DoubleLine, Monday Morning Minutes
DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau welcome back the NFL and then tackle a rough Sept. 2-6 run for the markets, including lots of red across equities (1:09); fixed income (3:04); and commodities (4:39), with even gold feeling ... Read More
DoubleLine Portfolio Manager Samuel Lau and Analyst Mark Kimbrough review a benign Aug. 26-30 week for stocks (1:04); bonds (3:26), taking note of a flattening Treasury yield curve; and commodities (7:34), with gold nearing $2500 per Troy ounce as markets ... Read More
DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau cover an Aug. 19-23 week that brought gains for stocks (0:52) and a broad rally in fixed income (2:11) as well as a commodities market (5:15) that Friday ratified accommodative guidance from ... Read More
DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau cover a positive Aug. 12-16 week for equities (0:49), fixed income (2:37) and commodities (5:27), supported by tame inflation readings (6:38) for July and surprising strength in retail sales (8:47). The macro ... Read More
DoubleLine Portfolio Manager Jeff Mayberry and Macro Asset Allocation Analyst Mark Kimbrough comment on the whipsaws in stocks, bonds and commodities that by the Aug. 5-9 week's end left markets little changed. The risk-off selloff that began Friday Aug. 2 ... Read More
DoubleLine Quantitative Analyst Eric Dhall and Macro Asset Allocation Analyst Mark Kimbrough cover a very exciting market week of July 29-Aug. 2, including a very rough Friday for stocks. Eric and Mark review the end-of-week selloff in stocks triggered by ... Read More
DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall survey the markets' July 22-26 scoreboard for stocks (0:59), fixed income (3:01) and commodities (4:29) before turning to the week's macro news (5:54). Macroland produced an unequivocally robust preliminary estimate ... Read More
DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall begin their review of the July 15-19 market week with returns in the red for stocks (0:52), bonds (2:18) and commodities (4:01). On the macro front (5:36), Eric Dhall ... Read More
DoubleLine Portfolio Manager Samuel Lau and Macro Asset Allocation Analyst Mark Kimbrough end the week of July 8-12 with a roundup of stock (1:44), bond (4:06) and commodity (6:18) markets. Then they survey the week's macro news (7:34), including a ... Read More
DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall Friday morning review the stock (1:08), bond (3:16) and commodity (5:44) markets for the week ended June 28, 2024. Then they discuss the week's macro news (7:09), including further evidence ... Read More
DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau cover the markets and macro news for the week of June 17-21, with markets closed Wednesday for the Juneteenth federal holiday. The S&P 500 Index was up on the week, boosted by ... Read More
DoubleLine Portfolio Managers Jeffrey Mayberry and Sam Lau cover the markets and macro news for the week of June 10-14, impacted as they were by the Topic of the Week: the June Federal Open Market Committee meeting and press conference ... Read More
DoubleLine Portfolio Manager Jeff Mayberry and Macro Asset Allocation Analyst Mark Kimbrough cover the June 3-7 market week for stocks (0:31), on the way warning about naïve extrapolations of stock-split returns; bonds (2:42); and commodities (4:15), with energy diverging from ... Read More
DoubleLine Capital Portfolio Managers Jeff Mayberry and Samuel Lau review markets for the week ended May 31, including a rare case of utilities as the leading equities sector year-to-date (1:00), fixed income (7:32) and commodities (9:36). Then they turn to ... Read More
DoubleLine Portfolio Manager Samuel Lau and Quantitative Eric Dhall review a mixed showing the week ended May 24, 2024, for stocks (1:09), bonds (4:04) and commodities (5:47). Turning to macro news (6:57), they note May 1 FOMC minutes show befuddlement ... Read More
DoubleLine Portfolio Manager Jeffrey Mayberry and Quant Analyst Eric Dhall recap a green trifecta for equities, fixed income and commodities for the week of May 13-17, powered by the CPI report, the main macro story. The CPI print was loved ... Read More
DoubleLine Portfolio Manager Samuel Lau and Quant Analyst Eric Dhall kick of their review of the May 6-10 market week combing through a green field of equities. The utilities sector is proving quite the player in 2024 while the leaders ... Read More
DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau review stock (0:57), bond (2:46) and commodity (5:40) markets for the week ended May 3, including notable volatility in equities and fixed income in the wake of inflation data, Fedspeak and jobs ... Read More
For the week ended April 26, 2024, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau review equities (1:00), fixed income (3:25) and commodities (5:52) markets. Then they discuss the week's macro news (6:46), including more reports of sticky inflation and ... Read More
As DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau note in their survey of markets for the week ended April 19, both equities as tracked by the S&P 500 (0:52) and fixed income as tracked by the Bloomberg US Aggregate ... Read More
DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall review the market week of April 8-12, for stocks (1:04) and fixed income (5:05). Both asset classes were stung by the April 10's report of a hotter-than-expected consumer price index ... Read More
After their review of equity (1:08), fixed income (2:20) and commodity (4:14) markets for the week ended April 5 and of recent macro news, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau for their Topic of the Week (16:14) discuss ... Read More
DoubleLine Portfolio Managers Samuel Lau and Jeffrey Mayberry review the market week of March 25-28, 2024, shortened by the Good Friday holiday. Sam and Jeff also recap March and first quarter performances for equities, fixed income (3:59), commodities (6:24) and ... Read More
For the market week ended March 22, 2024, DoubleLine's Samuel Lau and Mark Kimbrough recap a mostly positive week for equities (2:39) and fixed income (4:03) while commodities dipped (6:43). For the Topic of the Week (13:20), Sam and Mark ... Read More
For the week ended March 15, 2024, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau survey the equities (1:17), fixed income (3:20) and commodities (5:44) markets. Then they dive into the week's heavy macro news schedule (8:10), including CPI, PPI ... Read More
DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau cover a negative week ended March 8 for the S&P 500 (0:48), contrasting with a positive week for that index's equal-weighted cousin; a positive week (3:16) for all major fixed income sectors; ... Read More
Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall review markets for February (0:47) and the week ended March 1, 2024 (3:31) as well as the week's macro news (7:00) and Fedspeak (16:51). For their Topic of the Week (19:36), ... Read More
After covering the markets for the holiday-shortened week of Feb. 20-24, mostly positive for stocks (00:18) and bonds (1:52) and mostly negative for commodities (3:30), DoubleLine's Jeffrey Mayberry and Mark Kimbrough run down a relatively light week of macro news (5:13), including resilient employment numbers and S&P Global U.S. PMI prints in expansionary territory. For their Topic of the Week (11:57), Jeff and Mark look at the recent LEI* release and the way the publisher, the Conference Board, has changed its approach to LEI data that takes the pressure off a bellwether metric that has been pointing toward a recession in the U.S. since July 2022, when it turned negative year-over-year. They go through the 10 inputs that comprise the index and their weightings, and how the Conference Board now does not forecast a recession for 2024. Jeff and Mark discuss this shift in approach, which Mark terms a moment of capitulation on the LEI. Looking ahead to next week (20:41), Jeff and Mark preview some of the upcoming prints, including durable goods; home prices; consumer confidence; and the PCE, the Fed's favorite inflation metric. *For more on the Conference Board Leading Economic Index, check out Episode 29: Recapping Markets/Macro and Eyeballing the LEI
After covering stock (1:01), bond (4:08) and commodity (7:08) markets for the week ended Feb. 16, 2024, DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall dive into the week's macro news (8:50), including a January CPI report that pushed back Fed rate-cut expectations. For their Topic of the Week (22:42), Sam and Eric examine the concentration of the market cap-weighted S&P 500 large-cap stock index in terms of its 10 largest stocks. They also look at history for an idea of what above-average concentration has presaged for future performance of the market-cap weighted index versus the equal-weighted index. Looking ahead (37:58) to the week ending Feb. 23, Sam and Eric will have on their radar the Leading Economic Index of 10 leading indicators, the release of the minutes of the Jan. 31 meeting of the Federal Open Market Committee, jobless claims and S&P Global PMI reports.
