Year: 2023

Households Burn Through Last of Pandemic Savings The combination of high prices and the end of pandemic relief programs is eating into household savings.

Americans have spent down about 35% of the extra savings they accumulated during the pandemic as of mid-January, according to an estimate from Goldman Sachs. By the end of the year, the company forecasts that they will have exhausted roughly 65% of that money. (…)

His team at Goldman Sachs estimates that the monthly saving rate will rise modestly by the end of the year, to about 4.5%. (…)

Among Bank of America customers with a household income below $50,000 a year, the median balance in checking and savings accounts peaked in April 2021, according to an analysis by Bank of America Institute, a think tank within the bank. Between then and November 2022, that figure fell 36%, versus 14% for customers with a household income between $100,000 and $150,000 a year.

Still, across all income brackets, median balances remained elevated compared with shortly before the pandemic, in February 2020. (…)

Need proof of excess savings?

• Tom Brady Retired on a Beach. Now, an Auction for a Jar of Sand Nears Six Figures. Auctions for beach sand said to be from the exact spot the NFL legend filmed his retirement video are popping up on eBay

(…) “Tom Brady’s exact retirement spot—Bottled Sand,” says an auction announcement posted on eBay. As of Sunday, the auction has 119 bids, with the top one currently at $99,900. The auction for this jar ends Feb. 12. (…)

“You will be owning the very land the GOAT retired on,” the ad says, referring to the acronym for “greatest of all time.” (…)

While the seller has only put one jar up for sale on eBay, competitors have joined the game.

At least seven other similar eBay ads have appeared on the auction site. Although there is no way to confirm the sand is from the beach where Mr. Brady shot his video, the jars have been listed at prices ranging from $100 to $24,000. (…)

Fed loan officer survey finds tighter loan standards, reduced demand

Lending officers at major banks told the Federal Reserve that in the final three months of last year they tightened standards and saw reduced demand across a wide array of business and consumer credit fronts.

The Fed reported Monday in its January Senior Loan Officer Opinion Survey that the threshold to get credit rose for commercial and industrial firms, as well as commercial real estate borrowers. At the same time, these prospective borrowers reduced their demand for loans.

On the consumer front, survey respondents said that real estate and related lending standards got tighter amid declining demand for the same period. The same dynamic played out for auto, credit card and other types of consumer lending.

The survey also found that the trends that played out across bank lending in roughly the final quarter of 2022 will dominate 2023. “Banks, on balance, reported expecting lending standards to tighten, demand to weaken, and loan quality to deteriorate across all loan types.” (…)

The latest data points to a softening economy. “There were unfavorable changes across many details” of the survey, said Daniel Silver, an analyst at J.P. Morgan, who added the data “looks consistent with an economy that is weakening.” (…)

Fed’s Bostic Says Higher Peak Rate on Table After Jobs Blowout

(…) The Atlanta Fed president, who doesn’t vote on policy this year, said officials will need to understand if the jobs report was an “anomalous reading” in which case he would be “inclined to look through this a bit.” (…)

Anomalies in the January NFP report are numerous (from various sources including my own research):

• Something is happening to the data here in January. Since 2020, it has consistently lined up as a huge month for the payroll data: +334k in 2020, +494k in 2021, and +364k in 2022. And now +517k in 2023. The month of January has somehow managed to line up as 6x stronger than the average for all the months over the past three years.
• The biggest anomaly, perhaps, was that a 471k plunge in the retail sector translated into a +30k seasonally-adjusted run-up, the best number since August — even though retail sales have slid in three of the past four months.
• In January, the BLS adjusts for the new population count. Allowing for this adjustment (+954k last year), and putting the companion Household survey on a comparable footing as the Payroll data, employment only rose +44k in January.
• Average hours worked jumped in January (although not in the Household survey), inconsistent with the sharp increase in part-time employment.
• Full-time jobs accounted for only 54% of all new jobs in January. In fact, full-time jobs are down a cumulative 166k since June 2022 and have not increased at all since March. Historically not a good sign:

US full-time and part-time workers (millions)

