Tematica Chief Macro Strategist Lenore Hawkins provides regular insights and musings into today’s markets, economics and politics, while fighting for liberty with great wine & music, scores of stilettos and an excessive love of dogs
While the current administration has been looking to keep this economic cycle going much longer and even accelerating, the Federal Reserve is concerned that the cycle may be getting overextended and overheated, putting the central bank in a tough spot as it attempts to apply some interest rate brakes while fiscal policy lays on the accelerator.
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Without a press conference with this Fed Meeting, TD Ameritrade turned to Tematica Chief Macro Strategist Lenore Hawkins for some insights into what we might see with regards to interest rate hikes.
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The first quarter GDP report revealed that the level of government investment in infrastructure remains historical lows, reducing productivity, thus lowering potential economic growth. The disregard for this vital part of the economy cannot continue indefinitely, which makes for a potential boon for those companies poised to benefit from the upcoming investment cycle.
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While U.S. Consumer credit increased less than expected in January, we are concerned with what we are seeing in consumer loans and debt in general across the world. Auto Loans With our Cash-Strapped Consumer investing theme, the average amount financed and the duration of new auto loans continues to rise – same car, bigger […]
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The results of the election last weekend in Italy continue the international trend of angry and frustrated voters dumping those in power, desperate for change.
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Thursday’s report on retail sales reasonably should have given the market at least some pause, but the market ignored the disappointing numbers and kept moving on up. The coming months and year are likely to be more challenging for investors than 2017, which is all the more reason to have solid investment strategies based on long-term themes.
The bottom line for the week is equities appear to have shrugged off the concerns from earlier in the month, 3-4 Fed hikes are increasingly likely and wage growth for much of the country remains stubbornly elusive despite the tightening labor market. We believe we have a decent grasp on what is behind the wage conundrum, but that is a topic for another day. As for what to expect from the markets in the coming weeks, we suspect that we are not out of the woods and that another retest of the recent lows is likely before moving on to make new highs.
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Inflation rising while hourly earnings have fallen in 5 of the past 6 months. The Fed will find it is under further pressure to hike and/or taper, which applies the brakes to any economic acceleration from tax cuts and more government spending.
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Fiscal policy is hitting the accelerator pedal while central bankers are hitting the breaks in a market in which many participants have never experienced a major pullback. This is going to get interesting!
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Well, this week was something different! Richly priced equities took it on the chin. The culprit? Rising interest rates, which increase borrowing costs in an economy that is once again heavily indebted across the board at a time when the Fed is reducing its balance sheet, thus hitting the bond market from both sides – weaker demand and extra supply. Add in record high corporate debt and ballooning consumer credit card debt and you have yourself one painful debt-fueled headwind.
read more »The fourth quarter 2017 GDP growth rate came in weaker than expected and was utterly dependent on consumer spending despite weak wage growth.
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