DoubleLine's Jeff Mayberry and Eric Dhall review the market week (1:00) ended Feb. 9, 2024, including a new all-time high carrying the S&P 500 to close above 5000 for the first time, yields up across the investment grade segments of the fixed income universe and a higher week for the Bloomberg Commodity Index, although accompanied by a decline in industrial metals. Macro news for the week (4:39) includes a strong ISM Services report but in general tighter financial conditions indicated in the Federal Reserve's Senior Loan Officer Opinion Survey of Bank Lending Practices. For their Topic of the Week (11:21), Jeff and Eric discuss the U.S. Treasury's quarterly refunding announcement in the context of an explosion of the national debt to $34.2 trillion – a pace of debt growth that on Feb. 7 drew a warning from the Congressional Budget Office. Falling Treasury purchases by foreign governments, Jeff Maberry notes, means yield-sensitive investors such as insurers account for a larger share of Uncle Sam's creditors. Their bond vigilantism means more upward pressure on interest rates. Looking ahead to the week of Feb. 12-16, Jeff and Eric single out (21:27) above all the January print of consumer price index, due Tuesday Feb. 13. They will also be on the lookout for retail sales, import prices and jobless claims (Thursday) and housing starts and the January producer price index (Friday).
After reviewing stock, bond and commodity markets for January (0:54) and for the week ended Feb. 2 (3:07), Jeff Mayberry and Eric Dhall turn to the week's packed schedule (6:00) of macro news, including Friday's bond market-displeasing labor market news. For the Topic of the week (16:30), they discuss the guidance coming out of the Jan. 31 Federal Open Market Committee, which as expected left official short-term rates unchanged, and Fed Chair Jerome Powell's stock market-disappointing statements during his post-FOMC news conference. The Feb. 5-9 week will be light on macro news (28:48), although Eric Dhall expects to dig into the next Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS), due Feb. 5.
DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall recap the markets for the week ended Jan. 26, 2024, noting stocks (0:38) were rather tame notwithstanding new highs on the S&P 500, while fixed income (2:03) was largely flat and commodities (3:38) at last had a positive week, led by energy prices. In their review of the week's macro prints (9:39), they discuss strong growth in the preliminary report on fourth quarter GDP and a PCE indicator trending toward the Federal Reserve's inflation target. For the Topic of the Week (17:47), Jeff and Eric discuss divergences between hard and soft data in the various gauges and indicators measuring the U.S. economy. Looking ahead to the week ending Feb. 2 (29:10), Jeff and Eric have their eyes on the S&P CoreLogic housing price indexes for November, JOLTs report, ADP employment, payrolls for January and above all the Federal Open Market Committee meeting set for Jan. 31. While the FOMC is expected to leave the federal funds target rate unchanged, Jeff and Eric will be interested in the FOMC's guidance statement and Fed Chairman Jerome Powell's news conference.
For the holiday-shortened market week of Jan. 16-19, DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau for the Topic of the Week (10:55) look at the Retail Sales Report, an always potentially market-moving print, as retail sales account for about one-third of U.S. GDP, and the report provides a snapshot of consumer trends. Jeff and Sam break down the report's composition; how the data is collected through store surveys (which can still be returned by fax!); and discuss the “control group” or “core retail sales,” a narrower band of data for tracking retail sales. In their markets review (00:30), Jeff and Sam discuss the winners and losers in an up week for the S&P 500 Index; a pretty bloody run for fixed income (1:33) as Treasury yields rose across the curve, including the 2s10s inversion very close to de-inverting, a historical harbinger of recession; and another down week for commodities (3:38) despite a positive week for WTI crude. Over in Macro Land (4:30), retail sales and the University of Michigan consumer survey beat expectations, and jobless claims came in under expectations. Federal Reserve Governor Christopher Waller took the Fedspeak spotlight this week (7:42) talking about potential rate cuts in 2024. Next week (21:53) will bring prints including the still-recession-signaling LEI, the first estimate of fourth quarter GDP, jobless claims, personal income and spending.
