Rob Palombi
Rob Palombi
confirm economy evidence markets mind month numbers report
What's important to keep in mind is that we really only have one month of numbers that confirm the economy is slowing. What the markets want to see is more evidence of a slowdown, which is why this report is important.
against assuming bond good growth looking market numbers potential premium pricing strong time trigger
The bond market has been pricing in a premium against potential inflation. They've been looking at the numbers for some time and assuming that U.S. growth has consistently been strong enough to trigger inflation, and that is not a good thing for bonds.
ease economy expectation fed happen labor market neutral policy prepare seem slow soon switch
What the Fed may do right now is prepare the market for a switch to a tightening policy from a neutral policy, and that may happen as soon as this month. There's always been the expectation that the economy would slow and ease labor market conditions, but that doesn't seem to be happening.
businesses consumer demand increase inventory lead levels stronger
There's still a lot of consumer demand out there, and as businesses try to restock their inventory levels they will increase demand, which will lead to stronger growth. That could be problematic for the Fed.
appears chance moment officially rate rule scenario
There's still a chance of a rate hike, you can never officially rule that out, but for the moment it appears the worst-case scenario will be an announcement of a tightening bias. I don't see that happening, but that would be the worst-case scenario.
aware both leaning political public sides spectrum voting
Because of the gridlock, politicians on both sides of the political spectrum will have to be more acutely aware of what the voting public is leaning towards.
economy increase interest jobs market obvious producing rate relatively robust strong tame wage
It's obvious that the U.S. economy is very strong and producing jobs at a very robust pace. Even with the relatively tame wage gains, the market is anticipating another interest rate increase from the Fed.
ahead average consumers continue correction earnings investor market seen spend stock willing
Consumers continue to spend their earnings from the stock market and other investments. Even with the correction we've seen recently, the average investor is still significantly ahead of where they were two years ago and is still willing to spend a little of those earnings.
against bank both common finance ministry though time
It's always been a contentious issue, though both the Ministry of Finance and the Bank of Canada, for the record, have said they're against a common currency. I think over a very long time you'll see an amalgamation of currencies, but that's a very long way away.
beginning bond fed form given gradual harmful hike increase insurance lead number officials rate surprising warning
It was a very surprising number and very harmful for the bond market, given a number of Fed officials have been warning about rising inflation. We could be at the beginning of a gradual increase in CPI, which may lead to some insurance in the form of a rate hike by the Fed.
concern fed move perhaps soon toward
There's also concern the Fed will move toward a tightening bias, perhaps as soon as this month.
appear data despite economy general orders past point strength trend underlying weakness
Despite the weakness of the past two months, the general underlying trend for the economy is still higher. The data still point to strength in the manufacturing sector, and upcoming orders appear strong.
perception
Now I think that perception is much, much different.
cuts debt either larger leads left reduction tax
Gridlock leads to more debt reduction than either tax cuts or new spending. Because what we will be left with at the end of the day are larger surpluses.