Fed Between a Rock and a Hard Place (E214)

DoubleLine Portfolio Managers Jeff Mayberry and Eric Dhall discuss the week ended May 9, including a mixed bag for stocks (0:55), rates up across the board in fixed income (2:59) and commodities (4:12) largely up with the notable exception of agricultural products. Bitcoin (5:17) crossed back above $100,000. On the macro front, ISM services for April came in at 51.6, much better than the consensus estimate of 50.2. No surprise, the U.S. trade deficit for March worsened to -$140.5 billion as importers moved to front-run the imposition of tariffs by President Trump.    For the Topic of the Week (8:23), Jeff and Eric covered Federal Reserve Chairman Jerome Powell’s news conference following the Federal Open Market Committee’s well anticipated decision to stand pat on monetary policy. The upshot from FOMC guidance and Powell’s press comments was the Fed, while seeing elevated risks to its mandates for price stability and full employment, does not know how tariffs and trade negotiations will play out in the economy. Jeff Mayberry suspects that if push comes to shove, the Fed likely will prioritize inflation fighting over full employment. Topping Jeff and Eric’s calendar for the week of May 12-16 (13:12) will be April consumer price index on Tuesday.

DoubleLine Portfolio Manager Eric Dhall and Fixed Income Asset Allocation Strategist Ryan Kimmel (0:22) review markets and macro through the week ended May 2. “If you were a Rip van Winkle investor who went to sleep March 31 and woke up today, what would you find?” After the tariff-unleashed sell-offs, Eric notes Rip would find equities up across the major indices. Rates (4:97) moving higher farther out the yield curve led to lower returns in most of the fixed income universe for the month with bright spots being high yield corporates and bank loans. Commodities (6:57) were down more than 4% from March 31 through May 2, led by energy down 14%, with precious metals being the bright spot, up 6%, and gold up 3%. Economic data (8:47) for the week, Ryan notes, “took more of a front stage compared to previous weeks that were dominated by tariffs.” Among those prints, he covers the JOLTS report, with weaker-than-expected job openings reported for March and a healthy balance between job openings and total unemployed workers. Consumer confidence has deteriorated due to concerns about tariffs. ISM manufacturing shows more contraction into recessionary territory. On a positive note, nonfarm payrolls showed improvement amid abating wage growth. Looking to the week ahead (21:11), topping Eric and Ryan’s calendar will be the Federal Open Market Committee meeting Wednesday May 7 and Fed Chair Jerome H. Powell’s news conference. The futures markets have priced in only a 3% probability of a cut to the target federal funds rate. The news conference promises to be more interesting. “Everybody is going to be watching Jay Powell to see how he tap-dances around the questions that he’s going to get regarding his job.”

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Asset Allocation Strategist Ryan Kimmel recap the markets for the week of April 21-25, noting how the post-April 2 volatility has made it seem like a very long month. Equities (0:53) were up on the week, with the trade stories of 2024 on growth, value and tech putting in an appearance. The bond market (2:21) had a pretty quiet week while the Agg continued to have a pretty good run in the new year. Commodities (3:33) were flat. Jeff and Ryan note that the markets seemed to dodge another volatile week after President Donald Trump walked back his calls for removal of the Fed chair. Over in Macro Land (7:54), they look at mixed April prelim manufacturing and services PMI numbers, consistent initial jobless claims and a consumer sentiment score that is usually only seen in crises. The week in Fedspeak (15:48) had a pair of Fed governors each addressing a side of the agency’s inflation-employment mandate. Next week (18:34) will bring prints including JOLTS numbers, a Q1 GDP estimate (very low) and inflation data.

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough review (0:05) the abbreviated market week ended April 17. It was a week characterized by lessened price volatility than in the first two weeks of the month and somewhat positive macro prints. As stocks ended lower (0:48), value stocks and the equal-weighted S&P 500 posted gains, diverging from declines for growth stocks and the market-cap-weighted S&P 500. Fixed income (2:00) had a positive week in high yield corporates and emerging markets as well as the investment grade, government and government-guaranteed sectors. Commodities (3:00) caught a bounce.   On the macro front (4:39), Eric and Mark walked through import prices, retail sales and industrial data, finding some positive news in the readings, but they cautioned to wait for May data, given the as-yet unclear adjustments under way in response to Trump administration trade policies and reactions from U.S. trading partners. Looking to the week ahead (14:24), among other reports, Eric and Mark will be on the lookout for the Leading Economic Index (Monday), S&P Global manufacturing and services (Wednesday) and durable goods orders (Thursday).

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Asset Allocation Strategist Ryan Kimmel April 11, 2025, look into the extraordinary intra-week turbulence (0:48) behind a moderate weekly gain in the S&P 500, an almost no-place-to-hide week for bonds (4:41) and commodities (9:57) showing weakening demand in industrial inputs as WTI crude pierced intraweek below $56/barrel.   Overwhelmed by tariff-driven sentiment in the wake of Liberation or Obliteration Day, the markets paid little attention to the week’s backward-looking macro prints (11:24), including constructive March reports for the consumer and producer price indexes. For their review of the week’s Fed Speak (20:23), Jeff and Ryan single out comments on Thursday by Federal Reserve Bank of Chicago President Austan Goolsbee. In a fireside chat hosted by the Economic Club of New York, Goolsbee said tariffs risk “a stagflationary shock.” This complicates the Fed’s achievement of both its full employment and price stability mandates. “There’s not a generic playbook,” Goolsbee said, “for how a central bank should respond to a stagflationary shock.”   The abbreviated April 14-17 market week (22:44) appears to be relatively quiet in terms of scheduled macro news. Jeff and Ryan will be on the lookout for import prices (Tuesday) and retail sales and industrial production (Wednesday).

