How many times can I repeat bad news as good news? Last week, the Fed had its meeting-not every month but 8 scheduled per year-announcing no change in interest rates but expect cuts this year. Previous to the Fed meeting, inflation numbers caused concern in regard to any decline in interest rates this year. The fact that the Fed said it will lower rates do not raise rates was perceived bullishly by markets. Even more...
Don’t like the direction of stock market averages or interest rates. Wait a day. This week's news on inflation discouraged analysts and markets from expectations that the Federal Reserve will lower interest rates this year. Markets still expect at least one possibly two rate decreases this year but not until the end of 2024. Facebook announces huge expenditures on LLM, or large language models related to artificial intelligence. Although the revenues and earnings met market...
We are not prognosticators but except when we make an observation about current markets. We seem to be in the midst of the first correction in a long time with Year-to-Date averages performance Nasdaq -7.5% SP500 -6%. The heuristic bias that is very strong is whatever is happening now will persist forever. Markets are moving higher and that will persist. Markets are moving lower and that will persist. That is why it is hard for...
Why can’t we all just get along. This week there was a piece in Axios, a newsletter about politics and current events that specializes in easy reads. This piece was put together by the founders of Axios. Here is a link to a piece titled Behind the Curtain: America's reality distortion machine. “ Why America isn't as divided as we think, according to data The focus is that Americans agree on much more than they...
A recent study attempts to pinpoint the reason there is so much pessimism about the economy among the American population. The research focuses on the current high interest rates affecting Americans in the cost of credit card debt and auto loans: Americans' credit card, auto loan delinquencies spiked in 2023 Credit Card and Auto Loan Delinquencies Continue Rising; Notably Among Younger Borrowers - FEDERAL RESERVE BANK of NEW YORK The impact is being felt greatest...
Big news today is the real estate sales judicial settlement. This is providing an opportunity to change the paradigm regarding real estate sales as well as lowering the cost and price of housing. The United States has by far, one of the highest real estate agent fees in the world. Typically, today or yesterday the real estate agent represented the seller and as far as cost, the buyer. The “buyer agent” was actually paid through...
Federal Reserve Chairman Powell testified to Congress that interest rates will come down this year, but the Fed is not confident that inflation is under control yet. At least that is what he said on his first day of testimony. Today, his second day of testimony, he was much clearer that rates are very high compared to what they would be in a normal economic/inflation environment. The Fed goal for inflation is still 2% and...
More positive economic data and more records. Americans are still unhappy about the economy but more optimistic about their own finances. Main street vs. Wall Street continues. Wall street wins with the stock market, main street wins with the economy and Americans are still unhappy. Even worse, it is an election year with two octogenarians running for President. Maybe the resources and tools for aging in America will get more attention. Speaking of aging in...
Cognitive dissonance is a concept I learned in college. One of the 5 learnings I remember from college. Was that because I was not paying attention, or it just was not interesting to me. Yes, is the answer. I was preoccupied with other learning activities. Nevertheless, here is the definition: Cognitive dissonance is the discomfort a person feels when their behavior does not align with their values or beliefs . Cognitive dissonance is a psychological...
Earlier this week markets had a big scare with inflation numbers-CPI-coming in a little hotter than expected. Markets had a big sell off on Tuesday after a big positive day on Monday. Then markets spent the rest of the week recovering with the SP500 setting a new record high. The bond market moved their bets to a later date for the Fed to lower interest rates. I attended a Citi Private bank event presenting their...
I read an interesting analysis of 2024 by Citi Private Bank. I also attended a meeting for clients of Citi Private bank where their analysis was presented. Basically, we have the “Goldilocks” economy and markets awaiting us in 2024. I was looking for Goldilocks in the audience at the meeting. Declining interest rates, an undervalued stock market except for the “Magnificent Seven” (Microsoft , alphabet, amazon, NVidia , meta, tesla and apple. These stocks were...
Markets are counting on 4 rate reductions this year and were hoping that the Fed announcement this week would add to those expectations. The Fed announcement and then Chairman Powell’s news conference did not deliver. The Fed announcement moved from indicating possible increases to confirming expectations of lower interest rates ahead, just not now and maybe not in March. The sell off on Wednesday was immediate for markets and those averages that had the largest...
