Policy changes coming Going into this week, I knew it was going to be a doozy. There were so many market-moving things happening, and I think we’re only part-way through the chaos. Anyway, the BIG thing that happened this week was the FOMC’s first meeting of 2022. It was largely expected that the Fed was going to announcing policy measures to get inflation under control, but we were waiting to hear just how far they would be willing to go. The Fed seems ready to raise interest rates as soon as March and is likely to reduce its balance sheet. Moral of the story: The market is expecting four interest…

State of manufacturing This was a fairly light week of economic updates (plus a holiday week, though it somehow felt like it lasted for ever), but we got a few regional manufacturing updates from the Philly and New York feds. In an unfortunate turn of events, the New York manufacturing survey plummeted into negative territory for the first time in 20 months. The Philly survey, however, continued to show improvement despite the omicron wave, indicating that some parts of the country will be faring better than others. Moral of the story: NY got hit hard and fast and first by the Omicron wave, which pretty much wiped out a large…

Inflation I’m fairly certain I’ve talked about inflation in the last few months more than I have in the rest of my life combined. Consumer prices increased 0.5% in December, bringing the annual rate to a whopping 7%, which is the highest level we’ve seen since June 1982. Some of the bigger culprits included used car prices, which have increased 37% in the last year, and gasoline prices, up almost 50% compared to 2020. Aside from those eye-popping numbers, we’re seeing pressure on prices across the board – apparel, food, rents, everything. Moral of the story: Rising prices have become the regulatory zeitgeist recently and it does seem like policy-makers…

What’s the deal with jobs? We ended the first trading week of 2022 with the December jobs report that was a little mixed. On the one hand, we only added about 199k new jobs, compared to expectations for closer to 422k new jobs. On the other hand, the unemployment rate fell to a new pandemic low of 3.9%, and within close reach of the 50-year low of 3.5% we were at just before the pandemic started. In good news for workers (but bad news for continued inflation), wages increased 0.6% in the month. Moral of the story: There were about 4m more jobs available than there were unemployed workers through…