Lifting a line from T.S. Eliot, DoubleLine Portfolio Manager Eric Dhall surveys a cruel start to April for stocks (0:23) and other risk assets, as shock over Washington-imposed tariffs and fears of a trade war sent the broad equity market into a correction and tech into bear land. The sharp worsening in growth outlooks also erased most of commodities’ gains YTD (2: 07). Prices on WTI and Brent crude plunging below resistance levels the “double whammy” of worsening growth expectations and the stunning decision of OPEC+ to triple oil production relative to increase expectations. The resulting flight to safety (8:29) rewarded investors in high-grade fixed income securities with price gains in U.S. Treasuries, Agency mortgage-backed securities and investment grade corporate bonds. Analyst Mark Kimbrough (13:04) goes through the week’s macro data, including unemployment readings for March that might have buoyed risk markets, but for forward-looking macro fears swamping the backward-looking data prints.   Turning to the Federal Reserve (24:51), Eric Dhall notes Fed Chairman Jerome Powell is in a tough spot. The markets want four fed funds cuts this year, but Powell faces prospects of both labor deterioration and higher inflation. “I think the Fed is going to sit on its hands in May,” Eric says, “and not do anything knee-jerk unless we get some really massive data prints.” Among the data prints for the week of April 7(33:00), Mark Kimbrough will be on the lookout for the Fed’s report on consumer credit borrowing (Monday), the NFIB small business optimism report (Tuesday), the March consumer price index (Thursday) and March producer price index (Friday).

DoubleLine Portfolio Manager Eric Dhall and Fixed Income Asset Allocation Strategist Ryan Kimmel recap the week of March 24-28, with markets reacting to new macro prints and a tariff regime scheduled to be unveiled by the White House on April 2, which President Donald Trump has dubbed “Liberation Day.” Stocks were down, roiled by tariff talk; bonds were no place to hide (2:11); gold continued to shine, flirting with crossing the $3,100 mark (3:30); and commodities were up, lifted by precious metals (3:49). Over in Macro Land (5:56), the week included a PMI mixed bag, manufacturing contractionary/services expansionary; the Conference Board Consumer Confidence Index for March, with outlook deteriorating (6:53); an upside surprise in durable goods orders (7:55); and the week closed with a sticky PCE inflation number that raises questions about interest rate cuts (9:23). Friday also delivered the University of Michigan Consumer Sentiment Index, which expresses a lot of anxiety about recession risk and inflation levels (14:34). Next week will bring Liberation Day, and a possible reordering of the global trade regime, as well as Friday’s jobs report (16:40).

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough cover the week ended March 21 in stocks and fixed income, then turn to a macro picture characterized by “kind of bearish” retail sales, fast-growing manufacturing, recessionary warnings from the “broken clock” that has been the Leading Economic Index and an uncertain Fed.   With the futures market pricing in three cuts to the fed funds rate in 2025, Eric Dhall cautions against that expectation. Fed officials, he says, seem “befuddled,” with Fed Chair Jerome Powell at his March 19 news conference repeatedly invoking the “uncertainty” of current economic landscape. Mr. Dhall notes a decline in the doves in the FOMC’s dot plot even as FOMC members were expecting economic growth to slow. Mark Kimbrough agrees, saying, “Uncertainty makes sense. Uncertainty, is the new buzzword” at the Fed. “They’re trying to look through the impacts of these tariffs, but they don’t know.”   Looking ahead to the March 24-28 week, Eric and Mark will be on the lookout for S&P Global PMI readings, S&P CoreLogic Case-Shiller house price indexes, Conference Board consumer confidence and the Fed’s preferred inflation gauge, Personal Consumption Expenditures.

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Asset Allocation Strategist Ryan Kimmel survey the markets, including a week (March 10-14) that pushed the stock market (0:40) into one of its fastest corrections on record. Jeff notes (3:10) bonds turned in a flattish to slightly positive week after five days of volatility. Commodities (4:46) were up slightly, with energy diverging into the red. Surveying macro news (7:40), Ryan covers softer-than-expected consumer price and producer price readings for February while cautioning about the hotter price inputs into the Personal Consumption Expenditures Price Index favored by the Federal Reserve for inflation tracking. The Job Openings Labor Turnover Survey (13:54) for January came in higher than expectations, with 7.74 million job openings and an improvement to 2.1% in the quits rate, a nine-month high. “I take this as a sign that employee confidence has improved a bit, but this is lagged data before we saw the sell-off in equities, which can impact sentiment,” Ryan notes. More germane, he says, is possibly the University of Michigan Consumer Sentiment Index, whose preliminary numbers for March show a marked rise in inflation expectations. Looking ahead (18:59) to the week of March 17-21, while the Fed is expected to stand pat on interest rates on Wednesday, Jeff and Ryan will be on the lookout for any changes in guidance by the Federal Open Market Committee or from Fed Chair Jerome H. Powell’s news conference. They also will be watching for February retail sales (Monday), import prices (Tuesday), and jobless claims and the Leading Economic Index (Thursday).

DoubleLine Portfolio Manager Jeff Mayberry and Analyst Mark Kimbrough survey a volatile March 3-7 week for equities (0:32) and fixed income (3:06) amid sentiment cross currents over the possibility of trade tariffs while commodities (4:54) posted gains. “Markets have tended to overreact” to the on-again, off-again news about tariffs, Jeff Mayberry says. “All that seems to be weighing on sentiment.” Their review of the week’s macro news (6:23) covers among other items ISM manufacturing and services surveys and a raft of labor market prints, including nonfarm payrolls and unemployment. The household survey, Mark Kimbrough notes, shows “signs of degradation no matter how you slice it.” The week (18:23) of March 10-14 promises key inflation readings, including consumer price index for February (Wednesday) and producer price index for the same month (Thursday).