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Tag: hikes

  • Great fall hikes: Aspen Alley Trail in Breckenridge 

    With a name like Aspen Alley, you gotta hike this trail in the fall. Not only does the trail feature numerous aspens, but it also passes by mining ruins.

    There are two trailheads for this hike. AllTrails will direct you to the upper trailhead because it has more parking, but I prefer the lower trailhead so I can hike up and then down. The lower trailhead is located at the Old Sawmill Museum, a great place to learn about the components of a sawmill and how it operated.

    After exploring the outdoor, free museum, head uphill on the Aspen alley trail. From the parking lot, you’ll see colorful leaves. While we were there, some people just stopped, took a picture, and left.

    The Aspen Alley Trail is primarily single-track, meaning it is single-person wide. As you hike up, you may notice some steep turns, which make this trail very popular with cyclists.

    The trail winds through a forest of pines and aspen trees, making for a beautiful fall hike.

    Occasionally, the trees open up and you’ll get a view of the ski runs at nearby Breckenridge ski resort.

    About a quarter mile into the hike, you may start spotting some mining remnants. First, there’s a cable on the ground. Then tailings. Then a big metal piece. You can look around for more, but when you’re done, keep hiking up the trail; it will bring you to the top of the tailings. Here you’ll find more mining remnants and a view.

    Back on the main trail, hike another third of a mile to another small turnoff. Here, it’s just a few steps to more mining remnants. This is my favorite one because it has an ore cart hanging on an old railroad track. I am hoping to buy an old ore cart someday for my front yard.

    After exploring, it’s back to the main trail. The leaves here put on quite a show. Every corner may tempt you to stop and take more pictures.

    It’s 1.5 miles to the top. You’ll know you’re there when you come to a road. That’s Boreas Pass Road, and it goes to the top of Boreas Pass and over to Como, on Highway 285. It’s a beautiful drive in the fall. You can also hike the road, but there’s a lot of vehicle traffic, so I don’t recommend walking it until it’s closed by snow.

    Note: The lower trailhead has room for approximately 7-10 vehicles, provided they are parked carefully.

    Details: The hike is approximately 3 miles round-trip with about 600 feet of elevation gain. Expect to see many walkers, families, and cyclists on this trail.

    Directions: Google the Old Sawmill Museum in Breckenridge. If the parking is full, drive up Boreas Pass Road to the upper trailhead.

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  • The Calanques in France: A Geographical and Botanical Wonder

    The Calanques in France: A Geographical and Botanical Wonder

    “The Calanques, a real garden of stones on the edge of the sea.” This is how the famed French rock climber and mountain guide Gaston Rébuffat described the extraordinary dialogue between these dramatic limestone ridges and narrow azure coves of the Mediterranean near Cassis and Marseilles in the south of France. I walked there recently, […]

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  • This former Fed insider has 3 big takeaways from Powell’s press conference

    This former Fed insider has 3 big takeaways from Powell’s press conference

    This former Fed insider has 3 big takeaways from Powell’s press conference

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  • Hate to spoil the party but there’s a new risk in town — a ‘no landing’ economy

    Hate to spoil the party but there’s a new risk in town — a ‘no landing’ economy

    For the last 18 months, all you’ve heard from the markets is that the U.S. economy is three months away from a recession. Now, the popular analysis is that that inflation is on a smooth glidepath down and the economy will never have a downturn again.

    Worries about a recession have evaporated, and all the talk is about a “soft landing,” with the Federal Reserve not having to hike interest rates more than once more, at most.

    But behind the scenes, in some economic circles, there is growing concern about another risk for the economy, dubbed a “no landing” scenario.

    What does “no landing” mean? Essentially it’s marked by economic growth that’s too strong to allow inflation to fall all the way to 2%, where the Federal Reserve aims for it to be, and therefore an economy that will need more Fed rate hikes, according to Chris Low, chief economist at FHN Financial.

    So instead of the U.S. central bank starting to cut rates early next year, there may be more rate hikes in store.

    “There is still considerable work to do before the inflation beast is fully tamed,” Low said.

