We are often asked whether the current bull market in stocks has turned into a meltup that could soon be followed by a meltdown. That’s a risk we currently give a 25% subjective probability. Relatively high stock valuations are

The rally in the S&P 1500 has certainly broadened in recent weeks as the Fed started to cut the federal funds rate (FFR) by 50bps on September 18 and again on November 7 by 25bps. The S&P 400 MidCaps

The week ahead will provide important updates of housing and manufacturing indicators. The latter should show that economic growth may be broadening to include the goods sector, which has been relatively flat since the Fed started raising interest rates.

Fed Chair Jerome Powell is an accomplished danseur. His pirouettes are masterful. He did another such pivot on Friday in prepared remarks for a speech [starts at 19:00] to business leaders in Dallas. He said that “the economy is

We’ve been bullish on the dollar since the summer. Since the Fed’s September meeting, the US Dollar Index (DXY) is up 5.8% (chart). Roughly half of that move has occurred since last Tuesday’s US elections. The strong dollar confirms

Today’s CPI report suggests that inflation may be getting stuck north of the Fed’s 2.0% target. The headline and core CPI inflation rates rose 2.6% and 3.3% y/y during October. Goods prices are still deflating. But supercore inflation, rent

The NFIB survey of small business owners was released today showing a record high in their uncertainty index during October (chart). That’s not surprising since the polls showed that the presidential race was too close to call, raising the

Executive Summary: The new tariffs likely under Trump 2.0 could be means to great ends for the US by increasing the US’s trade negotiating leverage—or they could backfire and cause a trade war that curtails global economic growth, which is

Over the past three years, most American economists believed that a recession would be necessary to bring inflation down to 2.0% in the US. While the US economy managed to avoid a downturn, those predictions may have been right.

Just after Donald Trump won the presidential race on November 8, 2016, we observed that the economy and stock market were charged up with “animal spirits,” a term coined by John Maynard Keynes meaning spontaneous optimism. Animal spirits are

The week ahead will provide updates on inflation, consumer spending, and manufacturing. We expect inflation might have stalled in October, interrupting its decline toward the Fed’s 2.0% target. We still expect a solid increase in inflation-adjusted incomes last month,

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today as widely expected. We expected it as well, though we still believe that the now 75bps cut in the FFR since September 18 is

Donald Trump’s win and the Republican sweep of the House (probably) and the Senate (certainly) is consistent with our Roaring 2020s scenario. Indeed, it increases the odds that the good times will continue through the end of the decade

We may or may not know tonight who will be the next president, but we should know which party will win a majority in the Senate and the House. It appears that Republicans are likely to do so. In

Investors often rejoice when a stock they own is selected to join a major market index. Index funds collectively have trillions of dollars in assets under management and must buy the stock in bulk, giving a boost to its

Some of our best friends are technicians. Ed was at Prudential Equity Group at the same time as Ralph Acampora, the renowned market historian and technical analyst. Ralph’s analysis often confirmed Ed’s fundamental analysis. So in our spare time, we

The blockbuster event in the week ahead is Tuesday’s presidential election. We’re rooting for gridlock, or a divided government. Both parties seem intent on passing policies that would widen the federal government budget deficit that’s already too wide. Notwithstanding the stimulative

Some of the air is coming out of the AI trade. Super Micro Computer hasn’t been super recently. It fell 12% today after auditor Ernst & Young resigned due to inaccurate financial reporting and is now down 66% over the past

The S&P 500 equal-weighted index has been going nowhere fast since the Fed cut the federal funds rate (FFR) by 50bps on September 18 (chart). The same can be said for the Russell 2000. The stock market rally has

We don’t expect to be disappointed by October’s payroll employment report on Friday. Both September’s JOLTS report and October’s consumer confidence survey suggest that the labor market remains in good shape. Better yet, it may be improving. The impacts of

Republican Everett Dirksen was the Senate Minority Leader during the 1960s. Cautioning that federal spending had a way of getting out of control, Dirksen reportedly observed, “A billion here, a billion there, and pretty soon you’re talking real money.”

We still think that gridlock would be the most bullish outcome of the November 5 presidential and congressional elections, making it difficult for the next president to deliver on all the promises he or she made during their campaigns

The week ahead is jampacked with key indicators for the labor market, economic growth, and inflation, as well as more Q3 S&P 500 earnings. The first estimate of Q3 GDP will be followed by the September PCED inflation rate

The three-day BRICS summit of emerging market economies (EMEs) in Kazan, Russia concluded today. The group launched by Brazil, Russia, India, and China in 2006 has done little in terms of rivaling US global economic and financial hegemony. However, the

The US presidential and congressional elections aren’t until November 5, but the Bond Vigilantes are voting early. The 10-year US Treasury bond yield has risen a whopping 63 basis points to 4.25% since the FOMC’s September 17-18 meeting (chart). In exit

We’ve been asked to comment on yesterday’s grim forecast by economists at Goldman Sachs that the S&P 500 will produce annualized returns of only 3% (before accounting for inflation) over the next 10 years. They reckon that the range

Yes, that has been our advice since mid-August. Our August 19, 2024 Morning Briefing was titled “Get Ready To Short Bonds?” We wrote: “Bond investors may be expecting too many interest-rate cuts too soon if in fact August’s economic indicators rebound from

As the S&P 500 continues to rise to new record highs, we are frequently asked how we define a meltup and whether we are already in one. One simple answer is that the S&P 500 is melting up whenever the S&P 500

The economic week ahead will provide updates on the overall economy, manufacturing, and housing. Last week’s jobless claims (Thu) will also be important for gauging how significantly bad weather and worker strikes impacted the labor market. We expect more

Today, the Atlanta Fed’s GDPNow tracking model raised Q3’s real GDP growth rate from 3.2% to 3.4% (saar) following a roaring September retail sales report (chart). Real consumer spending was revised up from 3.3% to 3.6%! Jobless claims fell