The Fog is Starting to Clear
Questions about the direction of the economy, path of interest rates, impact of technological advances, political leadership, government policy, international relations and trade, and consumer confidence have converged recently and driven market volatility higher. While capital markets and uncertainty will always be constant companions, we are optimistic that some of the fog should start to […]
The Interest Rate Cut Mirage
For many months now, the prospect of lower interest rates has been shimmering like a mirage on the economic highway. And as mirages work, the closer we get to an interest rate inflection point, the timeline gets pushed further into the future. The seeming inability of high interest rates to crush inflation and slow the […]
Waiting for the breadth to rise
Inflationary trends are receding, the economy remains resilient, and interest rates are expected to decline later this year. Historically, these “Goldilocks” conditions have been ideal for capital markets. The S&P 500 Index’s 4.7% year-to-date (YTD) advance (as at February 21), on top of a strong 2023, reflects this positive outlook. However, as occurred during parts […]
Higher for [not much] longer
Volatility in a capital market setting is a characteristic traditionally associated with the equity market. In contrast, bond market volatility has historically been benign. This year, however, bond market volatility has risen to the highest since the great financial crisis of 2008-2009 (as measured by the Bank of America MOVE Index). Even though the U.S. […]
It’s a Marathon Not a Sprint
As 2023 dawned, the consensus of economist forecasts pointed to an elevated risk of recession sometime during the year. After all, central bank interest rates had risen dramatically from virtually zero in early 2022 to 4.25% in Canada and 4.5% in the U.S. by the end of 2022. Consumer price inflation peaked in June 2022 […]
Move Fast and Break Things
Mark Zuckerberg, founder, and CEO of Facebook, coined the phrase “move fast and break things” and made it a rally call to his employees to act with urgency and remove barriers that come in the way of innovation. Some have interpreted the phrase as a push to disrupt the status quo through innovation. While the […]
Goodbye Inflation!…Hello Recession?
The pandemic-induced chaos that started in 2020 continues to impact the global economy, albeit the ripples are getting smaller. With the worst of the healthcare crisis behind us, 2022 witnessed a broad economic reopening where the mismatch in supply and demand triggered generationally high inflation. Central banks worldwide responded with an unprecedented wave of […]
Statistics are Backward-Looking, Markets are Forward-Looking
Janus was the ancient Roman god of entrances and exits, thresholds and transitions, beginnings and endings, and in some ways time itself. According to mythology, Janus was present when the world was created and even now presides over the change from one year to the next with January as his namesake. Given his role, it […]
The Inflation Fever is Breaking…..We Expect Central Bankers to Stop Upping the Dose Soon
“Overall, there are early signs that inflation is moderating and that the labour market is getting in better balance”. (Sylvain Leduc, EVP and director of research at the Federal Reserve Bank of San Francisco, September 8, 2022) In addition to trekking the Inca Trail in Peru and attending a storybook wedding in Tuscany, the summer […]
Inflation, Interest Rates and Inflection Points
Inflation continues to hold the most sway over capital markets, and its direction will determine the path of interest rates, asset prices, and geopolitical stability. The absolute level of inflation, the highest in decades, is inflicting pain on consumers and investors alike. For those old enough to remember the last time inflation was this high, […]