Sonu Varghese
Will Falling Home Prices Wreck Household Balance Sheets?
The Case-Shiller National home price index fell 0.4% month over month in April, the second consecutive month of declines following the 0.3% decline in March. Note that the Case-Shiller index is actually a three-month average, and so the April index prices are a three-month average of February, March, and April. That means the actual monthly …
Sonu Varghese
June 25, 2025
The Fed Stays on The Sidelines, Paralyzed by Tariffs and Who Is Paying Them
The Federal Reserve (Fed) kept rates unchanged in the 4.25-4.50% range at their June meeting, as was expected. The most notable change in their official statement was that the Fed believes uncertainty concerning the economic outlook has reduced – but that’s only relative to a couple of months ago (post-Liberation Day). They still believe uncertainty …
Sonu Varghese
June 20, 2025
More Chaos, but That Shouldn’t Be a Surprise
Thursday, June 12, has been a tragic and exhausting day. It started with the terrible crash of an Air India flight in India, killing over 250 people—the worst aviation disaster in India since 1996. Then the day ended with Israel striking Iran, targeting their nuclear program and killing several top Iranian military officials (including the …
Sonu Varghese
June 13, 2025
11 Charts That Explain the Housing Strain
The May payroll report showed that labor markets remain OK, at least on the surface. As I wrote in my payroll blog, there’s weakness under the hood, but surface resiliency means the Federal Reserve (Fed) is likely to stay on pause for a lot longer—unless the unemployment rate really picks up, and then we have …
Sonu Varghese
June 11, 2025
May Payrolls Were OK, but There’s Weakness Under the Hood
On the face of it, the May payroll report was ok. The economy created 139,000 jobs in May (above expectations for a 126,000 increase) and the unemployment rate was unchanged at 4.2%. But pop the hood and there’s cause for concern. For one thing, we got a net 95,000 downward revision of jobs created in …
Sonu Varghese
June 6, 2025
The Big Picture: The US Economy Is Losing Steam
We can use fairly timely economic data without having to wait for GDP data or calls from a “recession dating committee” (at the National Bureau of Economic Research) to gauge whether the economy is close to or in a recession, or even recovering for that matter. This includes data like initial unemployment claims, unemployment rate, …
Sonu Varghese
June 5, 2025
Global Stock Markets Are Booming, Despite U.S. Struggles
Diversification away from US stocks has been a frustrating exercise for those of us involved in asset allocation for a good 15 years or so now. There have been a few good years, notably 2017, but it’s been rare. Coming into 2025, you would not have thought that international stocks would outperform, let alone by …
Sonu Varghese
June 3, 2025
RIP Liberation Day?
Well, this came out of the blue, but a U.S. court essentially cancelled the tariffs that set off a global trade war (technically paused until July). The US Court of International Trade (USCIT) struck down all of the “IEEPA” tariffs imposed by President Trump. IEEPA is the International Emergency Economic Powers Act that was passed …
Sonu Varghese
May 29, 2025
How Meaningful Is the US Debt Downgrade by Moody’s?
Short answer: not very much. The longer answer is also pretty much the same thing, but it’s really the context around the debt downgrade, and especially the US fiscal situation, that raises important questions, not the downgrade by itself. Last Friday evening (May 16th), Moody’s finally joined their counterparts at S&P and Fitch in downgrading …
Sonu Varghese
May 21, 2025
Two Big Things to Keep an Eye On
In our 2025 Outlook, we highlighted the threat of tariffs and risk of elevated interest rates if the Federal Reserve doesn’t cut. Well, both have manifested now. Average tariff rates, even after the China pause, are at the highest level since 1934 — rising from 2.4% at the start of the year to 17.8%. If …
Sonu Varghese
May 16, 2025