again, it appears the market is beginning to climb the proverbial “wall of worry.”
Inflation continues to be in the news and is top of mind for clients. This week, the September Consumer Price Index was reported 5.4% over the previous year, an inflation number well above where it was reported prior to the COVID-19 crisis.
On Monday, Facebook experienced an outage across its platform of apps for nearly six hours, affecting billions of users. The network disruption reminds us how interwoven social media is into the fabric of the global economy and many of our personal lives.
Our Director and CEO Emeritus Jim Rudd, has long been a fan of the Wayne Gretzky quote, “don’t skate to where the puck is, skate to where it is going.” While it important to keep an eye on current data, it is more important to understand current data in the context of where you think the puck, or the economy in this case, is going. Let’s look at what is currently going on in Washington and the economy, and where we expect they are going later this year and into 2022.
As autumn dawned this week, investors witnessed the first move by a developed market’s central bank to raise interest rates since the COVID-19 pandemic began. No, the Fed didn’t raise rates. Rather, it was Norway’s central bank that moved its short-term interest rate target off the zero bound, citing improved economic activity that no longer justifies such monetary policy accommodation.
Rolling Stone magazine released its top 500 songs of all time this week. While some may argue that the top ten is missing several classics, they did rank Aretha Franklin’s “Respect” as the best of all time. We feel this song is also timely as we believe the U.S. consumer deserves “a little respect”.
Federal Reserve Chair Jerome Powell’s speech at last month’s Jackson Hole Economic Symposium focused market participants on the labor market ‘speedometer’ that will determine how much and for how long our central bank will maintain its current stimulus measures. The Fed has set a high bar for achieving ‘substantial further progress’ towards full employment.
