DoubleLine’s Jeff Mayberry and Samuel Lau run down market and macro events for the Sept. 20-24 week, which ushered in the autumnal equinox and a new regular feature to the podcast, a deep dive into the week’s Federal Open Market Committee (FOMC) meeting. The S&P 500 was up for the week, led by the energy sector, which reclaimed the crown of sector of the year with its nearly 40% rise in 2021 (2:07). Bitcoin got some bad news from the crypto crackdown in China, which also caused waves with the Evergrande development crisis (4:47). On the macro front, PMI manufacturing and service numbers were strong, while Fed Chair Jerome H. Powell’s Friday listening event didn’t produce any headlines (7:35). Jeff and Sam launch the inaugural edition of their FOMC meeting deep dives, which will continue as long as the Fed keeps its heavy hand in the market (12:55). Big takeaways from the meeting include dot plot movement and a taper date set for November, as the Fed said its inflation and employment numbers have been met. Jeff and Sam note, however, that Powell stated the Fed will also look at the “broader environment” before tapering, and events such as Washington’s looming vote on the debt ceiling could affect the timeline. Looking ahead, next week’s deliveries will include data on durable good and housing price appreciation, and the personal consumption expenditures deflator (29:58).

Monday Morning Minutes

MMM Episode 34: Sept. 20-24 Market/Macro Recap, FOMC Meeting Deep Dive and Outlook

DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall review the Nov. 7-11 week, which saw strong large gains in stocks (2:21) and across all major bond sectors, led by emerging markets debt (4:42). Amid a slight decline in commodities (6:58) and a 21% drop in Bitcoin, gold staged a surprising 5% gain. In the week’s macro news (9:19), the big market movers were headline and core prices for October. Prints in both indexes came in 20 basis points year-over-year below expectations on Thursday, triggering rallies in stocks and bonds. However, Jeff Mayberry cautions (14:35) that it remains to be seen whether October marks the beginning of a disinflationary trend or a mere aberration. He also notes loosening financial conditions on the week, a development that runs contrary to the policy objectives of Federal Reserve tightening.
Looking ahead for the week of Nov. 14-18 (21:42), Messrs. Mayberry and Dhall will be on the lookout for the October producer price index on Tuesday, retail sales on Wednesday, jobless claims on Thursday and the Conference Board US Leading Index on Friday.

MMM Episode 91: Meaningful or Bear-Market Rally? Jeff and Eric Strike a Note of Caution

After reviewing the May 1-5 performances of stocks (2:38), fixed income (3:50), commodities (5:41) and the week’s macro news, DoubleLine’s Samuel Lau and Eric Dhall take a dive (13:51) into the May 3 meeting of the Federal Open Market Committee (FOMC), its policy decisions and guidance as well as Federal Reserve Chair Jerome Powell’s news conference. Their Fed Day analysis includes some skepticism about Powell’s stated reassurances on the health of the banking system but alsi some empathy for the economic conjuncture in which Powell finds himself as the Fed seeks to tame inflation. 

Looking ahead to the upcoming macro news releases for the market week starting May 8 (?31:29), the cohosts single out the April consumer price index, Tuesday May 9; the producer price index, Thursday; the University of Michigan preliminary May consumer sentiment survey, Friday; and Fedspeak events featuring New York Fed President John Williams; Christopher Waller and Philip Jefferson, both members of the Fed’s Board of Governors; and St. Louis Fed President James Bullard.

MMM Episode 114: Sam and Eric Ponder Powell’s Parsing and Positioning on Fed Day

DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall review the performance of stocks (2:23), bonds (4:47) and commodities (6:39) for May to date; a complicated mix of macro news (13:34) for the week ended May 26; and expectations reflected in the futures market of a 25-basis point hike in the federal funds target rate on June 14 or July 26 (13:33). Then Jeff decodes the message that Treasury bill yields are sending on the prospects of a failure or agreement by Washington to raise the U.S. debt limit before the federal government runs short of cash (18:03). Looking ahead to the Memorial Day-abbreviated market week ending June 2, the hosts single out for investors’ radar prints of the S&P CoreLogic Case-Shiller 20-City Composite Home Price Index, JOLTS Job Openings, jobless claims, ISM Manufacturing, nonfarm payrolls and unemployment (22:50).

MMM Episode 117: The Debt Limit Viewed through a T-bill Lens

DoubleLine Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall begin their review of the week ended Aug. 18 with a rough market for equities (1:18) All 11 sectors of the S&P 500 ended the week in the red. The catalyst for the losses in equities appeared to be higher interest rates (2:46), with the yield of the 10-year Treasury notably breaking above 4.20%. Higher rates (4:22) virtually by definition led to negative returns in many areas of fixed income, including for the Bloomberg US Aggregate Bond Index, the most widely followed gauge of domestic high grade bond performance. Commodities (5:47) shared in the red ink, led lower by energy and industrial metals.