For the week ended Jan. 12, 2024, traditional asset markets, Samuel Lau and Eric Dhall observe, echoed their behavior in 2023, with stocks (1:05) and bonds (3:25) delivering positive returns and commodities ending lower. Sam points out that the U.S. Treasury yield curve as measured by 2s10s de-inverted to the tune of 13 basis points, bringing the curve closer to a positive slope, historically a signal of imminent recession. Eric reviews the macro news for the week, including the market's knee-jerk reaction to Thursday's hotter-than-expected December CPI. In light of the protracted past concentration of stock returns in a handful of leaders such as the Magnificent 7 or the top 10 stocks by market cap of the S&P 500 (17:30), Sam suggests that investors consider diversifying their equity exposure away from market-weighted indexes to equal-weighted indexes. Looking ahead to the Jan. 16-19 market week (33:46), Eric and Sam have their eyes on prints of retail sales, import prices, jobless claims and, because Fed Chair Jerome Powell watches it, the University of Michigan consumer sentiment survey.
Jeff Mayberry and Samuel Lau start review a somewhat volatile and negative 2024 debut for bonds (0:47) and fixed income (2:13) with commodities (3:55) treading water with a slight rise of 10 basis points on the Bloomberg Commodity Index for the abbreviated week ended Jan. 5. For the week's macro news (5:35), Jeff reviewed readings on the ISM manufacturing and services indexes, labor market reports and the release of the Dec. 13, 2023, meeting minutes of the Federal Open Market Committee. For the Topic of the Week (10:31), Jeff and Sam share their thoughts on the Treasury basis trade and recent blips in the Secured Overnight Financing Rate (SOFR). Barring a change of pace in balance sheet reduction by the Federal Reserve, Jeff expects more blips in SOFR rates as quantitative tightening continues, further reducing excess reserves in the banking system. On their radar for macro prints Jan. 8-12 (25:08) are releases of the consumer and producer price indexes for December and jobless claims.
DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau Kick off the last episode of 2023 with a yearly performance review of the markets, with equities and fixed income far removed from 2022's double bear runs. The S&P 500 Index (00:50) finished up 26%, with the low clocking in on Jan. 5 and the high arriving Dec. 28. The index's run was paced by tech and communication services (big losers last year). For fixed income (5:01), U.S. Treasuries had a volatile run but ended the year fairly close to where they began. The Agg finished the year up 5.5%, boosted by a strong fourth quarter. Commodities (8:51) struggled on the year while Bitcoin (11:21) surged 150%. Over in Macro Land (11:42), Jeff and Sam review the latest prints, including fed funds futures that forecast six cuts to the federal funds rate in 2024. Looking back on 2023 (15:34), Jeff and Sam list some of their favorite topics discussed, including the three-month/10-year yield curve inversion; stress in the overnight repo market; and a check-in on recession indicators that still challenge the “no landing” narrative. List of highlighted episodes are below. This episode was recorded after market close Dec. 29, 2023. Thanks for listening and have a Happy New Year! 3-Month/10-Year Yield Curve Inversion MMM Episode 97: Will 2023 Break the 3s10s' Perfect Streak on Calling Recession? Bank Runs MMM Episode 106: March Madness Shakes Up a Couple Banks Yield Curve Steepening MMM Episode 107: Timing the Lead Times of the Treasury Yield Curve State of CRE Lending Space MMM Episode 109: Green Month and Quarter for Markets; Tough Times Ahead for CRE Borrowing U.S. Treasury Funding Stress MMM Episode 132: Treasury Refunding Needs and Potential for Funding Stress Recession Metrics MMM Episode 136: Recession Watch Update Amid Red Market Week Financial Conditions MMM E143: Financial Conditions, a Very Strong November and Fedspeak Discord
After reviewing “everything rallies” for the week ended Dec. 15 in stocks, bonds and commodities, and the week's macro news, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau discuss the Dec. 13 monetary policy decisions and guidance of the Federal Open Market Committee and Fed Chairman Jerome Powell's dovish news conference. They also discuss New York Fed President John Williams' attempt at the end of the week to talk back investors' ebullient take on Powell's comments. That effort, Jeff Mayberry notes, that was largely ineffective in persuading markets. Futures are pricing in the probability of federal funds rate cuts beginning in March vs. previous expectations of cuts starting in May.
