Richard MacDonald, Senior Vice President/Investments - Stifel

05/15/2023

Optimism hangs in the air as weekend talks regarding the debt ceiling are reportedly "moving along." Of course, that being said, the lack of meaningful progress continues to wreak havoc on investor confidence as the June 1 deadline rapidly approaches.

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05/12/2023

While showing ongoing improvement, as Bowman suggested, the trend in price pressures is not yet convincing the Fed that it has done enough to tame inflation. The Committee has indicated a willingness to move to the sidelines in June and still may do so. However, the latest price data does not make the case for the Fed; rather any decision to pause would be made in spite of the latest still-elevated inflation data.

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05/11/2023

The April consumer price report came in almost perfectly in line with expectations, which is to say there was no surprise in this morning's report one way or the other. That being said, while inflation has cooled from a recent peak, price pressures also remain stubbornly elevated, well above the Fed's target range with the pace of disinflation painfully slow.

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05/09/2023

The clock is ticking for officials in Washington to reach an agreement on the debt ceiling, but neither side appears willing to bend. The debt limit for the U.S. is currently capped at $31.4 trillion. However, given the ongoing and massive amounts of annual federal spending, U.S. government commitments have surpassed that level prompting the need for additional debt issuance beyond the current limitation.

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05/08/2023

A stronger-than-expected employment report in April perpetuates the Fed's own description of an extremely tight labor market. Furthermore, while the Fed indicated a willingness to potentially move to the sideline depending on the evolution of the data – particularly the inflation data – with an unemployment rate ticking lower and wage growth ticking higher, it will be increasingly difficult for the Fed to standby and assess earlier policy initiatives.

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05/04/2023

The Fed appears increasingly willing to assess incoming data and market conditions in determining the next policy move and the extent of policy firming. The difference now, however, is that the Committee appears less certain as to the direction and extent of policy needed to tame inflation and as such may be increasingly willing to pause and assess, as opposed to an earlier plan of raising rates while assessing.

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05/02/2023

As the debt ceiling debate continues, Treasury Secretary Janet Yellen issued a warning the U.S. government could exhaust funds by as early as June 1, amping up pressure on officials in Washington to reach an agreement sooner than later.

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04/28/2023

Coupled with yesterday's GDP report, the underlying thesis of the U.S. economy is very clear: With solid income growth, the consumer showed surprising resilience in the first quarter with robust spending in January, a bit of a pullback in February, and stable expenditures in March. For the Fed, coupled with a lack of meaningful disinflationary pressures leaving the core PCE more than double the FOMC's target range, there is little support for the Committee to shy away from a further rate hike in May or even additional rate hikes thereafter.

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04/27/2023

While weaker than expectations, the general thesis of activity across the first three months of the year remains one of resilience. While topline activity slowed from a more robust pace in Q4, growth remains positive with the consumer leading the charge despite a seemingly overly pessimistic sentiment by businesses cutting back perhaps more than necessary in anticipation of eventual weakness.

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04/26/2023

While all slightly different in the sector and region of focus, broadly speaking, regional indicators have signaled an ongoing decline in activity under the weight of slowing domestic consumption reflecting elevated inflation, minimal wage growth and a drawdown in savings, as well as a drain in international demand as an elevated dollar distorts the costs of American-made goods.

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04/24/2023

Ahead of next week's FOMC meeting, a number of Fed officials took to the stage last week, emphasizing both the Fed's focus on inflation as well as a need for patience when it comes to banking-sector volatility.

04/21/2023

Despite a lack of improvement in inflation and the return of relative "calm" to financial markets, at least some Fed officials are signaling a potential pause in policy after another 25bp hike in May.

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