The market week of Oct. 11-15, 2021, as co-hosts Jeff Mayberry and Samuel Lau take note, witnessed a wide rally across asset classes, including commodities, bonds and stocks as measured by the S&P 500, apart from the communications services sector, which was weighed down by one of its component stocks (2:30). Turning to the Question of the Week (14:00), Sam explains the wide differences exhibited in natural gas prices moves in different markets for that commodity around the world. On the inflation front, while consumer and producer prices In September posted impressive gains relative to past years (10:42), the co-hosts surmise that those increases were below market expectations . The coming week of Oct. 18-22, Messrs. Mayberry and Lau note, has little in the way of scheduled macroeconomic news, although they’ll be curious to see what surfaces from the Wednesday release of the Federal Reserve’s Beige Book summary of economic activity (31:17).

Monday Morning Minutes

MMM Episode 37: Broad Rally, Differential Nat Gas Markets and Seeing Beige

After their review of stocks, bonds, bitcoin and commodities for the week of Dec. 6-10, 2021, cohosts Jeffrey Mayberry and Samuel Lau peruse the latest readings of jobless claims and the Consumer Price Index (7:31). Taking note of the rise in stocks Friday on the heels of the CPI’s 6.8% year-over-year increase in November, Jeff notes “maybe the market was expecting a higher print,” adding that a minimal month-to-month rise would push the CPI to a 7.0% gain or higher for December. For their Question of the Week, Jeff and Sam explain the use of federal funds futures pricing in deciphering market expectations for the direction and level of that official short-term interest rate (12:06). They also delve into tools based on fed funds futures pricing to handicap changes in that interest rate, including the Chicago Mercantile Exchange’s CME Fed Watch Tool and Bloomberg Financial’s World Interest Rate Probability (WIRP) function (17:13). Looking ahead to the week of Dec. 13, Jeff and Sam discuss the “big meeting” of the Federal Open Market Committee on Wednesday (28:05) with its prospects of embarking on aggressive tapering to quantitative easing in an effort to reach an end to the Federal Reserve’s bond buying in March 2022.

MMM Episode 44: Of Jobless Claims, Prices and Reading the Fed Funds’ Tea Leaves

After a review of the Jan. 10-14 market activity and macro news, DoubleLine’s Samuel Lau and Jeff Mayberry explain and explore commodities futures for their Topic of the Week (15:46). In that discussion, they discuss the market participants (notably hedgers and producers versus speculators), the important distinction between spot-price returns of commodities versus investable returns afforded by futures contracts, the different exchanges over which commodities futures trade, and the term structures of backwardation and contango, with their respective positive versus negative roll returns.
In their recap of markets for Jan. 10-14 (1:45), energy stocks, up more than 5% for the week, was the sole sector of the S&P 500 to deliver a meaningful positive return. With the exception of energy and communications services, the later up a meager 9 basis points (bps), the remaining sectors were in the red, with real estate stocks down almost 2%. Value stocks, up 1 bp, continued to outperform growth stocks, down 1%. Yields (3:55) were up across the Treasury curve, except for the long bond, which was flat. The largest yield increases at the shorter end of the curve, which tend to be most sensitive to Federal Reserve rate policy. Commodities (5:53) were up 2.25% on the Bloomberg Commodity Index, led by the energy constituents.

MMM Episode 48: 7% CPI, Pricing in 4 Rate Hikes and a Primer on Commodities Futures

After running down market and macro news in the face of threatening moves by Russia toward Ukraine, Jeff Mayberry and Samuel Lau look at the sanction responses by the West after Russia’s invasion as their Topic of the Week (17:55). This episode was recorded Feb. 25, 2022. They cover the initial sanctions by various countries and the EU, including restrictions on banking and limiting access to key technology; which parties are already calling for ratcheting up those sanctions or employing additional measures, and what form those moves might take; Russia’s ability to handle current and future sanctions; and the current hesitation to cut off Russia from the SWIFT banking system, which Jeff and Sam see as the worst-case scenario (24:14).

Despite the looming invasion threat, Jeff and Sam note that the flight to quality that might have been expected never materialized in the market week of Feb. 21-25, possibly because markets had already priced in an invasion and the sanctions response was milder than some had anticipated. Equities (2:17), fixed income (3:54) and commodities (6:04) marked a positive week. Next week will deliver manufacturing, ADP and employment data, and an appearance by Fed Chair Jerome H. Powell before the House (31:40).