Jeff Mayberry and Samuel Lau first review the week ended Dec. 8, 2023, for stocks (1:06), fixed income (3:00) and commodities (5:25) as well as macro news (8:12), including volatility around the week's labor market prints. Then they take up the subject of yield curve control (15:41), the targeting by central banks of sovereign bond yields at specific tenors generally further out the curve from conventional short-term policy rates. Yield curve control was instituted by the Bank of Japan in September 2016. BoJ officials, Jeff and Sam note, appear to be prepping markets and the public for an end to yield curve control, perhaps ahead of anticipated policy rate cuts by the U.S. Federal Reserve. Then Jeff and Sam look ahead to the week of Dec. 11-14 (29:07), whose calendar includes the November CPI report (Tuesday); PPI and Federal Open Market Committee meeting (Wednesday); retail sales, jobless claims and import prices (Thursday) and the S&P Global PMI surveys for manufacturing and services (Friday).
After covering positive market performance in the final week (Nov. 27-Dec. 1) of a very healthy November, DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau dive into the latest BIS paper on financial condition indices as the Topic of the Week (25:24). They go through the six indices that comprise the report, with a focus on the Goldman Sachs and Bloomberg indices that offer the most insight into U.S. economic performance. In their market review, Jeff and Sam talk about November's strong run in equities and fixed income, possibly assisted by Fed Chair Jerome H. Powell's cautious comments on the economy at the beginning of the month. The S&P 500 (1:06) experienced broad-based gains with energy the only one of 11 sectors to finish in the red. Fixed income's positive performance (4:11) was fueled by a rally in U.S. Treasury rates, and the Agg had its best month since May 1985. Commodities (8:29), as an asset class, did not participate in the boom. After taking Thanksgiving week off, there was a lot for MMM to cover in Macro Land (12:02), including the latest LEI print, labor numbers, home prices, a bumped-up Q3 GDP estimate and a PCE print reflecting strides in the Fed's inflation fight. In the Fedspeak roundup (19:53), Jeff and Sam appreciatively note the clashing and evolving hawkish and dovish stances of Fed officials reflecting a range of opinions. Next week's macro prints (34:53) will include the ISM services report and job numbers.
After covering a broad-based positive run in the markets for the week of Nov. 13-17, DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall break down the latest Consumer Price Index (CPI) print (11:35), one that Dhall notes was greeted with a “sense of jubilation” by the markets, as it could support the end of the Federal Reserve's interest-rate hiking cycle. In their review (13:03), Sam and Eric look at what sticky housing prices could mean for the Fed's inflation fight and speculate that Fed Chair Jerome H. Powell must have been happy after opening the latest CPI report. It was a very green week for the markets (2:45), with the S&P positive in 11 out of 11 sectors, the Agg notching a healthy month thus far (6:38) and even commodities enjoying an uptick (9:30). Over in Macro Land, aside from the CPI print, the week included a gloomy picture painted by small-business owners (12:10), some pretty ugly retail numbers (20:59), and some producer prices and import data that point to a deceleration in goods inflation. Turning to Fedspeak (27:45), Fed officials were out en masse with a consistent, cautionary message that the inflation fight is not over. MMM will be taking next Friday off but will be back Dec. 1, so there will be a lot of data to review when it returns (29:45), including new LEI, PCE and global PMI prints, and the second update to third quarter GDP numbers. This episode was recorded after market close Nov. 17, 2023. Happy Thanksgiving!
