Connect with us

Economics

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

Powell’s cremation of “team transitory” took place after the Fed chair was asked how long inflation has to run above-target

Published

on

This article was originally published by Zero Hedge

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

Remember when clueless macrotourists  and worthless econo-hacks who have zero understanding of actual economic dynamics spent miles of digital ink convincing their tiny echochambers that they were right and that inflation was transitory (or rather, desperately scrambled to mask their utter lack of grasp of even the simplest concepts):

Well, one month ago we made it quite clear where in the financial pecking order these so-called ‘experts’ fall…

… and then moments ago none other than Jerome Powell put to rest any further debate on the topic of transitory vs permanent inflation:

  • *POWELL: TIME TO RETIRE THE WORD TRANSITORY REGARDING INFLATION
  • *POWELL: THREAT OF PERSISTENTLY HIGHER INFLATION HAS GROWN

Powell’s cremation of “team transitory” took place after the Fed chair was asked how long inflation has to run above-target before he decides it’s not so transitory, with Senator Pat Toomey mocking the term “transitory”, saying: “Everything is transitory. Life is transitory” to which he could have also added that “on a long enough timeline the survival rate for everything drops to zero.

In response, Powell said it’s probably a good time to “retire that word”, a clean and clear admission from Powell that inflation is no longer transitory.

And while it is certainly good news that we can finally stop polluting the airwaves with idiotic discussions whether inflation is transitory or not, it hardly helps Americans because as the latest BofA transitory vs permanent inflation reading shows, both are at all time highs.

The market was not happy either because just moments later, Powell also said the one thing that traders dread, namely that the taper could wrap up a few months earlier:

  • *POWELL: CAN CONSIDER WRAPPING UP TAPER A FEW MONTHS SOONER

Tyler Durden Tue, 11/30/2021 – 11:12

Author: Tyler Durden

Economics

NZD rises as US dollar rally pauses

After falling over 1% since late last week, the New Zealand dollar is in positive territory on Wednesday. NZD/USD is trading at 0.6785 in the European…

After falling over 1% since late last week, the New Zealand dollar is in positive territory on Wednesday. NZD/USD is trading at 0.6785 in the European session, up 0.19% on the day.

ANZ says RBNZ to hike up to 3%

The RBNZ has embarked on a series of incremental interest rate hikes, starting with two hikes of 25 bps in the fourth quarter of 2021, bringing the current rate to 0.75%. How far will the bank go? The ANZ Bank had projected in October that the rates would reach 2% by April 2023, but now says that rates will reach 3% by that date. ANZ wrote that this updated forecast is not due to stronger growth, but rather surging inflation and the tight labour market. ANZ noted that inflation is galloping above 5%, as is inflation expectations, which means that an OCR of 3% would be “modest”.  If more analysts adopt this view, expectations of higher interest rates should boost the New Zealand dollar.

Omicron continues to cause headaches for the New Zealand government. The number of Omicron cases remains quite low, but the country has imposed tight border controls to combat the virus. The government is now closing its border to New Zealand citizens and is trying to boost the vaccination rates. Still, it’s doubtful that the country can keep Omicron at bay, and a spike in cases could lead to renewed lockdowns which would hamper economic growth.

US Treasury rates continue to creep higher. After punching past 1.80% on Tuesday, a 2-year high, the 10-year rate has climbed to 1.89%. The 2% level, which is psychologically significant, is within striking distance. Higher US bonds, a reflection of market worries about accelerated Fed tightening, have boosted the US dollar against most of the major currencies.

.

NZD/USD Technical

  • NZD/USD is putting pressure on resistance at 0.6912. Next, there is resistance at 0.6967
  • 0.6844 is providing support. Below, there is support at 0.6721

dollar
inflation
interest rates
fed
us dollar

Author: Kenny Fisher

Continue Reading

Economics

Peer Joost becomes CEO of DIGITEC, Hans-Jürgen Joost retires

Peer Joost, CEO of DIGITEC, commented: I would like to formally recognise my father’s contribution to DIGITEC’s growth over the last 40 years. As CEO,…

Peer Joost, CEO of DIGITEC, commented:

DIGITEC COO Peer Joost

Peer Joost

I would like to formally recognise my father’s contribution to DIGITEC’s growth over the last 40 years. As CEO, he led a team which successfully navigated the Scandinavian banking crisis, the dot-com bubble and global financial crises, reinventing our products and services to satisfy the changing needs of the market and firmly establishing DIGITEC as a pioneering Software and Data Service company and global market leader for FX Pricing solutions.