MMM Episode 54: Market Reactions to Russia-Ukraine and Reviewing the State of Sanctions

Portfolio Managers Jeff Mayberry and Samuel Lau with guest and DoubleLine Macro Asset Allocation Analyst Mark Kimbrough start with a review for week ended April 14 of stocks (including a look at banks) (2:24), fixed income (5:02), commodities (6:27) as well as the week’s macro news (8:48) and Fedspeak (17:45). For the Topic of the Week (20:29), Jeff and Sam dig into the details of the weekly initial and continuing jobless claims made for unemployment insurance benefits. Looking to the week of April 17-21 (32:23), Jeff, Sam and Mark have on their radar, among other items, more Fedspeak events, the release of the Federal Reserve’s Beige Book (Wednesday April 19), the Leading Economic Index of 10 leading indicators (Thursday) and the S&P Global Manufacturing and Services PMIs (Friday).

MMM Episode 111: Analyzing Jobless Claims and Fedspeak

After reviewing a mostly green market week (and month and year-to-date) of April 24-28, DoubleLine’s Jeffrey Mayberry and Samuel Lau take a look at what a difference a day makes with their Topics of the Week. Jeff and Sam begin the segment by looking at zero-days to expiry (0DTE) stock options (21:19), with investors’ growing interest having already produced mixed opinions from “nothing to see here” to the “next Armageddon.” The two cover the history leading up to 0DTE, retail investors’ exposure (30:37) and generally see a pretty balanced market with not much reason for concern (27:35).* Next up (28:29) is the CBOE’s new 1-Day Volatility Index (VIX1D), unveiled by CBOE as a companion to its VIX, which measures stock market expectations of volatility based on S&P 500 index options on a 30-day basis and is referred to as the fear gauge.** Jeff and Sam discuss the new index’s operation and the short and simple breakdown provided by the CBOE on the VIX1D, wonder if the VIX1D’s popularization of “business minutes” will lead to talk of “business seconds,” and they look forward to tracking the new index’s reactivity to next week’s speech by Fed Chair Jerome H. Powell at the FOMC meeting. The Topic of Week segment concludes with a quick check-in on the status of the 2s10s spread (37:20).

Stocks (1:52) and the Agg (4:55) posted strong performances in April while commodities (6:25) struggled and Bitcoin (9:00) maintained its strong year-to-date return. Over in Macro Land, Jeff and Sam look at data prints including home prices (9:43); preliminary GDP (12:05); and the Fed’s report on the collapse of Silicon Valley Bank (15:37 ), in which, Sam notes, the Fed does not fully acknowledge the extent of its failure. Looking to next week (40:16), the big event is the FOMC meeting, which is expected to bring another quarter-point rate hike.

*For more on options and Witching Hour(s), check out MMM Episode 36

**For more on the Volatility Index, check out MMM Episode 49

MMM Episode 113: 0DTE Stock Options, a Daily VIX and a Mostly Green Month

After covering positive market performance in the final week (Nov. 27-Dec. 1) of a very healthy November, DoubleLine Portfolio Managers Jeffrey Mayberry and Samuel Lau dive into the latest BIS paper on financial condition indices as the Topic of the Week (25:24). They go through the six indices that comprise the report, with a focus on the Goldman Sachs and Bloomberg indices that offer the most insight into U.S. economic performance.

In their market review, Jeff and Sam talk about November’s strong run in equities and fixed income, possibly assisted by Fed Chair Jerome H. Powell’s cautious comments on the economy at the beginning of the month. The S&P 500 (1:06) experienced broad-based gains with energy the only one of 11 sectors to finish in the red. Fixed income’s positive performance (4:11) was fueled by a rally in U.S. Treasury rates, and the Agg had its best month since May 1985. Commodities (8:29), as an asset class, did not participate in the boom. After taking Thanksgiving week off, there was a lot for MMM to cover in Macro Land (12:02), including the latest LEI print, labor numbers, home prices, a bumped-up Q3 GDP estimate and a PCE print reflecting strides in the Fed’s inflation fight. In the Fedspeak roundup (19:53), Jeff and Sam appreciatively note the clashing and evolving hawkish and dovish stances of Fed officials reflecting a range of opinions. Next week’s macro prints (34:53) will include the ISM services report and job numbers.