Source: Macrobond, ING

• Services employment jumped 471k in January (91% of the total increase). Yet, the S&P Global Services PMI remained very weak in January, signalling “a solid contraction in business activity across the US service sector” (…) and “the pace of employment growth slowed further amid reports of cost-cutting efforts”. True, the ISM-Services said otherwise but its employment index was unchanged with 20.4% of services industries reported higher employment and 24.6% reporting reduced employment.
• The ISM also said that 10 services industries reported growth in January, down from 11 in December, 13 in November and 16 in October. Yet, its PMI index is up during that period! Meanwhile, S&P Global’s Services PMI is down and in contraction territory.
• We know that the ISM survey favors the largest companies while the S&P Global survey is more economy-weighted. It so happened that the ADP jobs report for January highlighted that small business employment dropped 75k in January, its fourth consecutive decline.
• And the NFIB small business hiring intentions was at 19% in January versus 20% for the six-month average. No change!
• Finally, there is the Homebase employment data, a labour scheduling and time tracking tool used by tens of thousands of local businesses that are often individually owned and primarily consist of restaurant, retail and personal services – so reflect the experiences of businesses that won’t be tracked by the larger survey organisations.

Homebase number of workers versus median for the period Jan 4- Jan 31 2020 (% difference)



                                                                                                                                                             Source: Macrobond, ING

Will Wilson win (again)?

Morgan Stanley’s macro guru Wilson reminds us about forward EPS growth that went negative last week. He writes: “…This has only previously happened 4 times over the past 23 years. In each prior instance (2001,2008,2015,2020), equities have faced significant price downside associated with the shift from positive to negative earnings growth…historically, the majority of the price downside in equities comes after forward EPS growth goes negative.” Earnings recession is basically not priced in according to Wilson. (via The Market Ear)

MS

Here’s a variant using the Rule of 20 Fair Value [trailing EPS x (20 – inflation)]. Fair Value (red) is influenced by trends in trailing 12-m EPS and inflation. When the S&P 500 is above/under the Rule of 20 Fair Value, it means overvaluation/undervaluation but trends in EPS and inflation are meaningful for the index cyclical direction.

Here’s a snapshot since 1999. Trailing EPS peaked last October at $222.37. They are now $221.88. If analysts estimates stand, EPS should decline to about $219 after Q1’23 and around $216.5 after Q2, a small 2.6% decline from the peak. At 5% inflation, the R20 Fair Value would be 3250. At 4%: 3465. At 3.0%: 3680. Again, assuming current estimates hold.

JPMorgan’s Kolanovic Calls Latest Stock Rally a Bear-Market Trap

JPMorgan Chase & Co. strategist Marko Kolanovic reiterated Monday that investors should fade last week’s Federal Reserve-induced stock-market rally, arguing that the US economy’s disinflationary process could just be “transitory.”

Kolanovic sees the first three months of the year likely marking an “inflection point in the market,” with an air pocket during the second and third quarters, he wrote in a note to clients. That will be followed by renewed deterioration in fundamentals through the end of the year since the central bank will likely keep interest rates high for some time, he added. (…)

One of Wall Streets biggest optimists through much of last year’s market selloff, most of Kolanovic’s 2022 calls didn’t work out. He has since reversed his view, cutting his equity allocation in mid-December due to a soft economic outlook for this year. Last month, he said the economy was headed for a downturn. The bank reduced its recommended equity allocation once again due to fears of a recession and central-bank overtightening. (…)

January’s Hiring Boom Caught Economists by Surprise The U.S. added more than a half million jobs last month. Forecasters had expected less than 200,000.

(…) The January figures can be particularly hard to predict, economists say, because seasonal adjustment factors play a big role. Statistical agencies adjust all sorts of figures to make them comparable month-to-month and help people better understand what is going on with the economy. It is no surprise that employers let go of holiday workers in January or that Americans buy more hot dog buns before July 4. The question is how much more or less than typical.

On an unadjusted basis, the U.S. shed 2.5 million jobs in January. A year earlier they shed 2.8 million.

Nela Richardson, chief economist at payroll processor Automatic Data Processing Inc., said seasonally adjusted figures might be skewing true results because the current period could be different from the prepandemic economy. The seasonal adjustments are based on models developed over many years. (…)

The Labor Department considers the latest figures to be preliminary numbers and will revise them in the next two monthly reports. Then once a year, the department uses an expanded data set relying on tax records to more finely tune its estimates. It releases that update each February, alongside January numbers.

The revisions can be large. For example, a year ago, the Labor Department initially estimated 467,000 jobs were added in January 2022, on a seasonally adjusted basis, but after the latest revisions the gain was cut to 364,000.

