Comparing now vs then/Michael Dell hasn't forgotten
So the previous FOMC meeting was on January 31st and the collection of both economic and market data since does not make Powell's job any easier for him. The unemployment rate has gone from 3.7% to 3.9%, the highest in two years. Initial claims remain low though continuing claims remain elevated. Retail sales have flat lined since November. Maybe manufacturing is showing signs of bottoming out due to the need for some inventory restock. Small business confidence remains depressed. Existing home sales remain punk but the new build of single family homes is still pretty good. The CRB index has risen by 5.5% with crude oil up 9% and the average gallon of gasoline according to AAA higher by 11.5% at the highest since late October. The CRB food index is up by 5.2% since late January. Two yr inflation expectations in the TIPS market have risen by almost 50 bps and by 17 bps for the 5 yr. Super core CPI, after rising by .3% in December, a stat they saw at the last meeting, was up by .9% in January and .5% in February m/o/m and higher by 4.3% y/o/y vs 3.9% in December. I could go on but clearly no easy job here for the Fed and if anything on the inflation side, Powell should be less confident with the direction of inflation since that meeting, not more so.
I mentioned on Monday the net charge off and delinquency monthly numbers we saw on Friday from Capital One and Synchrony, among others but didn't include a chart for a visual. Here is one capturing Capital One's credit card net charge off rate thru February, the highest in 13 years:
Capital One credit card net charge off rate at 5.95%
As we debate the comparisons between the stock market behavior in tech stocks in the late 1990's vs what we're seeing now, if there is someone who remembers the stock market action back then it was Michael Dell as his stock skyrocketed with many others only to come crashing down and remaining in the desert for a decade plus as it pulled forward so much earnings optimism. So what did Michael Dell do over the past few weeks as his stock went parabolic again because they talked about its growing AI server business? He sold almost $500mm worth of stock, totaling about 4mm shares over multiple days. He didn't forget.
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