MMM E143: Financial Conditions, a Very Strong November and Fedspeak Discord

Jeff Mayberry and Samuel Lau first review the week ended Dec. 8, 2023, for stocks (1:06), fixed income (3:00) and commodities (5:25) as well as macro news (8:12), including volatility around the week’s labor market prints. Then they take up the subject of yield curve control (15:41), the targeting by central banks of sovereign bond yields at specific tenors generally further out the curve from conventional short-term policy rates. Yield curve control was instituted by the Bank of Japan in September 2016. BoJ officials, Jeff and Sam note, appear to be prepping markets and the public for an end to yield curve control, perhaps ahead of anticipated policy rate cuts by the U.S. Federal Reserve. Then Jeff and Sam look ahead to the week of Dec. 11-14 (29:07), whose calendar includes the November CPI report (Tuesday); PPI and Federal Open Market Committee meeting (Wednesday); retail sales, jobless claims and import prices (Thursday) and the S&P Global PMI surveys for manufacturing and services (Friday).

MMM E144: Yield Curve Control’s Possibly Numbered Days at the BoJ

DoubleLine’s Jeff Mayberry and Eric Dhall review the market week (1:00) ended Feb. 9, 2024, including a new all-time high carrying the S&P 500 to close above 5000 for the first time, yields up across the investment grade segments of the fixed income universe and a higher week for the Bloomberg Commodity Index, although accompanied by a decline in industrial metals. Macro news for the week (4:39) includes a strong ISM Services report but in general tighter financial conditions indicated in the Federal Reserve’s Senior Loan Officer Opinion Survey of Bank Lending Practices. For their Topic of the Week (11:21), Jeff and Eric discuss the U.S. Treasury’s quarterly refunding announcement in the context of an explosion of the national debt to $34.2 trillion – a pace of debt growth that on Feb. 7 drew a warning from the Congressional Budget Office. Falling Treasury purchases by foreign governments, Jeff Maberry notes, means yield-sensitive investors such as insurers account for a larger share of Uncle Sam’s creditors. Their bond vigilantism means more upward pressure on interest rates. Looking ahead to the week of Feb. 12-16, Jeff and Eric single out (21:27) above all the January print of consumer price index, due Tuesday Feb. 13. They will also be on the lookout for retail sales, import prices and jobless claims (Thursday) and housing starts and the January producer price index (Friday).

Federal Debt Spiral and Bond Vigilantes (E152)

After covering stock (1:01), bond (4:08) and commodity (7:08) markets for the week ended Feb. 16, 2024, DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall dive into the week’s macro news (8:50), including a January CPI report that pushed back Fed rate-cut expectations. For their Topic of the Week (22:42), Sam and Eric examine the concentration of the market cap-weighted S&P 500 large-cap stock index in terms of its 10 largest stocks. They also look at history for a idea of what above-average concentration has presaged for future performance of the market-cap weighted index versus the equal-weighted index. Looking ahead (37:58) to the week ending Feb. 23, Sam and Eric will have on their radar the Leading Economic Index of 10 leading indicators, the release of the minutes of the Jan. 31 meeting of the Federal Open Market Committee, jobless claims and S&P Global PMI reports.

Studying a Market-Moving January CPI and Narrow S&P 500 Leadership (E153)

After covering the markets for the holiday-shortened week of Feb. 20-24, mostly positive for stocks (00:18) and bonds (1:52) and mostly negative for commodities (3:30), DoubleLine’s Jeffrey Mayberry and Mark Kimbrough run down a relatively light week of macro news (5:13), including resilient employment numbers and S&P Global U.S. PMI prints in expansionary territory. For their Topic of the Week (11:57), Jeff and Mark look at the recent LEI* release and the way the publisher, the Conference Board, has changed its approach to LEI data that takes the pressure off a bellwether metric that has been pointing toward a recession in the U.S. since July 2022, when it turned negative year-over-year. They go through the 10 inputs that comprise the index and their weightings, and how the Conference Board now does not forecast a recession for 2024. Jeff and Mark discuss this shift in approach, which Mark terms a moment of capitulation on the LEI. Looking ahead to next week (20:41), Jeff and Mark preview some of the upcoming prints, including durable goods; home prices; consumer confidence; and the PCE, the Fed’s favorite inflation metric.