    Former Fed Vice Chair Richard Clarida described the risk in crystal-clear terms. “If the Fed finds itself  in March 2024 with an unemployment rate of 4% and an inflation rate of 4% with some of that temporary good news behind them, they are in a very tough spot,” Clarida said in a recent interview with Bloomberg News.

    “It is a risk. It is not the base case. But if I was still there [at the Fed], I would be assessing it,” he added.

    So why does this matter? Why would the Fed be in such a tough spot? Two words: presidential election.

    A Fed that is dedicated to bringing inflation down might have to slam the brakes on the economy forcefully to get the job done. That gets tough during an election year, especially one that already seems poised to be filled with acrimony.

    “The Fed does not play politics with monetary policy. The FOMC will do what is right for the economy, election year or not. Nevertheless, FOMC participants are already sensitive to triggering a recession. Doing it in an overt way when Congress, a third of the Senate, and the White House are up for grabs would be reckless,” Low said.

    Andrew Levin, professor of economics at Dartmouth College and a former top Fed staffer, said “raising interest rates sharply in the midst of an election cycle could be a delicate matter. Even the vaunted inflation fighter, Paul Volcker [the Fed’s chairman from 1979 to 1987], decided to ease off the brakes midway through the 1980 presidential campaign.”

    Ray Fair, a Yale economics professor, thinks that, whether or not the Fed successfully lowers consumer-price inflation to the vicinity of 2% will be what really matters for the 2024 presidential election. If inflation does not go gently and the Fed is still fighting next year, it would likely be negative for President Joe Biden and the Democratic Party, he said.

    See: Inflation could rebound later this year. And that might be a good thing.

    To avoid hiking rates next year, the Fed, in Low’s view, will raise interest rates to 6% by the end of this year. That is an out-of-consensus call. Financial markets think the Fed is done hiking with its benchmark policy interest rate in a range of 5.25% to 5.5%.

    Many economist and the financial markets are talking more about prospective Fed rate cuts in early 2024 than any more hikes.

    Asked during a recent radio interview if he thought a “no landing” scenario was taking shape, Philadelphia Fed President Patrick Harker replied: “I don’t think so.”

    Harker said the economy was likely on track to return to the low-interest-rate and low-inflation environment of 2012-19.

    “I think about this a lot, and I asked myself what’s different fundamentally about the U.S. economy now then the way it was before the pandemic,” Harker said. He concluded that there wasn’t much difference.

    The big trend Harker mentioned was demographics, with baby boomers still moving in large numbers into retirement. “I don’t think we have to stay in a high-inflation regime. I think we can get back to where we were,” he said.

    Steve Blitz, chief U.S. economist at research firm GlobalData.TSLombard, said he puts the probability of a “no landing” scenario at about 35%.

    Blitz added it was a common mistake for economists, policy makers, traders and journalists “to presume that the expansion to come is going to look like the expansion that was.”

    “At least in the United States, that was never the case,” he added.

    Blitz said that if the U.S. economy were growing at a rate below 2% with an inflation rate higher than 3%, the Fed would have to raise the policy rate to about 6.5%. But if the economy is humming along with 3% growth and inflation over 3%, that would be a trickier spot. “Does the Fed really want to slow that down?” he asked.

    See: The U.S. economy is aiming for a three-peat: 2% GDP growth

    The range of possible outcomes for the economy remains wide. Some economists still believe that a recession early next is the most likely outcome.

    Other economists, like Michelle Meyer, chief U.S. economist at Mastercard, think the economy will continue to grow, with inflation coming down. Meyer described that outcome as “a soft landing with bumps.”

    Stephen Stanley, chief economist at Santander U.S., said he thinks the U.S. economy will “muddle through” next year with subpar growth in the range of 1% for several quarters and inflation slowing gradually.

    “Obviously, that optimism melts away if we’re back to readings of 0.4% and 0.5% on core CPI in three months or six months,” Stanley said.

    Economic calendar: See what’s on the U.S. economic-data docket in the coming week

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  • ‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns

    ‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns

    The Federal Reserve is likely to raise interest rates more than the markets now expect, says Ricardo Reis, an economist at the London School of Economics.

    “Markets are going to get rocked,” Reis told MarketWatch on the sidelines of the American Economic Association annual meeting in New Orleans.