On Friday the department said it revised the employment level for March 2022, the benchmark month, by more than 500,000 jobs, or an increase of 0.3%. The average adjusted revision over the past decade has been 0.1%, the agency said. (…)

“It is completely confusing,” said Douglas Porter, chief economist at BMO Financial Group. “We have to all be humble in how well we can forecast what lies ahead.”

Recall that last December, the Philly Fed said that the BLS’ Q2’22 payrolls numbers were overstated by 1M workers annualized, or 0.6%. Two weeks ago, the BLS Business Employment Dynamics stats concurred.

Now, the BLS tells us that March ‘22 employment level was 506k more than reported but that its Q2’22 original number was ok.

Go figure!

In the meantime, some people set monetary policies, others investment policies, often based on the former, focusing on this very statistic.

Consider:

• The establishment survey sill suggests a slowdown trend:

• Not so for the household survey:

• Establishment employment is up 3.3% YoY vs +1.9% for the household survey. Which will adjust to which?

• Lay-off announcements suggest that growth in establishment employment (payrolls) is about to turn negative:

Surging lay-offs suggest employment will weaken

Source: Macrobond, ING

• Average weekly hours also bounced back in January. They had steadily declined from a record 34.9 hours in May 2021 to their 2011-2019 normal level of 34.4 hours. At 34.7 in January, weekly hours exceed their best levels between 2011 and 2019.
• Even manufacturing hours jumped a huge 0.4 hours in January.
• Manufacturing production overtime rose 0.2 hours in January.

Increased hours may be due to good weather. The SF Fed’s model suggest the weather added about 120k jobs in January.

This while PMIs all point to recessionary conditions in manufacturing:

Production levels at goods producers also decreased at a solid pace. The rate of contraction was among the fastest since the global financial crisis, despite slowing slightly from December. (…) new orders fell at a steep rate. (…) The rate of job creation eased for the fourth month running.

The ISM said that only 2 industries reported growth in January vs 15 reporting contraction. Seventeen of 18 industries reported a decline in new orders in January.

The jump in payroll employment was especially strong in services, +471k vs +46k for goods-producers. Weekly hours were also up 0.2 hours, well above their 2011-2019 levels.

But purchasing managers surveys only add to the confusion with S&P Global’s signalling “a solid contraction [to 46.8] in business activity across the US service sector at the start of 2023 (…) [and the] pace of employment growth slowed further amid reports of cost-cutting efforts” while the ISM survey jumped 6 points to 55.2 even though “employment was unchanged for the month”.

Jay Powell is slated to speak tomorrow at the Economic Club of Washington, D.C.. The latest data confirm his view of a “very, very strong labor demand”.

However, that very, very strong demand is not translating in stronger wage growth which slipped well below 4.0% annualized in January.

Strange world!

So this data dependent Fed, dedicated to slow demand, looks at this next chart and wonders what to do: the combination of solid jobs growth (blue, +0.33% MoM), a +0.3% gain in wages (black) and a 0.9% increase in hours worked produced a 1.5% MoM jump in payroll income which is now up 8.5% YoY, accelerating from +7.3% in December:

PCE inflation in the 4.5-5.0% range could result in real consumer expenditures rising 3.5-4.0% YoY at a constant savings rate, twice the Q4’22 growth rate.

The FOMC will get one more job report before its next meeting March 21-22. More or less confusion?

The WSJ’s Nick Timiraos:

Fresh signs of a hot U.S. labor market leave the Federal Reserve on course to raise interest rates by a quarter percentage point at its meeting next month and to signal another increase is likely after that. (…)

The department not only reported unusually large job growth in January but—more important for the Fed—it revised previous months’ reported gains higher, suggesting the economy had more momentum than previously anticipated.

Wage growth also was revised higher in November and December. Hourly pay for private-sector workers grew at an annualized rate of 4.6% during the three months through January, up from 4.1% for the prior three-month period.

(…) signs of any reacceleration could prompt officials to delay decisions about a pause into the summer. (…)

• Summers Sees Risk of ‘Sudden Stop’ in Economy After Jobs Surge

(…) “It’s as difficult an economy to read as I can remember,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. A key question after the jump in US payrolls is whether this is all “going to be income that’s going to be spent, that’s going to lift the economy up a bunch?” or do companies at some point conclude they have too many workers and too much inventory “and we’re going to see a fairly sudden stop.” (…)

Summers concluded, “we have to maintain a lot of agnosticism about where headed.”