*For more on the Conference Board Leading Economic Index, check out Episode 29: Recapping Markets/Macro and Eyeballing the LEI

Moment of Capitulation on the LEI (E154)

Portfolio Manager Jeff Mayberry and Quantitative Analyst Eric Dhall review markets for February (0:47) and the week ended March 1, 2024 (3:31) as well as the week’s macro news (7:00) and Fedspeak (16:51). For their Topic of the Week (19:36), Jeff and Eric explain how to use the Chicago Mercantile Exchange’s FedWatch Tool to obtain the market’s probabilities of future levels in the federal funds target rate from fed funds futures prices. They also discuss reasons to be skeptical of long-range market probabilities for rate changes and how the November presidential election might constrain the time window within which the Federal Reserve is willing cut rates. Looking ahead to the week of March 4-8 (27:19), Jeff and Eric will have on their radar ISM services, JOLTS, whole trade and inventories reports; the Federal Reserve’s latest Beige Book release; and above all Friday’s raft of February labor market prints, including February changes in payrolls and unemployment rate.

Using Fed Funds Probabilities – with a Grain of Salt (E155)

DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau cover a negative week ended March 8 for the S&P 500 (0:48), contrasting with a positive week for that index’s equal-weighted cousin; a positive week (3:16) for all major fixed income sectors; and weekly gains (5:46) for commodities and Bitcoin. After reviewing the week’s macro news (8:51) and Jerome Powell’s congressional testimony (13:10), Jeff and Sam dive into the Topic of the Week (14:36): the government’s household and establishment surveys in the labor market. Their discussion includes factors behind recent divergent readings of flat-to-rising unemployment and strong nonfarm payrolls as well as falling business participation rates in the establishment survey. Then they preview the key macro news releases (28:28) for the week of March 11-15, in particular, the February consumer price index (Tuesday) and import prices (Friday).

Jeff and Sam Demystify Divergent Labor Surveys (E156)

For the week ended March 15, 2024, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau survey the equities (1:17), fixed income (3:20) and commodities (5:44) markets. Then they dive into the week’s heavy macro news schedule (8:10), including CPI, PPI and import price readings and the week’s inflation-driven rate sell-off (10:44) and lowered rate-cut expectations (15:13) as they look ahead to the March 20 meeting of the Federal Open Market Committee.

Stickier Inflation, Higher Yields, Lower Rate-Cut Expectations (E157)

For the market week ended March 22, 2024, DoubleLine’s Samuel Lau and Mark Kimbrough recap a mostly positive week for equities (2:39) and fixed income (4:03) while commodities dipped (6:43). For the Topic of the Week (13:20), Sam and Mark do a deep dive on this week’s Federal Open Market Committee (FOMC) meeting and subsequent press conference by Federal Reserve Chair Jerome H. Powell. A quarterly meeting means a Summary of Economic Projections (SEP) from FOMC members, so after reviewing the rates and changes, if any, Sam runs through the new SEP forecasts, with some notable updates. Mark parses the Fedspeak in recapping Powell’s press conference (20:34), observing that while the SEP forecasts seemed rather hawkish, Powell’s statements seemed on the dovish side.

In their review of Macro Land (7:28) for the week of March 18-22, Sam and Jeff’s coverage includes job data, a preliminary manufacturing PMI print and a Leading Economic Index report that raises more questions on how to read this recession gauge. Looking ahead (29:00), the Good Friday-shortened week of March 25-28 will bring numbers on jobs, home prices and consumer confidence while the PCE print will come out on the holiday of March 29.

Because of the holiday next week, Minutes will be recording Thursday, March 28.

*For more on the topics covered in this episode, check out:
Episode 112: Red Week, Recession Metrics and the Overnight Reverse Repo Facility
Episode 58: Hard Look at the Fed’s Rare “Soft Landings”
Episode 21: Excess Reserves
Episode 18: Fed’s overnight reverse repurchase agreement facility

FOMC Fedspeak: Hawkish or Dovish? (E158)

DoubleLine Portfolio Managers Samuel Lau and Jeffrey Mayberry review the market week of March 25-28, 2024, shortened by the Good Friday holiday. Sam and Jeff also recap March and first quarter performances for equities, fixed income (3:59), commodities (6:24) and Bitcoin (9:13). Over in Macro Land (9:39), they look at housing prices, jobless claims and a GDP fourth quarter estimate, noting that the markets will be closed when the PCE and personal income prints are released Friday. In addition, Sam and Jeff discuss market expectations for Federal Reserve rate cuts this year – still hanging in at three – and the status of the Fed’s overnight reverse repo facility. Looking ahead (15:38), next week’s prints will include ISM manufacturing and services PMI data, a JOLTS update and employment numbers from ADP and the U.S. Bureau of Labor Statistics. This episode was recorded March 28, 2024, before the close of trading.

