One of the most interesting charts to float across my desk this morning was this one from FactSet, citing currency factors and cost increases as companies’ top concerns on their Q2 earnings calls.With oil, gas and the dollar up significantly over the past several months, it’s not a huge surprise.
Nor is it a surprise that we’ve seen oil and gas decline sharply — a thesis we lhatched months ago when it became apparent that inflation would rise to problematic levels.
The currency question is a little more complicated. USDJPY is threatening a major breakout… …and EURUSD a major breakdown… …all against the backdrop of a yield curve which is threatening to invert.What does it all mean, and how might Powell address it in his testimony to Congress? Can the FOMC find a sweet spot where interest rates, dollar strength, and inflation can all be kept in check?
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