After reviewing stocks (0:51), fixed income (3:28), commodities (6:14) and somewhat bearish macro news (8:11) for the week ended Nov. 10, DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall cover the latest Fedspeak (14:34), including a bit of blue language by Fed Chairman Jerome Powell. Then for their Topic of the Week (17:53), they elaborate on the so-called Sahm Rule, a coincident recession indicator based on the 3-month moving average of the U-3 unemployment rate. Topping their watch list for the week of Nov. 13-17 (25:01) will be Tuesday's release of the October print of the consumer price index. Other items on Jeff and Eric's stakeout will be the NFIB small business optimism survey, producer price index, retail sales, import prices, initial jobless claims, industrial production and capacity utilization.
After Samuel Lau's review of markets for month of October (1:29) and the week ended Nov. 3 (2:55) and the week's macro news (9:25), Jeff Mayberry covers the highlights of Nov. 1 Federal Open Market Committee meeting (21:01) and a sometimes “blunt” and “testy” Jerome Powell during his post-FOMC news conference. Jeff also observes a shift (31:48) in fed funds futures market pricing. Amid signs of a softer labor market, fed funds futures, he says, indicate the possibility of four cuts to the Federal Reserve's policy rate in the back half of 2024. Looking ahead of the Nov. 6-10 week (34:46), Jeff and Sam will be watching for data prints on consumer credit, jobless claims and consumer sentiment and expectations.
Before a dive into the third quarter gross domestic product (GDP) report (15:58), DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall kick things off with a review of financial markets for Oct. 23-27. All sectors of the S&P 500 (1:00) ended in the red except utilities. Fixed income (2:37) experienced gains amid an 8-basis point decline in the yield of the 10-year Treasury. Commodities (4:50) were essentially flat, with industrial metals being the biggest winner. They next cover the week's macro news (7:28), including PMI manufacturing and services reports, durable goods, jobless claims, personal income and PCE prints. The 3Q GDP report (15:58), which came in at a surprisingly strong 4.9%, was “really driven by consumer spending,” Jeff notes. He cautions against reading a trend into GDP prints, given the significant volatility and noise around the variable. “It has big moves over time,” he says. “Just because we're at 4.9% today doesn't necessarily mean the economy is in the clear for the short term.” For the Oct. 30-Nov. 3 week (25:29), Jeff and Eric will be on the lookout for the Employment Cost Index (an indicator often referenced by Fed Chair Jerome H. Powell), the August report of the S&P CoreLogic Case-Shiller house price index, ADP employment change report, JOLTS job openings, personal income and, of course, the outcome and guidance due Nov. 1 from the Federal Open Market Committee meeting and Powell's news conference. As of Oct. 27, the federal funds futures market was pricing only a 2% chance of an in increase in the fed funds rate. Jeff also (29:04) will be paying attention to the Treasury's refinancing announcement on Monday Oct. 30. “Normally no one talks about it because it is what it is. But there are some inklings out there that given the increase in interest rates on the longer end of the curve, the Treasury's going to issue more T-bills than they would have otherwise because they don't want to flood the long-term Treasury market with more long-term Treasuries.”
After covering a mixed week in the markets for Oct. 16-20, DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall break down the concept of “term premium,” which measures the extra amount of yield or spread that bond investors require to take on the additional interest rate risk, and why it is suddenly such a hot topic (13:48). Jeff and Eric also discuss the three basic models for calculating term premia, the two models the Federal Reserve prefers to use and why rising/higher term premia matter. This week's market rundown (00:47) has Jeff and Eric wondering if this will be another year to forget like 2022. Stocks were mostly down, and the pain continued in the bond market (2:16) – while the 2s10s recession signal continued to de-invert – commodities were up a little (4:54), and Bitcoin climbed 10% (5:39). Over in Macro Land (5:58), the week included prints showing the strength of the consumer and labor market, and the Old Faithful LEI continued to point to recession. Fedspeak (11:29) couldn't get any louder this week as Fed Chair Jerome H. Powell spoke at the Economic Club of New York Luncheon on Thursday. Jeff and Eric run through his remarks, including the markets' live reaction during the Q&A segment. Next week (26:54), prints will include the advanced third quarter GDP estimate, with big numbers being bandied about, and the PCE deflator.
