Economic Indicators
Timer after Economic Events
What is the FOMC?
The Federal Open Market Committee (FOMC) is responsible for setting monetary policy, including the federal funds rate. The interest rate decision is closely monitored by investors as it impacts economic growth, inflation, and market stability.
Timer after Economic Events
– Yield curve inversion and its resolution could signal concerns over a potential recession and stock market decline.
– Yield curve inversion resolution (10Y – 3M) may indicate important economic signals.
– Status:
All Time High
The Buffett Indicator, which compares the total market capitalization of US stocks to GDP, has reached an unprecedented high. A value above 100% typically suggests that the market is overvalued.
This indicates that stocks are very expensive and may be at risk of a correction or downturn.
– Status:
Quantitative Tightening (QT) Ongoing
What is QT?
Quantitative Tightening (QT) is a monetary policy used by central banks to reduce the size of their balance sheets. It involves the sale of government securities or allowing them to mature without reinvestment, effectively reducing the amount of money circulating in the economy. This policy is often implemented to combat inflation or stabilize economic growth.
Updating Useful Information
▼ Howard Marks’s Memo Released (Jan 7, 2025)
– On Market Speculation:
A discussion on whether current market conditions resemble a bubble.
– Key Lessons:
Howard Marks shares insights on long-term investing in volatile markets.
– Economic Risks:
An overview of macroeconomic risks and their potential impact on market stability.
– Investment Strategy:
Advice on cautious portfolio positioning during uncertain times.
– Contrarian Viewpoints:
Why some market participants may underestimate the risks of speculation.
– Final Thoughts:
Marks’s conclusion on current market valuations and investor sentiment.
▼ US Treasury Yield (–)
– 30-Year Yield:
–
– 10-Year Yield:
–
– 2-Year Yield:
–
– 3-Month Yield:
–
▼ US Major Indexes P/E Ratios (as of January 13, 2025)
– Dow Industrial Avg:
26.73
– Russell 2000 Index:
33.96
– NASDAQ 100 Index:
32.56
– S&P 500 Index:
24.79
▼ Fed Watch Expected Rate for the Next Meeting (January 29, 2025)
– Upper 90% probability:
Maintain current rate (4.25% – 4.50%)
– Under 10% probability:
Cut to 4.00% – 4.25%
Description:
The Fed Watch Tool by CME Group provides probabilities of Federal Reserve interest rate changes at upcoming meetings. The current interest rate is 4.25% – 4.50%, and the next meeting on January 29, 2025, shows an upper 90% probability of maintaining the current rate and an under 10% probability of a rate cut to 4.00% – 4.25%.
▼ 2025 S&P 500 Predictions
– Oppenheimer:
7,100
– Wells Fargo Investments:
7,007
– Deutsche Bank:
7,000
– BMO:
6,700
– Bank of America:
6,666
– Fundstrat:
6,600
– RBC:
6,600
– Barclays:
6,600
– Evercore ISI:
6,600
– CFRA:
6,585
– Citi:
6,500
– Goldman Sachs:
6,500
– Morgan Stanley:
6,500
– JPMorgan:
6,500
– UBS:
6,400
▼ Currency Index & Exchange Rates (2025-01-11)
– Dollar Index:
103.25 (+0.12 / +0.10%)
– Euro Index:
95.70 (-0.05 / -0.08%)
– EUR/USD:
1.0244 (-0.0055 / -0.97%)
– GBP/USD:
1.2204 (-0.0104 / -0.81%)
– USD/JPY:
157.69 (-0.38 / -0.24%)
– USD/CHF:
0.9164 (+0.0047 / +0.00%)
▼ Fear and Greed Index = 27
– Fear Level:
Fear
Description:
The Fear and Greed Index measures market sentiment and shows the balance between «fear» and «greed.» This index ranges from 0 to 100, with lower values indicating «fear» and higher values indicating «greed.» It combines multiple market indicators to reflect the current emotional state of investors.
▼ High Yield Spread at Historically Low Levels
– Current Spread:
Below 3%
What is the High Yield Spread?
The High Yield Spread refers to the difference in yields between high-risk, high-yield corporate bonds and safer government bonds (typically U.S. Treasuries). A lower spread indicates that investors are willing to accept less compensation for the risk of holding corporate bonds, which often signals optimism or excessive risk appetite in the market.
Why is a Low Spread Significant? A historically low spread, such as below 3%, suggests that market participants may be underestimating risks or anticipating sustained economic stability. However, it can also be a sign that the market is vulnerable to potential corrections if unforeseen risks materialize.
▼ US M2 Money Supply Was Negative for About 16 Months (~Mar/2024)
– Period:
2022.11 ~ 2024.03
What is the Significance of Negative M2 Growth?
The M2 money supply measures the total amount of liquid money in the economy, including cash, savings, and money market funds. A prolonged period of negative M2 growth is exceptionally rare and may indicate tight monetary conditions or a significant reduction in economic liquidity.
Why is this Important? Negative M2 growth can be a sign that monetary tightening policies are impacting consumer spending and credit availability. While it may help control inflation, it can also slow down economic activity and potentially lead to deflationary pressures.
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