I am delighted to take over as CEO as we begin a new phase of growth, which extends our range of services and supported assets and increases access to a wider group of clients around the world.

А specialist provider of FX Swaps technology and data, DIGITEC has more than 40 bank clients globally. This includes over 50% of the Euromoney Top 50 FX trading firms.

DIGITEC recently expanded the team in its newly created London office with four new employees.

The post Peer Joost becomes CEO of DIGITEC, Hans-Jürgen Joost retires appeared first on LeapRate.

bubble

Continue Reading

Economics

Earnings Season Is in Full Swing — and So Are the Buying Opportunities

The S&P 500 reached 4,724 for the third time in three months — and failed to break higher last week.

Source: Shutterstock

When traders see that…

The S&P 500 reached 4,724 for the third time in three months — and failed to break higher last week.

Source: Shutterstock

When traders see that sort of behavior, they call it “resistance.” It can start to become part of a self-fulfilling prophecy.

Each time the S&P 500 has reached 4,724, investors worry that other traders will start selling again; they don’t want to be stuck holding the bag, so they sell — which can turn into a feedback loop when the market rises to that key level.

As annoying as this can be, it’s not all bad news. As long as market fundamentals remain positive, it gives us a chance to load up on some stocks that have been overlooked during the back and forth. As you will recall, last week we said investors should focus on energy stocks that had been overlooked over last month. That sector rose another 5% on average during the week.

We still like the energy and basic materials sector this week.

Earnings

Beyond some technical issues the market is dealing with, this is a big week for earnings reports. Most companies in the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite will be reporting their profits for the fourth quarter of 2021 from now until early February.

The influx of quarterly reports (called “earnings season”) is usually a trigger for volatility. Volatility tends to be worse when the stocks that are reporting are near their yearly or all-time highs. Last week, we warned that because the big banks were near their highs, it would take a lot to make traders happy, and they were likely to fall after their reports.

Starting with JPMorgan Chase & Co. (NYSE:JPM)’s report on Friday morning, the banks are down. In fact, JPM dropped more than 6% following their report. There were a variety of small issues the banks were dealing with, the most worrisome was rising costs from inflation.

However, don’t get us wrong… the financial sector took a hit last week, and there are some weak spots, but overall the sector is doing extremely well, and that is actually setting us up for some interesting opportunities this week.

For the most part, the banks dropped on what we call a “technical issue” — meaning that prices had been rising and traders were looking for any excuse to sell and take some profits off the table. The JPM report was bad, but Citigroup Inc. (NYSE:C) and Wells Fargo & Co. (NYSE:WFC) also reported on Friday and recovered quickly after that selling had a chance to settle down.

Because inflation and economic growth are both pushing interest rates higher, we have a chance to turn a negative into a positive by using that to our advantage with banks and broker-dealers.

Here’s What to Do

After reading the reports and evaluating the sector, we think there are some unique opportunities in the banking sector.

We like Morgan Stanley (NYSE:MS) at prices under $96 per share. The big bank dropped after JPM’s report disappointed, but the stock appears oversold. Rising rates will add directly to MS’s bottom-line profits in 2022, but this recommendation comes with a caveat: Investors shouldn’t add a position just before its earnings report is released. So, you should wait until Wednesday morning, once the MS report has been released.

Raymond James Financial Inc. (NYSE:RJF) is also an interesting stock that many small traders overlook. RJF’s fundamental and price performance has been stellar but they have been lagging other brokers like The Charles Schwab Corp. (NYSE:SCHW). We think SCHW stole the limelight last year as they went on a buying frenzy (gobbling up TD Ameritrade recently). RJF should catch up in the short term, and rising rates will help.

We had recommended the regional banker, Regions Financial Corp. (NYSE:RF), earlier last year in anticipation that consumer loans would continue to grow despite rising rates. That has worked out and the stock is back in another buy position; we like prices at $24 per share or less. This is another company reporting next week, so we recommend waiting until Thursday morning before making a play for the stock.

Bottom Line

The official start of earnings season was off to a mostly expected choppy start. The good news is that economic growth is still very positive, and that should send stocks higher towards the end of January.

Besides earnings, the big X-factor right now is rising interest rates. Long-term rates are high enough to slow growth, but it will probably keep tech and retail stocks in the dumps for a few more weeks. However, higher rates will work in our favor in the financial sector, which should be our focus this week.

We’ll be back with you on Friday.

Sincerely,

John Jagerson & Wade Hansen
Editors, Trading Opportunites

More From InvestorPlace

The post Earnings Season Is in Full Swing — and So Are the Buying Opportunities appeared first on InvestorPlace.


interest rates

Continue Reading

Trending