After reviewing stocks (1:17), bonds (2:51) and commodities (4:14) for the Oct. 9-13 market week, DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall cover the week's macro news (6:42), including somewhat Fed-friendly inflation prints. Based on Fed Funds futures pricing showing a one-third chance of a hike in that key policy rate by year end (9:47), Eric says, “The market is on board with the Fed where the Fed's happy with short-term rates where they are.” The battle on inflation, they caution, is far from over. “We're kind of in a conundrum,” Jeff notes, “where if the market rallies on the Fed doing less, then the Fed has to do more, and the market sells off.” For the Topic of the Week (17:51), Jeff Mayberry demystifies the arcana of interest rate swaps and the phenomena of negative swap spreads. Looking ahead to the week of Oct. 16-20 (26:33), Jeff and Eric foresee a relatively light week for macro prints. Items under their surveillance include the retail sales advance number for September, industrial production, capacity utilization, manufacturing, the Fed's Beige Book, jobless claim and the “broken clock” of recession indicators, the Conference Board's Leading Index of 10 leading economic indicators.
DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau face the heat outdoors and indoors recapping the red market week of Oct. 2-6 before a timely revisit of recession indicators (16:43). Jeff and Sam take a look at the still inverted 2s10s and 3s10s on the U.S. Treasury yield curve and what the de-inverting of these two signals could mean for the timeline of a possible recession arrival. It might be sooner than you think. The two also run through some other recession indicators, including the LEI and a strong labor market, that are sending out mixed signals (28:17). For the market week (1:01), Jeff and Sam discuss a rough run for stocks and fixed income (4:23) before looking at a pretty good performance for commodities (6:58). Over in Macro Land (9:20), data prints included a beat of expectations for the ISM Manufacturing PMI (still contractionary) and a very big beat for nonfarm payrolls (11:34). This week's Fed Speak includes the proposition that doing nothing is an activity (14:02). Next week will bring a flood of data prints, including PPI, CPI and import numbers (31:51). This episode was recorded after market close on Oct. 6, 2023. For previous discussion of recession signals, check out: Episode 107: Timing the Lead Times of the Treasury Yield Curve Episode 97: Will 2023 Break the 3s10s' Perfect Streak on Calling Recession? Episode 82: Recession Indicators: Reliability and Readings Now Episode 52: Yield Curve Flattening as an Economic Indicator
Heading into a possible shutdown of the government, Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall survey a bad 3Q2023 (16:48) for stock, bond and commodity returns, but a quarter offering possible opportunities in the wake of wide dispersions in asset performance. Jeff and Eric first cover the Sept. 25-29 week's performance for equities (1:30), fixed income (3:05) and commodities (4:19). After covering the week's macro news (5:35), including “incredible resilience” reflected in the S&P Case Shiller 20-city house price index, they turn to a review of markets in September, the third quarter and year-to-date. While stocks with the exception of energy (16:48) shared along with bonds and commodities in the quarter's carnage, Jeff Mayberry notes the “huge dispersion” among sectors, a possible set-up for trading opportunities. They also review fixed income (20:32) and commodities (23:16) for those time periods. Then they look ahead (27:41) to the Oct. 2-6 week which has scheduled, among other macro news drops, ISM manufacturing and, if the government is still running, the JOLTS, non-farm payrolls, unemployment and labor force participation reports. In the absence of government reports on the labor market, Jeff Mayberry notes the ADP Employment Change report, due Wednesday Oct. 4, could be a market mover.
Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall review broad losses in stocks (0:59), bonds (2:23) and commodities (4:20) for the Sept. 18-22 market week. Then after checking the week's macro news (6:57), including a resilient jobs market notwithstanding labor strikes, they do a deep dive (11:58) into the Sept. 20 meeting of the Federal Open Market Committee and Federal Reserve Chair Jerome Powell's news conference. The upshot of that meeting was that while the FOMC as expected took a pass on hiking the federal funds rate above 5.50%, the guidance from Fed officials came in more hawkish than expected, disappointing investor hopes for signals for a future pivot. For the week ahead (29:40), Jeff and Eric will be on the lookout for the S&P CoreLogic Case-Shiller house price indices for July, the Conference Board's Consumer Confidence report, durable goods orders, 2Q GDP revisions, jobless claims and a “big dose” of news on Friday Sept. 29: personal income, personal spending and the PCE deflator.
DoubleLine Portfolio Managers Jeffery Mayberry and Samuel Lau kick off the episode with a nod to the 15th anniversary of Lehmann Brothers' bankruptcy filing (Sept. 15, 2008) before running down the market week of Sept. 11-15. For their Topic of the Week* (16:48), Jeff and Sam break down the just-released August CPI print, with a look at headline, core and supercore readings; a discussion of the BEA publishing a supercore PCE price index, its current favorite metric (22:06); and a rundown of various Fed bank CPI prints (24:15): median, trimmed mean, flexible and sticky. On the market week, the S&P 500 (1:21) was slightly down, with utilities up and tech down. On the fixed income side (2:33), the Agg was down for the week while bank loans continued their strong year. Commodities (4:45) continued their second-half surge, and WTI crude's sticky $90 handle is spotlighted as well as the factors boosting oil. Over in Macro Land (10:11), topics include retail sales numbers goosed by gas; jobless claims; and the Producer Price Index, which had its lowest year-over-year core print since January 2021. No Fedspeak this week heading into next week's FOMC meeting, but there were some interesting shifts in rate hike expectations (15:26) for the remainder of the year. Next week will also bring jobless claims, the August LEI numbers and global PMI prints (28:05). This episode was recorded after market close on Sept. 15, 2023. *For more discussion of the CPI, check out Episode 13 on the owners' equivalent rent component, Episode 19 on Fed banks' sticky and flexible readings, Episode 30 on the impact of housing prices, Episode 102 on weighting mechanisms and Episode 104 on supercore inflation.
For the week ended Sept. 8, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau start with a review of the markets for stocks (0:56), fixed income (3:27) and commodities (4:54), all of which printed with red ink. Turning to the week's macro news (9:22), they take particular note of the surprisingly strong reading of 54.5 ISM services report for August versus consensus expectations of 52.7. For the Topic of the Week (14:40), Jeff and Sam explore the Treasury quarterly refunding needs, which are running high versus historical averages, and the potential for funding stress in light of such large, expected debt issuance. They also ponder the future reliability of the Secured Overnight Financing Rate (SOFR) as a gauge of financial stress, given the end of the London Interbank Offered Rate (LIBOR). Looking ahead to Sept. 11-15, on Jeff and Sam's radar screens (28:43) are the August CPI (Wednesday); retail sales, PPI and jobless claims (Thursday); and the University of Michigan survey of 5-to-10-year inflation expectations.
After touring the equities (1:12), fixed income (4:08) and commodities (6:28) markets for Aug. 28- Sept. 1, DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall cover the week's heavy calendar of macro news (8:07). Highlights include the June readings of the S&P CoreLogic Case-Shiller home price series, which showed home prices, supported by low inventories, defying rising mortgage rates, and labor market data, which, while improving toward a better balance, still indicating Federal Reserve monetary policy remaining tight for longer. Looking ahead to the week of Sept. 4-8 (31:24), Sam and Eric will be on the lookout for ISM Services report and release of the Fed's Beige Book (Wednesday) and jobless claims (Thursday).