Q1 2024 Is in the Books (E159)

After their review of equity (1:08), fixed income (2:20) and commodity (4:14) markets for the week ended April 5 and of recent macro news, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau for their Topic of the Week (16:14) discuss the Treasury General Account and the relationship between TGA balances, Treasuries securities issuance and the duration of the Treasury market. Then Jeff and Sam highlight the important upcoming macro items (30:13) for the April 8-12 market week, including March prints of the consumer and producer price indexes.

TGA Balances and Treasury Securities Duration (E160)

DoubleLine Portfolio Manager Samuel Lau and Quantitative Analyst Eric Dhall review the market week of April 8-12, for stocks (1:04) and fixed income (5:05). Both asset classes were stung by the April 10’s report of a hotter-than-expected consumer price index in the March, although bonds staged a partial comeback Friday on a safety trade driven by fears of an escalating conflict in the Middle East. Samuel Lau next covers commodities (10:19), which stayed in the green for the week. In the macro discussion for the week (12:29), Eric Dhall takes a look under the hood of the March CPI report. In particular, he notes some troubling data in the services sector, which accelerated from 0.35% month-over-month in February to 4% in March. Sam Lau surveys (26:43) the week’s Fedspeak and the declining probabilities price into the fed funds figures market for more than one rate cut in 2024. Looking ahead to the week of April 15-19 (30:55), Sam and Eric have their sights trained on retail sales (Monday); industrial production, capacity utilization and manufacturing production (Tuesday); the Fed’s Beige Book release (Wednesday); and jobless claims and the LEI (Thursday).

A Market Squeeze on Hotter Inflation, Falling Rate Cut Expectations (E161)

As DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau note in their survey of markets for the week ended April 19, both equities as tracked by the S&P 500 (0:52) and fixed income as tracked by the Bloomberg US Aggregate Bond Index (3:32) ended in the red while commodities (8:07) continued month-to-date to be a sanctuary of positive returns. In his review of the week’s macro prints and Fedspeak (10:22), Jeff takes issue with the Conference Board “kind of changing the goal posts” with regard to reading its Leading Economic Index. The LEI has been flashing recession ahead since July 2022. Looking ahead to the April 22-26 market week (19:05), the most important macro bogeys on Jeff and Sam’s radar are the advance estimate of 1Q2024 gross domestic product (Wednesday) and the Personal Consumption Expenditure Deflator (Friday).

Red Stocks and Bonds, Green Commodities (E162)

For the week ended April 26, 2024, DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau review equities (1:00), fixed income (3:25) and commodities (5:52) markets. Then they discuss the week’s macro news (6: 46), including more reports of sticky inflation and slower-than-expected growth as evidenced in the preliminary GDP estimate for 1Q2024. For their Topic of the Week (14:16), Sam and Jeff explain stagflation, concluding that this phenomenon so far is absent, but it behooves investors to be on the lookout for it if growth slows further amid stubborn inflation. Looking ahead to the April 29-May 3 macro calendar (23:48), they will be especially interested in the Treasury quarterly refunding Wednesday, which front runs the Federal Open Market Committee meeting the same day. While markets have priced in the FOMC standing pat on the federal funds rate, Jeff Mayberry will be watching Fed officials’ guidance on a possible tapering of quantitative tightening.

Looking Out for Stagflation, Slower QT and Tsy Refunding Hiccups (E163)

DoubleLine Portfolio Managers Jeff Mayberry and Samuel Lau review stock (0:57), bond (2:46) and commodity (5:40) markets for the week ended May 3, including notable volatility in equities and fixed income in the wake of inflation data, Fedspeak and jobs data. Then Jeff Mayberry walks through the week’s macro news (7:25), including data showing sticky inflation, accelerating house price appreciation and some progress in job openings and unemployed people moving closer toward balance. 

For their Topic of the Week (19:14), Jeff and Sam dissect the policy guidance coming out of the May 1 meeting of the Federal Open Market Committee and Fed Chair Jerome Powell’s news conference, including plans to taper the rate of Fed balance sheet roll-off. The week of May 6-10 offers a relatively light macro schedule (34:17). Among the data points to watch for are the Senior Loan Officer Opinion Survey on Bank Lending Practices (Monday) and, because Fed Chair Jerome Powell uses it, the University of Michigan’s survey of consumers’ inflation expectations (Friday).

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