Saturday Night Quarterback says, For the week ahead expect…

Saturday Night Quarterback says, For the week ahead expect…

A market with an obsessive interest in inflation will get plenty to obsess about this week. On Monday, February 26, Randal Quarles, the new vice-chair for regulatory supervision at the Fed, delivers a speech titled An Assessment of the U.S. Economy at the 34th Annual National Association for Business Economics conference. On Tuesday morning, new Fed chair Jerome H. Powell delivers the Fed’s Semiannual Monetary Policy Report to the Congress to the House Financial Services Committee. And on Friday government statisticians deliver the PCE data on inflation

Bad news for wage inflation: New Fed report says men in prime working years who have left the workforce may never come back

Bad news for wage inflation: New Fed report says men in prime working years who have left the workforce may never come back

If you’re trying to predict how tight the labor market is–and from that how fast wages and inflation and interest rates–might rise–there’s nothing more important than the puzzle that is workforce participation. The percentage of the potential workforce that is actually working has been stuck at historic lows. And despite the economic recovery participation rates haven’t climbed significantly. If fewer workers who could work are working, then wages are likely to be under more rather than less upward pressure. And now a new report from the Federal Reserve Bank of Kansas City says that men in their prime working years have left the labor force at an astonishing rate and they may never return unless the nature of the U.S. job market changes radically.

10-year Treasury yield back to 2.87% as market decides wage inflation isn’t likely to push the Fed to three rate increases in 2018

10-year Treasury yield back to 2.87% as market decides wage inflation isn’t likely to push the Fed to three rate increases in 2018

Traders and investors decided today that the Federal Reserve’s semiannual monetary policy report to Congress is wrong and that Wall Street’s own seers are right about wage-driven inflation. The Fed’s report, delivered to Congress today, makes it clear that the bank sees the labor market at or beyond full employment. On the other hand, Wall Street strategists keep saying, It’s different this time.

Notes You Need for February 22: oil inventories, MIC, U.S. dollar, Treasury auction, AMZN, PRGO, net neutrality

Notes You Need for February 22: oil inventories, MIC, U.S. dollar, Treasury auction, AMZN, PRGO, net neutrality

In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. A typical post resembles this one from today: “1:40 p.m.: Amazon (AMZN) has launched its own Basic Care line of more than 60 over-the-counter health products. The products are produced by Perrigo )PRGO), a private-label healthcare manufacturer, for Amazon. Perrigo reports earnings on February 27. “

Saturday Night Quarterback says, For the week ahead expect…

Federal Reserve minutes show bank upping estimates of growth in 2018–and projecting need for more interest rate increases

Today’s release of the minutes from the Federal Reserve’s January 30-31 meeting show the central bank estimate economic growth at 2.5% for 2018 and noting that the outlook for stronger economic growth raised the likelihood for continued, gradual interest rate increases. Fed members felt that it was increasingly probable that the economy would hit its inflation target of 2%.
 

Rebalancing (finally) my Volatility Portfolio for 2018

Rebalancing (finally) my Volatility Portfolio for 2018

The market has finally (and probably only momentarily) stabilized enough for me to rebalance my Volatility Portfolio. My intention was to rebalance at the end of January but then stuff happened. You know 9% drop in the Standard & Poor’s 500,  huge spike in volatility (as measured by the CBOE S&P Volatility Index (VIX) anyway), correlations shifting all over the place. But after the portfolio’s 53% gain in 2017 and with the changes in the market’s risk profile that are emerging, this portfolio badly needs a rebalance. And here it is. The portfolio is going into this rebalancing with 12 positions. It’s going to come out with 12 positions, although not the same 12 positions and not with the same weights for each position.

Saudis push OPEC to go for $70 a barrel

Saudis push OPEC to go for $70 a barrel

The goal was to cut production enough to reduce global oil inventories to their five-year average. The hope of the coalition of OPEC and Russia that reduction in production would get oil prices up to $60 a barrel. Now with that inventory reduction just about in place and with oil at $60 a barrel, the Saudis are pushing for further production cuts and a target price of $70 a barrel.