Chart IFor a strong stock market in early 2023, VIX must decline below 20, toward 15. VIX is currently at 19.7. Since fixed income volatility controls the VIX, volatility on the 20-year Treasury ETF (VXTLT) must also decline below 21 (See A, Chart I). VXTLT is currently 21.4. Most importantly, Bank…
The following article, published by the Wall Street Journal on January 6, 2023, discusses the dramatic rise and almost imperceptible fall of inflation over the last 12 months. Key Takeaways Over the past 12 months, CPI inflation has been at an alarming rate of 7.1%. But the US economy got there as…
The following article, published by Bloomberg on January 4, 2023, sums up well the unique factors in today’s economy with inverted yields have led to a false recession signal. Key Takeaways Everyone using the yield curve as a predictor forecasts recession in 2023.Normally, the spread of the 3-month T-Bill to the real…
As employees work remotely, food prices become a more important driver of wage growth. FAO world food price is now below what it was at the beginning of the Ukraine war. Growth in the FAO index, plotted 7 months forward, forecasts wage inflation moderating to 3.5% in 2023. Wage growth…
The Trends in CPI are Obvious1 Food has been slowing for 2 months in a row.Energy is tanking, matching the roundtrip seen in oil, diesel, gasoline, and even natural gas.The rate of used cars is falling -36%.Shelter has slowed visibly and now matches the downtrend of other market-based measures of home…
