Dovish Fed Minutes Ramp Market; Valuing the Yellen Put


The September 16-17th FOMC minutes were released Thursday afternoon, continuing the market’s Beast Mode reaction to Fed dovishness. The S&P 500 completed the best week of the year, barely down-ticking from 1,893 to 2,015. The market rallied 7% from the lows after the September Employment report to the highs yesterday. The 122 handle rally takes the […]

Super Dovish Fed Persists

dove cartoon

The Fed’s lack of policy response, and subsequent press conference, evokes memories of a scene in Bronx Tale… What’s going on here?  Now you can’t leave.  I will never forget the look on their faces.  All eight of them.Their faces dropped.  All their courage and strength was drained from their bodies.  They had a reputation for breaking up […]

Employment Report & Markets; Forcing a Fed Rate Hike


While the odds on a Fed rate hike are still vacillating, the strong jobs report, and recent market action are now forcing the Fed’s hand. The Fed needs extreme market conditions to justify not hiking. The point has arrived where stock and bond markets are strong enough, even with the prospects of a hike, that diminished Fed credibility should […]

China in Recession; Yuan Depreciation Imminent


China is at the end-game of its great economic transformation. Multiple iterations of 5-year plans, and flawed central economic planning, created a massive build-up in debt that can no longer be continued. China’s debt fueled growth is understood, but the impact of the deleveraging phase is becoming evident in real time. Various estimates of China […]

Crude Rally Boxes Fed Into A Corner & China PMI Weakest Since 2012


This weekend’s Jackson Hole speeches, and subsequent commentary, outlined the guideposts for a Fed rate hike, potentially in September. The explosion in crude, if it holds for two more weeks, will pressure the Fed to hike. The Fed clearly highlighted the USD, employment, and oil, as drivers of inflation. The fast 10-point in rally in oil, from sub-$40, […]

Stanley Fischer’s Jackson Hole Speech: Fed Determined to Lift-Off

stanley fischer

Stanley Fischer delivered a critical speech this weekend at the Jackson Hole, Economic Symposium, outlining the Fed’s forward looking view on inflation and the potential for a lessening of factors that dampen inflation. This speech signals the Fed is staying the course and determined for rate hike lift-off on the advertised time-table. CJF interprets this […]

April employment report; strength broadens to lower-end


This month’s job report will rightly be questioned; late-winter/early spring weather for much of the country was horrible in February and March, and this morning’s report reflects payback from depressed activity making results appear better than they actually are. Nonetheless, trends in April, and thus far year-to-date, reflect a potentially important change in labor market […]

Wealth Effect; gaining steam from asset returns and persistence

shopping girl

The ongoing economic tug-of-war remains tied. Growth spurts with better momentum (housing, auto, healthy corporate profits, job market) are almost immediately met by numerous automatic stabilizers (higher mortgage rates, deteriorating housing affordability, satiation of replacement cycles). But weighing the good and the bad, we are in a fine environment for the stock market. The environment […]

Student debt bubble; should school loans be repaid, or not?

student debt

Tuesday’s WSJ presented an interesting cover story on student debt forgiveness. Push back is growing with respect to managing the amount of total debt forgiveness or capping it to a maximum amount; the article states $57,500 as potential forgiveness cap per student. Bubble aftermath is never pretty and the fascinating case of runaway US student […]

Crimea Annexation; the implications for global capital allocation

stalin putin

  Around geopolitical events, political posturing is generally the short-term focus for all parties involved, and markets, but the longer-term implications are often unrelated to what is obvious in the short-term. The despotic approach of Vladimir Putin, and his “damn the torpedoes” approach to dealing with market/economic consequences exacerbates this effect. A fascinating take on […]

Europe’s Prisoner’s Dilemma – LTRO Needs to Continue for Years

prisinors dilemma

European leaders have inadvertently created one of the financial world’s largest negative feedback mechanisms. By issuing long-term refinancing operations (LTRO) with cheap ECB funding for terms up to three years and encouraging European banks to take the funding and purchase assets such as sovereign debt, the ECB effectively has encouraged the European financial system to […]