Archive | December, 2016

Relationship Between the Dollar and Inflation Expectations Have Completely Reversed Since This Summer

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At least since 2003 (which is when our data on TIPS begins), the dollar and breakeven inflation expectations have had a negative relationship. Said differently, when the dollar strengthens (as it has done recently) inflation expectations tend to fall and vice versa. A strong negative relationship has been especially true since 2010 when the correlation […]

Consumers Are Bullish on Equities and 3 More Observations From the Consumer Confidence Survey

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The December Conference Board Consumer Confidence survey had some interesting results. One of the more noteworthy changes were in regards to equity price expectations. The percentage of respondents who expect equity prices to increase over the next 12-months shot up by nearly 14 points while those who expect stock prices to fall declined by nearly 11 […]

Are 3 Rate Hikes Really Possible Next Year?

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The Fed has communicated that the plan for 2017 includes three rate hikes. The market isn’t quite buying into that plan yet. According to Bloomberg’s WIRP function, the first meeting with over a 50% chance of a rate hike isn’t until the June FOMC meeting (73% probability of a hike). If the market is correct, then […]

A Different Interpretation of the Output Gap

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Last week we blogged about how there seems to be more slack in the US economy than is generally perceived. A supporting data point for that thesis was the fact that the CBO estimate of the output gap remains well below previous cycle highs (chart below).  However, the Fed has their own model for the […]

DM Estimates Revisions Breadth Has Hit an All-Time Low


More than three out of four developed market stocks have seen a negative revision to their FY1 sales estimate over the last six months. Earnings estimates have fared slightly better, with about one-third of the developed world experiencing positive revisions. The energy sector stands out, having the greatest percentage of issues with positive revisions to estimates, […]