January 2022: Market Valuation, Inflation and Treasury Yields
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. On August 4, 2020, the 10-year Treasury yield hit its all-time low of 0.52%. As of January 31, 2023, it was at 3.52%
The "Real" Goods on the December Durable Goods Data
The Census Bureau has posted its advance report on durable goods new orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's review durable goods data with two adjustments.
Meta Shares Soar as Zuckerberg Declares 'Year of Efficiency'
Meta Platforms Inc.’s shares soared more than 20%, on track for their biggest gain in 10 years, after Chief Executive Officer Mark Zuckerberg announced plans to make the social media giant leaner, more efficient and more decisive.
Regression to Trend: 115% Above Trend in January
Quick take: At the end of January the inflation-adjusted S&P 500 index price was 115% above its long-term trend, unchanged from the previous month.
About the only certainty in the stock market is that, over the long haul, over-performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.
CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's Core Personal Consumption Expenditures Chain-type Price Index for December, released last Friday, shows that core inflation continues to be well above the Federal Reserve's 2% long-term target at 4.42%. The December core CPI release was higher, at 5.71%. The Fed is on record as using core PCE data as its primary inflation gauge.