Andrew Chader

The View from 5th AvenueBy Andrew Chader

The View from 5th Avenue – 10 June 2022

Yesterday’s sell-off into the close was that more prescient once 8:30am rolled around today. Peak inflation had been discussed amongst the Street after the PCE data on May 27th dropped from the previous month. That was for April however, and today’s CPI for May showed that inflation has not peaked, and now there are worries that June may follow the same tune (multiple components rose).

The View from 5th AvenueBy Andrew Chader

The View from 5th Avenue – 7 June 2022

Investors are aware, or at least they should be at this point. Inflation is here, and central banks around the globe are going to raise rates. The next two weeks are busy with cb meetings, and Australia last night “surprised” the markets by raising their rate 50bps (instead of the 40bps expected) to 0.85. With the ECB on Thursday (although July a likely start), the FOMC next Wednesday (50bps), and then the SNB/ BOE next Thursday, traders understandably are happy to move cautiously.

The View from 5th AvenueBy Andrew Chader

The View from 5th Avenue – 25 May 2022

The investment puzzle of 2022 remains complicated no doubt, but one of the main concerns has been the Fed fetish the markets have developed. With inflation soaring, the Fed is hiking aggressively and 50bps for June and July is widely expected. Their rate path trajectory after that remains a question though, and for a market that is trying to re-allocate for the future economy, not knowing the end time makes it difficult to price assets.

The View from 5th AvenueBy Andrew Chader

The View from 5th Avenue – 12 May 2022

At this point, investors do not need any more reminding of the headwinds that the economy and markets are confronting. Today’s PPI reading, while inline with estimates on a monthly basis (+0.5%), still showed a y/y gain of 11% (down from 11.5% in March). The Fed remains committed to their 50bps approach with even Bullard backing that in statements last night. So that means markets continue to price in a higher rate environment, and a potential recession, and the fact that the Fed will also be reducing their balance sheet (making the Fed put gone for now).