April 26, 2024 | Daily JAM, Mid Term, Morning Briefing |
Yesterday we had a report of core Personal Consumption Expenditure for March that showed core inflation ticking up to an annual rate of 3.8% from 3.7%. Core inflation, if you remember, looks at prices after excluding more volatile food and energy prices, The reasonable conclusion was that inflation was remaining stubbornly higher than the Federal Reserves % target. And that the first cut to interior rates from the Fed wouldn’t come until December, instead of July or September. Today we got the report on all-items PCE inflation.
April 25, 2024 | Daily JAM, Morning Briefing, Short Term |
U.S. economic growth slowed in the first three months of the year, the Bureau of Economic Analysis reported today. Gross Domestic Product (GSP) grew at an annualized rate of just 1.6%. That’s a big retreat from the 3.4% annual rate in the fourth quarter of 2023. Just as important as the drop in the growth rate itself is the reason for the decline.
April 24, 2024 | Daily JAM, Morning Briefing |
One down and billions more to go.
Yesterday’s big auction of 2-Year Treasury notes saw rock solid demand that let the day pass without a big, destabilizing drop in prices and a jump in yields. Today, in Round #2, the Treasury is set to auction off $70 billion in five-year notes. So far, at least, the sale looks like it will see solid demand again. Though, can I say, You ain’t seen nothing yet? Treasury is likely to increase its monthly issuance of the seven main notes and bonds (not including TIPS) by nearly 60% in 2024 to $354 billion in August 2024, from the $222 billon it issued in July 2023, according to “Neutral Issuance” scenario in the presentation by the Treasury Borrowing Advisory Committee.
April 21, 2024 | Daily JAM, Mid Term |
It’s been a tough month for Treasuries with yields rising on a re-thinking of when the Federal Reserve might begin to cut interest rates. The yield on the 10-year Treasury closed at 4.62% on Friday. That’s an increase in yield of 35 basis points in a month. (When yields climb, bond prices fall.) And this week the Treasury will auction a combined $183 billion of two-, five- and seven-year Treasury notes. Ans that’s ahead of the latest update on the Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation measure.
April 17, 2024 | Daily JAM, Videos |
Today’s video is Want to know when the Fed will cut rates? Look at the calendar. The Fed only has so many meetings left for 2024 and even fewer if you only coun those with Dot Plot updates of the Fed’s economic projections. The Fed is on the verge of a major shift in policy and the U.S. central bank almost never makes a big policty shift at a meeting without an update of its economic projections.. Early in the year, people were looking for up to five cuts, now, sentiment has shifted to one or fewer. If we get a rate cut at all, when will it be? Look at which upcoming Fed meetings include Dot Plots. The Fed doesn’t like to surprise investors and if they make a drastic change, like a shift to rate cuts, you can bet they want to do it while they’re also discussing projections for 2024 and 2025. The.CME Fedwatch Tool currently odds for the next meeting, May 1, at a 98% chance of no cut and the June meeting is now up to an 84.8% chance of no cut. The June meeting WILL have a Dot Plot and, up until recently, the finanial markets believed that meeting that would deliver the news. Because the Fed generally likes to give in-depth information during a big policy shift, it’s unlikely that the rate cut will be in July, since no dot Plot economic pdate is scheduled for that meeting. The next real chance of a rate cut, I think, is September 18, which has a Dot Plot. (There is no August Fed meeting.) The market thinks there will be a cut in September, and CME Fedwatch has the odds of no cut at that meeting at just 32.7%. A second rate cut in 2024 would have to be at the December 18 meeting, the final 2024 meeting with a Dot Plot. (The Fed doesn’t meet in Ocrober and the November meeting does include a Dot Plot update.) Without the September cut, it’s very unlikely there will be two cuts in 2024. Unless inflation data changes a lot, I doubt we’ll have two rate cuts, but we can look for one in September or December at this point.
April 12, 2024 | Daily JAM, Mid Term |
All good things come to an end. After seven straight quarters of record levels of profits from net interest income, the spread between what earns by lending and what it pays depositors to raise funds, JPMorgan Chase (JPM) reported that net interest income slightly missed analyst estimates for the first quarter. The quarter the company reported today certainly wasn’t a disaster. The bank earned $23.1 billion in net interest income in the period, up 11% from the first quarter of 2023. But the end of the beat and raise guidance of the last year and a half plus an increase in costs were enough to lead to substantial selling today, April 12. The shares finished the day down 6.47% at $182.79. Analysts and investors were clearly hoping for more.
April 5, 2024 | Daily JAM |
Step 4: Build a short-term Treasury bond ladder The yield on the 10-year Treasury bond climbed another 7 basis points today, April 5. That’s a gain in yield of 23 basis points in one month. So yes, it’s time to build a bond ladder in Treasuries.
March 20, 2024 | Daily JAM, Morning Briefing, Short Term |
The Federal Reserve unanimously voted to leave the benchmark Fed Funds rate in a range of 5.25% to 5.5%, the highest since 2001, for a fifth straight meeting. They left their projections in the quarterly Dot Plot for the Fed Funds rate by the end of 2024 at 4.6%. That was the same projection as in the December Dot Plot. And nothing in either the post-meeting press statement or in Fed chair Jerome Powell’s press remarks changed the timing on when the Fed will make its first interest rate cut.
March 19, 2024 | Daily JAM, Dividend Income, EQNR, Jubak Picks, Mid Term, Special Reports, Top 50 Stocks, V |
Let’s say you’re a dividend income investor. You need cash income in retirement. Or you want your portfolio to generate cash now so you can invest in new opportunities. Or you just want the extra safety and lower risk that owning a stock with a substantial dividend can bring. Whatever your reasons–and I can think of a lot more–this is a particularly challenging financial market for dividend income investors.But I do think there are strategies dividend income investors can successfully pursue even in this challenging market. In the rest of this Special Report I’m going to explain the three ways I think you should be thinking about dividend income investing in this market. And then I’m going to give you 10 dividend stocks that I think are especially well-suited to producing income (and price appreciation, which is always nice even if you’re an income investor) in this market environment. First pick just posted–Pfizer
March 18, 2024 | Daily JAM, Morning Briefing |
About 8.5% of credit card balances and 7.7% of auto loans moved into delinquency in the fourth quarter of 2023, the Federal Reserve Bank of New York reported last week. “Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “This signals increased financial stress, especially among younger and lower-income households.” Total household debt increased by $212 billion last quarter to $17.5 trillion
March 16, 2024 | Daily JAM, Morning Briefing |
There’s room for disappointment in Wednesday’s Dot Plot projections from the Federal Reserve. Economists surveyed by Bloomberg were still expecting the Federal Reserve to cut interest rates three or more times in 2024 with the first cut coming in June. (To be more precise, the survey found that a majority expect three or more cuts in 2024 while more than a a third expect two or fewer cuts in 2024.) The survey was conducted from March 8 through March 13. Why do I highlight the dates?
March 14, 2024 | Daily JAM, Morning Briefing, Short Term |
It’s becoming a refrain. Today another inflation measure came in hotter than expected. Which is the problem. It’s har to ignore the possibility that inflation has stopped its steady decline and its recent months has started to move up again. Is there a problem here beyond a stickiness in prices that is preventing the Federal Reserve from reaching its inflation goals? And that might be endangering even a June timetable for an initial interest rate cut? Prices paid to U.S. producers rose in February by the most in six months.