What the real world is saying (FT and others):

• More than 500 tech companies have announced layoffs since July (Axios).
• Challenger Gray & Christmas estimates that U.S. employers announced more than 100,000 job cuts in January, up from less than 44,000 in December and 19,000 a year earlier.
• Ford, McDonald’s, UPS and US Bancorp have told investors that they are preparing for at least a mild US recession.
• PayPal blamed a “challenging macroeconomic environment” in announcing 2,000 lay-offs.
• FedEx said it would cut 10% of its senior ranks to align better with customer demand.
• Intel cited “macroeconomic headwinds” to explain why it was cutting the pay of its CEO and other executives and managers.

but

• Mastercard and Visa still see “a resilient consumer”.
• Same with McDonald’s and Mondelez Intl.
• Procter & Gamble sees little evidence of trading down.
• Caterpillar, the industrial machinery group that is considered an economic bellwether, said that its US market “remains relatively strong to date”.

The slowdown in Amazon trailing 12-m revenues per share growth from 35% pre-pandemic to 7% over the last 12 months (and the collapse in margins) clearly reflects the recession in goods as this CPMS/Morningstar chart shows.

And growth in real expenditures on services, expected to offset the goods recession, has slowed to a crawl at the end of 2022.

This jibes with S&P Global’s Services PMI survey:

U.S. Services PMI: Business activity contraction eases at start of 2023, but cost pressures strengthen once again

January data signalled a solid contraction in business activity across the US service sector at the start of 2023, according to the latest PMI™ data. Although easing, the fall in output stemmed from further weak domestic and external demand conditions, as new business and new export orders declined.

Firms continued to expand their workforce numbers despite another fall in backlogs of work, but the pace of employment growth slowed further amid reports of cost-cutting efforts. Nonetheless, business confidence strengthened and was buoyed by increased spending on marketing and investment in cost efficiency.

At the same time, cost inflation picked up for the first time in eight months. A sharper rise in input prices was not reflected in a quicker increase in output charges, however, as selling prices rose at the slowest pace since October 2020.

The seasonally adjusted final S&P Global US Services PMI Business Activity Index registered 46.8 in January, up from 44.7 in December and broadly in line with the earlier released ‘flash’ estimate of 46.6.

Weak client demand hampered business activity, as output fell at a solid pace. Firms noted that inflation and high interest rates weighed on customer spending, with further reports of hesitancy in placing new orders. The rate of contraction softened to the slowest in three months, however.

New business fell for the sixth time in the last eight months, albeit at only a marginal pace. The decline in new orders was linked to lower purchasing power among customers amid strong inflationary pressures.

Alongside subdued domestic sales, new export orders also decreased in January. The rate of contraction in new business from abroad quickened and was among the sharpest since May 2020. Service sector firms stated that global economic uncertainty and high inflation in key export markets weighed on export sales.

Cost pressures intensified in the opening month of 2023, thereby bringing an end to a seven-month sequence of easing input price inflation. Higher cost burdens were often linked to increased material prices, but service providers also commonly mentioned upticks in wage bills. The rate of cost inflation was historically elevated, but the second-slowest since November 2020.

Efforts to boost sales and remain competitive reportedly hampered firms’ ability to hike output charges in January, despite a marked rise in input prices. The rate of charge inflation was broadly in line with the long-run series average, and the slowest since October 2020. The pace of increase in selling prices moderated for the ninth successive month.

Employment across the service sector increased further during January, thereby extending the current sequence of job creation that began in July 2020. That said, the pace of growth slowed to only a slight pace. Efforts to rein in costs and challenges retaining staff at the current salary level reportedly hampered workforce numbers.

Meanwhile, service providers registered another monthly decline in backlogs of work in January. The rate of contraction was modest overall and matched that seen in December.

Finally, business optimism improved at the start of the year. Service sector firms recorded stronger expectations regarding the outlook for output over the coming year. Hopes of greater new orders, investment in cost-saving methods and increased spending on marketing were often linked to positive sentiment.

• But it does not jibe with the ISM Services PMI: Outside the pandemic, the ISM Services has never risen so much in one month.

New Orders

Employment

Confused? Join the club!

