Signals Matters News Letter: The Signals THAT Matter
Broadly, the core and timeless principles behind the infrastructure of Signals Matter Portfolio Construction are carefully discussed here and here.
As for WHAT’S HAPPENING NOW…
Markets continue to speculate on Fed rate policies—will Powell cut or not cut? This game of waiting for rate cuts has us all wondering out loud, but does it really matter given US debt levels? Is not inflation inevitable?
DC continues to hem and haw, citing labor and inflation data to justify continued uncertainty despite early promises in January of 2024 rate cuts. As Piepenburg argues below, this game of “data dependence” feels fishy…As of now, the April labor data shows official concern as US employers scale back on hiring, boosting official unemployment to 3.9%, evidencing the smallest US jobs post in 6 months. Is labor cooling?
Meanwhile, UST yields dipped and the S&P closed above 5100, as if bad news is the new good news while the bulls return. Markets continue to anticipate the tailwind of an election-year rate cut. But will that be enough to stave off an inflationary end-game and even a stagflationary backdrop? Is the Fed trapped? See links below from VON GREYERZ, AG.
Meanwhile, the bond markets are speaking more clearly than the policy makers and pundits. The US Yield Curve struggles (yet still fails) to go positive in a desperate attempt to attract investors with yields high enough to meet longer-term risk concerns. Depending on how one trusts or dis-trusts official CPI, it seems to many that real-returns (i.e., returns adjusted for inflation) are not that attractive. This, coupled by the fact that longer term yields are still less than short-term yields (hence the “inversion”), suggests the US credit markets are anything but confidence-inspiring.
Even More
Signals Matter Market Reports reflect the company’s long-term macro views and are posted free of charge at www.SignalsMatter.com, on LinkedIn, and directly to your inbox by Signing Up Here. Portfolio Solutions are geared to shorter timeframes and may differ from our longer-term perspectives. Our actively managed Portfolios are available to Subscribers who Join Here and to Accredited Investors who directly invest in Signals Matter Partners, LP. For further information, click Direct Invest or Book a Meeting with us.