Dominating the relatively light macro news for the week (9:13) were a major property default in China, robust retail sales in the U.S. (albeit possibly skewed by Amazon Prime day), mixed import prices and the release of the minutes of July 26 meeting of the Federal Open Market Committee (FOMC), the monetary-policy setting body of the Federal Reserve. The FOMC minutes (12:57) may have led markets to price in the likelihood of the federal funds rate remaining higher for longer than previously expected. Looking to the week ahead, Jeff and Eric will be especially tuned in to Federal Reserve officials’ comments at their annual retreat at Jackson Hole, Wyoming (17:45), in particular Fed Chair Jerome Powell’s speech scheduled for 7:05 am Pacific/10:05 am Eastern Friday Oct. 25.

MMM Episode 129: Negative Week for Stocks, Bonds and Commodities amid Higher Rates

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.

MMM Episode 132: Treasury Refunding Needs and Potential for Funding Stress

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 for second quarter GDP. This first of three GDP estimates for each quarter, Eric cautions, is “the least accurate because of revisions. That said, it was a home run, came in at 2.8% quarter-over-quarter annualized real, which is fantastic relative to the estimate of 2.0%.” Noting personal consumption “contributed 1.6% of that 2.8% GDP annualized,” Sam notes, “certainly the consumers are in there, really pulling their weight.” Sam and Eric, however, cautioned not to be mesmerized by the rear-view mirror of macro statistics. Looking through the windshield at  the road ahead (17:41), Sam and Eric will be watching July 29-Aug. 2 for the S&P CoreLogic Case-Shiller house price index updates through May and JOLTS job openings for June (Tuesday); the FOMC rate policy meeting and above all Fed Chairman Jerome Powell’s news conference (Wednesday); ISM manufacturing for July (Thursday); and the “Pizza Friday data,” i.e., the verdict of the markets on the news of the week.

Minutes

Taking “Home Run” GDP with a Grain of Salt (E175)

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 Friday’s labor market report (00:36), look at a bond market rallying with incredible strength and a 2s10s inversion that has tightened considerably (3:52) and review a commodities market broadly selling off (6:31). It was a jampacked week in Macro Land, which included prints on home prices, job openings and consumer confidence (9:17). But Eric and Mark do deep dives into the two major events of the week: Wednesday’s exuberant Fed Day (15:16) and Friday’s market-moving unemployment report (21:54). On the former, they discuss the factors behind Fed Day’s dovish vibes, leading to their review of a very ugly picture painted by the new labor report. In their breakdown of the labor report, Eric and Mark explain why market followers are now referencing the Sahm recession signal and how it works. Next week will be a light one for macro (27:01), including a consumer credit print and the Senior Loan Officer Opinion Survey. This episode was recorded before market close on Aug. 2, 2024.

Dovish Fed Day Flies Into Sahm Recession Signal on Friday (E176)

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 deepened Monday Aug. 5. But as Mark Kimbrough notes in his review of the week’s macro news (5:00), an upbeat ISM services report “came in for the rescue,” helping to lift stocks and in general lower risk premia. “Now that you look back,” Jeff Mayberry says, “it’s pretty funny seeing all the people calling for all these emergency cuts, and now here we are, down 4 basis points on the S&P on the week.”  

Looking ahead to “inflation week” (12:13)with producer and consumer price indexes for July due Tue. (Aug. 13) and Wed. (Aug. 14), respectively, and the University of Michigan consumer inflation expectations survey (Friday). Given the markets’ anticipation of fed funds rate cuts, starting in September, Jeff Mayberry notes the week of Aug. 12 could prove volatile, particularly given vacation-loaded schedules in August. “Everyone likes to joke,” Jeff Mayberry says, “that the junior traders are on the desk and tend to overreact vs. the old hands who have been through this before.”

A Volatile Week: Much Ado about Not Much? (E177)

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 picture and the latest Fedspeak, add up, they reason, to rate cutting, beginning at the Sept. 18 meeting of the Federal Open Market Committee, but not at an aggressive pace. Looking ahead to Aug. 19-23 (15:25), Jeff and Sam will be especially on the lookout for any policy nuances in Fed Chair Jerome Powell’s Jackson Hole retreat speech on Friday. Further out, they are keen to see the next labor market readings ahead of next month’s FOMC meeting.

Rate Cuts Still on Track But Perhaps Not So Aggressive (E178)

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 Fed Chair Jerome Powell in his Jackson Hole, Wyoming, symposium speech. The week’s macro prints (7:52), notwithstanding surprising strength in new home sales, likewise left intact expectations of cuts to the federal funds rate, with futures markets pricing in four quarter-point moves over the remainder of 2024, starting at the Sept. 18 meeting of the Federal Open Market Committee. The week of Aug. 26-30 holds little (16:49) in the way of big market movers in the scheduled macro releases. Among the reports on Jeff and Sam’s radar are durable goods orders (Monday) and PCE and University of Michigan consumer inflation expectations survey (Friday).