S&P Global explains how its PMI-Services survey differs from the ISM in this article. The main points in my view:

The first, and most striking, difference between the two surveys is that of sector coverage. While the S&P Global PMI for the service sector only includes data provided by companies operating in the US services economy, encompassing a variety of consumer, business and financial services which are provided by the private sector (or otherwise charged for), the ISM services PMI in fact covers any activity other than manufacturing.

The ISM definition therefore includes construction, utilities, agriculture, retail and various aspects of government administration, many of which can blur, dampen or distort the picture of the health of the services economy. Public sector activity, in particular, will tend to dampen any business cycle trend, especially any downturn in private sector activity, hence its exclusion from the S&P Global survey. (…)

Survey respondent bases are different in terms of company size, with S&P Global stratifying its panels not only by sector contribution to GDP but also ensuring an appropriate mix of small, medium and large firms within each sector. In contrast, ISM data are based on ISM members and as such are likely to be biased towards larger companies, with small- and medium-sized firms under-represented.

As smaller firms often behave differently to larger firms during different stages of the economic cycle, or in response to policy changes or international economic conditions, it is important for any survey to ensure robust representation of all different enterprise sizes.

FYI, government employment has been very volatile since mid-summer. It jumped by 74k employees in January after -9k in December, +62k in November and +15k on average in Sep-Oct.

What about earnings, guidance and revisions, investors’ real world?

EARNINGS WATCH

From Refinitiv/IBES:

Through Feb. 3, 250 companies in the S&P 500 Index have reported earnings for Q4 2022. Of these companies, 69.6% reported earnings above analyst expectations and 27.2% reported earnings below analyst expectations. In a typical quarter (since 1994), 66% of companies beat estimates and 20% miss estimates. Over the past four quarters, 76% of companies beat the estimates and 21% missed estimates.

In aggregate, companies are reporting earnings that are 1.3% above estimates, which compares to a long-term (since 1994) average surprise factor of 4.1% and the average surprise factor over the prior four quarters of 5.3%.

The actual earnings growth of the 250 companies that have reported so far is -4.5%. After the first 263 Q3 reports, earnings were up 2.4%.

Of these 250 companies, 65.2% reported revenue above analyst expectations and 34.8% reported revenue below analyst expectations. In a typical quarter (since 2002), 62% of companies beat estimates and 38% miss estimates. Over the past four quarters, 73% of companies beat the estimates and 27% missed estimates.

In aggregate, companies are reporting revenues that are 0.9% above estimates, which compares to a long-term (since 2002) average surprise factor of 1.3% and the average surprise factor over the prior four quarters of 2.5%.

The actual revenues growth of the 250 companies that have reported so far is 5.3%. After the first 263 Q3 reports, revenues were up 11.7%.

Inflation averaged 7.1% in Q4’22 (core +6.0%) vs 8.3% in Q3 (core +6.3%).

For Q4’22,

• the estimated earnings growth rate is -2.7% [-2.2% on Jan. 6]. If the energy sector is excluded, the growth rate declines to -7.0% [-6.7%].
• the estimated revenue growth rate is 4.6% [4.1%]. If the energy sector is excluded, the growth rate declines to 3.7% [3.3%].

For Q1’23,

• the estimated earnings growth rate is -2.5% [1.0%]. If the energy sector is excluded, the growth rate declines to -4.3% [-1.1%].
• the estimated revenue growth rate is 1.5% [2.5%]. If the energy sector is excluded, the growth rate declines to 2.0% [2.6%].

Analysts are thus saying that a 1.5% gain in revenues will result in -2.5% decline in earnings when, in Q4, +4.6% revenue growth translated into -2.7% in profits.

This while inflation on both revenues and costs is well above 4%. Morgan Stanley’s Mike Wilson says that “80% of S&P industry groups are seeing cost growth in excess of sales growth”. He continues:

“We think margin pressure is what will drive the downside we are expecting in 2023 earnings—as inflation falls companies will struggle to cut costs as quickly as pricing power erodes. We have already seen margin trouble for a number of companies that have reported 4Q earnings and we only expect the issue to heat up as we move further into the year. EBIT margins for 2023 have fallen 1.2% for the S&P 500 since the end of last year. The industry groups that have seen the biggest margin downside are Autos, Energy, and Capital Goods. Net margins for 2023 have fallen 1.5% for the S&P 500 since the end of last year.”

