Articles

  • 1 week ago | bloomberg.com | Edward Harrison

    This was one of the more challenging Federal Reserve decisions to anticipate. US macro data has deteriorated so much that, normally, you’d expect policymakers to cut interest rates. However, they’ve already said tariffs are keeping them on hold for a while, unless things really fall apart. Military conflict between Iran and Israel can only make that hold longer. Therefore, it was anyone’s guess what the Fed’s dot plot of interest rate projections would show.

  • 2 weeks ago | bloomberg.com | Edward Harrison

    In financial circles, there’s an old adage: “Don’t fight the Fed.” That framing makes it seem like the Federal Reserve dictates and the market falls in line. I’d like to change the saying to: “Don’t fight the bull market,” to reflect the current zeitgeist. Sure, investors can de-risk tactically — by changing sector and country allocations, for example.

  • 3 weeks ago | bloomberg.com | Edward Harrison

    Donald Trump has proven to be a lot more malleable than many in the financial world initially anticipated. Equity markets have adapted well, and now trade on the theme that Trump always chickens out (or TACO for short). That helped the S&P 500 gain 7% last month. But will this last? And will Trump capitulate again when the 90-day reciprocal tariff deadline comes?

  • 1 month ago | bloomberg.com | Edward Harrison

    Have you seen the Road Runner cartoon, where the coyote chases the speedy bird only to overshoot the mark and run off the cliff? At first, Wile E. Coyote levitates as if he’s still on firm ground, but once the illusion fades, he plummets toward rock bottom. That’s the risk with US financial markets as foreign investors withdraw their support. To be sure, a panic isn’t the likely outcome here.

  • 1 month ago | bloomberg.com | Edward Harrison

    Now that the trade war between the US and China has de-escalated, everyone on Wall Street seems to think the risk of recession is greatly diminished. This suggests that Treasury yields will rise because the Federal Reserve won’t need to save the day. My view is that the Fed was never going to save the day to begin with, so de-escalation actually opens the door for rate cuts in a weakening labor market. Unlike the majority on Wall Street, I see downside risk in equities, not bonds.

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