Stocks, Bonds, Commodities All Aboard on Rate Cuts (E179)

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 anticipate easing monetary policy at the Federal Reserve. On the week’s macro front (9:21), there was little in the way of market-moving news. With positive readings on the S&P CoreLogic Case-Shiller home price indices, Mark Kimbrough takes note of “faster growth still in the major metro areas as well as the rest of the country.” Among macro prints to watch for Sept. 3-6 (18:23), Sam and Mark single out the ISM manufacturing report (Tuesday), JOLTS job openings (Wednesday), ISM services (Thursday) and nonfarm payrolls and unemployment (Friday).

Benign Markets amid Muted Macro News (E180)

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 the squeeze. Over in Macro Land (6:03), Jeff and Sam review the prints impacting the market volatility, including ISM manufacturing and labor force reports, and what those numbers might mean for potential Fed moves at September’s FOMC meeting. As their Topic of the Week (12:50), they take a look at the possible de-inversion of the long-inverted U.S. Treasury yield curve as represented by the differential of the two- and 10-year Treasury yields (“2s10s”).* Jeff and Sam look at the six previous recession periods dating back to 1980 and how the 2s10s de-inversion fits into those recessions’ timelines. Next week (23:58), Jeff and Sam will be looking at the last batch of inflation and other metrics before the Fed convenes its FOMC meeting. This episode was recorded Sept. 6, 2024, before market close. 

*For more on 2s10s and the inverted Treasury yield curve, check out:

Episode 107: Timing the Lead Times of the Treasury Yield Curve

Episode 52: Yield Curve Flattening as an Economic Indicator

Rough Market Week Amid (Another) Emerging Recession Signal (E181)

DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau cover the week of Sept. 9-13, 2024, which saw positive performances for stocks (0:30); fixed income (2:00), including a recessionary signal in the form of a Treasury yield curve de-inversion; and commodities (4:30). Topping the week’s macro news (5:35) were the August CPI and PPI reports. For their Topic of the Week (10:44), Jeff and Sam discuss the two-year Treasury as a leading indicator and the three-month T-bill as a coincident indicator of the federal funds target rate. Looking ahead (18:06) to the week of Sept. 16-20, apart from the FOMC meeting and Jerome Powell news conference on Wednesday, Jeff and Sam will be watching for retail sales on Tuesday as well as jobless claims and the Conference Board’s Leading Economic Index, both on Thursday.

Leading Signals for Recession and the Fed Funds Rate (E182)

DoubleLine Portfolio Manager Jeffrey Mayberry and Quantitative Analyst Eric Dhall track the Sept. 16-20 week market activity leading up to and in the wake of the Federal Reserve’s big rate cut on Wednesday. Jeff and Eric look at a positive week for stocks (00:43), a down week for the Agg while the 2s10s spread de-inverted (2:00) and rising commodities boosted by energy (4:01). Over in Macro Land (5:20), prints they look at include retail sales, production numbers and what they might mean as a recession herald, jobless claims, and the LEI and its increasingly questioned data signal. They then turn to the big macro news of the week (the year?) for the Topic of the Week (9:40): the Fed’s cut of 50 basis points (bps) to the federal funds rate. Jeff and Eric talk about 25-bp versus 50-bp cut predictions, review Fed Chair Jerome H. Powell’s press conference and his talk of Fed “recalibration,” go through the Federal Open Market Committee’s Summary of Economic Projections and whether the Fed can still stick the soft landing. Looking at next week (21:37), prints will include U.S. PMI numbers; housing prices; consumer confidence; and annual revisions to GDP, which might be impacted by questions about employment data. This episode was recorded Sept. 20, 2024, before market close.

What’s the Impact of a Half-Point Rate Cut? (E183)

What’s the Impact of a Half-Point Rate Cut? (183)

DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall review market activity and macro news for the week of Sept. 23-27. Sam and Eric talk another strong run of almost daily historic highs for the S&P 500 Index (00:38), a flat week for fixed income (2:18) and a positive week for the Bloomberg Commodity Index despite struggling WTI crude (4:07). Over in Macro Land (6:09), they dive into a full week of prints that delivered few, if any, surprises, including the S&P Global PMI manufacturing and services reports, a resilient housing market, weakening consumer expectations and a Personal Consumption Expenditures Price Index that could support further interest rate cuts by the Federal Reserve. Next week (16:48), Minutes will have a monthly markets wrap-up as well as coverage of labor market data. This episode was recorded Sept. 27, 2024, before market close.

Monday Morning Minutes

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