Posts by James Walden, CFA

Debt-Ceiling Diversification By James M. Walden, CFA The United States hit the debt ceiling on January 17, 2023. Since then, the Treasury Department has provided some breathing room by using “extraordinary measures,” or accounting maneuvers, to keep paying the bills. Nonetheless, politicians are on the clock to raise or suspend the debt ceiling. A couple…

No Easy Decisions By James M. Walden, CFA Recent banking turmoil has created the need to make some tough decisions. By now, everyone is familiar with the collapse of Silicon Valley Bank (SVB). The bank fell from a classic run-on-the-bank made much worse by management missteps. Like many banks, SVB benefited from a spike in…

Quicker and Higher By James M. Walden, CFA Since Fed Chairman Powell came around to the idea that inflation wasn’t transitory after all, he has been laser-focused on bringing it down. That hasn’t changed. What does look to be shifting is his tactical approach. Some historical perspective is useful. After bringing the Federal Reserve’s benchmark…

A Recession Doesn’t Appear to Be Priced in…Yet By James M. Walden, CFA The S&P 500 fell 25% from its January 2022 high to its October 2022 low. With such a meaningful decline in the S&P 500, one might easily assume that high inflation and rising interest rates caused corporate profits to plummet. Not so.…

Not Done Yet By James M. Walden, CFA Labor Department data shows continuing moderation in inflation—good news, to be sure. But the Fed isn’t ready to join the celebration. Despite annual inflation improving to 7.1% in November from 7.7% in October, the central bank indicated it is likely to continue raising interest rates into 2023,…

High Inflation: Relief, but Not Yet Defeat By James M. Walden, CFA The annual inflation rate in the United States fell to 7.7% in October, further declining from the peak of 9.1% in June. Stocks surged on the news, with the S&P 500 up 5.5% the day the data was released. Investors cheered the prospect…

Yearning for Earnings By James M. Walden, CFA The current price of any individual stock or broad equity index can be deconstructed into two variables: (1) its earnings per share, and (2) the price the market is willing to pay for each $1 of earnings per share. (This variable is known as its price-to-earnings, or…

High Inflation? Still Here By James M. Walden, CFA The Labor Department’s recently released report on August inflation confirmed that it’s still here and still high. Certain aspects are getting worse. That should put to rest any speculation that the Fed is ready to pause its anti-inflation tightening efforts. We think it’s prudent to remain…

Are We in a Recession? Maybe. Maybe Not. By James M. Walden, CFA A couple of weeks ago, we got our first read on second-quarter GDP growth. It came in at -0.9%, following the first quarter’s contraction of -1.6%. A popular rule-of-thumb definition for recessions is “two consecutive quarters of negative GDP growth.” And since…

Man on a Mission By James M. Walden, CFA Under the Federal Reserve Act, the Fed has been given what is referred to as its “dual mandate”: to pursue the economic goals of maximum sustainable employment and price stability. The unemployment rate in the United States in June 2022 was 3.6%, just a tick higher…