Source: Morgan Stanley via John Mauldin

Estimates are slowly being revised down across the board since mid-December…

  

…increasingly encouraged by official corporate guidance. Thirty-nine companies have pre-announced Q1’23, substantially fewer than the 52 that had pre-announced at the same time during Q4. But more companies have guided negatively whereas many others have simply decided not to offer any guidance at this time. Not a good sign.

Note that Factset’s compilation shows that 43 companies have offered guidance for Q1’23 with 37 negative and 6 positive (86% negative vs 5 and 10-year averages of 59% and 67% respectively).

Factset also says that 251 companies have issued guidance for the current fiscal year with 129 negative and 122 positive (51% negative).

The Hottest Sectors of the Reopening Are Now Driving a Wage Slowdown Things are starting to look more normal

(…) Here’s a look at the annualized pace of change in average hourly earnings for production and nonsupervisory employees across various time frames:

So what’s behind this decline?

Sectors that exerted the fastest upward pressure on overall wages during the economic reopening over the last two years are now driving the deceleration.

As you can see in the chart, there were massive spikes in leisure and hospitality, education and health services, professional and business services, retail trade, and transportation and warehousing. Those five categories have now come sharply off the boil. Meanwhile the categories where the contribution to total wage growth was always more muted — for example construction or wholesale trade — are still somewhat elevated, but don’t change the picture much for overall wages. (…)

States Are Flush With Cash, Which Could Soften a Possible Recession Rapid recovery, federal stimulus leave state finances in historically strong shape

States will hold an estimated $136.8 billion in rainy-day funds this fiscal year, according to the National Association of State Budget Officers, up from $134.5 billion a year earlier, when they represented 0.53% of gross domestic product, the highest in records going back to 1988. This year’s figure would represent roughly 12.4% of their total spending.

Unlike the federal government, most state and local governments must balance their budgets every year. That means that a fall in tax revenues must be offset, most often by cutting spending and laying off workers, which exacerbates economic downturns. Healthy reserves could make such cuts unnecessary. (…)

Moody’s Analytics estimates 39 states have the reserves necessary to offset all the revenue expected to be lost in a relatively mild recession. Four more are within striking distance.

City and county governments have also been able to pad their reserves thanks to recovery and stimulus programs. Comprehensive data on local government finance isn’t available yet, but New York City boosted its reserve funds to $8.3 billion in fiscal year 2023, or 11.1% of revenues. Both figures are the highest ever. Los Angeles and Chicago have also directed more money to rainy-day funds.

State and local governments together make up 11% of total spending in the U.S. economy. They account for about 13% of total payrolls, more than manufacturing, construction, retail, or leisure and hospitality. (…)

A broader measure of state reserves, which includes all unspent funds, whether stored in specified rainy day funds or not, will amount to 24.7% of total spending this fiscal year, down from 31.7% in 2022, according to NASBO forecasts. By contrast, states held just 8.9% on average between 2000 and 2020. Most state fiscal years run from July 1 to June 30. (…)

State and local governments are 505k employees short vs pre-pandemic. State and local government wages rose 8.8% since 2019 but remain about 8% lower than private wages which have risen 12.3% since 2019.

SENTIMENT WATCH

Goldman Sachs remains in the no-recession camp but David Kostin sees the need for what-if scenarios:

The combination of limited upside in our base case and substantial downside risk if the economy dips into recession makes for a challenging distribution of outcomes for US equity investors, especially relative to the alternatives. If resilient economic activity data catch down to the more negative recent survey data and investors assign increased likelihood to a hard landing scenario, US equities would face meaningful downside.

We estimate the S&P 500 would fall to 3150 in a recession scenario, driven by a combination of falling earnings estimates and a much lower P/E multiple (14x vs. 18x today). This would represent a nearly 25% decline from the current level.

Beyond recession, another downside risk is that inflation continues to slow, but fails to approach the Fed’s target. This dynamic could lead to even tighter monetary policy and higher interest rates. Finally, as we discussed last week, the debt ceiling represents a potential risk to US equities later this year. While the reaction to debt limit “close calls” has been mixed, the 2011 experience witnessed a sharp 17% drawdown in US stocks.

FOMC/Powell

National Bank Financial produced the best summary of last week’s FOMC/Powell event: A gentle hike with an end in sight