    “All the risks are on the upside. A rate of 5.5% is the minimum,” he added.

    Last month the Fed raised the top end of its benchmark rate range to 4.5%. The central bank penciled in a 5.25% terminal rate.

    Investors who trade in the fed-funds futures market now expect the Fed to stop raising when rates get to 5%.

    Reis thinks the central bank will ultimately move rates higher.

    The Fed is burned by failing to recognize the persistent upward move of inflation in 2021, he said.

    “So I think they are biased toward over-tightening,” he said. “Either legitimately or because they are worried about fixing their past mistake, there are going to be tighter than you think.”

    The economy is at a turning point and the Fed does face some “tough calls,” Reis said.

    The key going forward is the path of wages.

    Workers need to have their wages go up because their paychecks have not kept up with inflation.

    So the Fed is going to have to gauge if the rise in wages is too much, just right or too little, he said.

    If wages don’t rise much, inflation can quickly return to the Fed’s 2% target, he said.

    If wages rise in line with productivity, the Fed won’t have to raise too much and inflation will come down to 2% in a few years.

    This will be difficult because productivity is an economic variable that is hard to measure.

    If wages spike, this would probably cause companies to continue raising prices, kicking off a wage-price spiral, Reis warned.

    The Fed might overreact to the rise in wages, he said.

    There is a scenario where rates go up “much more,” Reis said. But there is a range — it could be “much much more” or “much more” or “just more.”

    Reis said that he was sympathetic to the idea that raising the unemployment rate to 5.5% was not a terrible outcome if it means a return to low inflation.

    The unemployment rate hit 3.5% in December.

    Stocks
    DJIA,
    +2.13%
     
    SPX,
    +2.28%
    moved sharply higher Friday when the government reported relatively slow increase in wages in December. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.562%
    fell to 3.56%.

     

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  • Fed’s Waller says market has overreacted to consumer inflation data: ‘We’ve got a long, long way to go’

    Fed’s Waller says market has overreacted to consumer inflation data: ‘We’ve got a long, long way to go’

    Federal Reserve Gov. Christopher Waller said Sunday that financial markets seem to have overreacted to the softer-than-expected October consumer price inflation data last week.

    “It was just one data point,” Waller said, in a conversation in Sydney, Australia, sponsored by UBS.

    “The market seems to have gotten way out in front over this one CPI report. Everybody should just take a deep breath, calm down. We’ve got a ways to go ” Waller said.

    Investors cheered the soft CPI print, released Thursday, driving stocks up to their best week since June. The S&P 500 index
    SPX,
    +0.92%
    closed 5.9% higher for the week.

    The data showed that the yearly rate of consumer inflation fell to 7.7% from 8.2%, marking the lowest level since January. Inflation had peaked at a nearly 41-year high of 9.1% in June.

    Waller said it was good there was some evidence that inflation was coming down, but noted that there were other times over the past year where it looked like inflation was turning lower.

    “We’re going to see a continued run of this kind of behavior and inflation slowly starting to come down, before we really start thinking about taking our foot off the brakes here,” Waller said.

    “We’ve got a long, long way to go to get inflation down. Rates are going keep going up and they are going to stay high for awhile until we see this inflation get down closer to our target,” he added.

    The Fed is focused on how high rates need to get to bring inflation down, and that will depend solely on inflation, he said.

    Waller said “the worst thing” the Fed could do was stop raising rates only to have inflation explode.

    The 7.7% inflation rate seen in October “is enormous,” he added.

    The Fed signaled at its last meeting earlier this month that it might slow down the pace of its rate hikes in coming meetings.

    The central bank has boosted rates by almost 400 basis points since March, including four straight 0.75-percentage-point hikes that had been almost unheard of prior to this year.

    “We’re looking at moving in paces of potentially 50 [basis points] at the next meeting or the next meeting after that,” Waller said.

    The Fed will hold its next meeting on Dec. 13-14, and then again on Jan. 31-Feb. 1.

    At the same time, Powell said the Fed was likely to raise rates above the 4.5%-4.75% terminal rate that they had previously expected.

    “The signal was ‘quit paying attention to the pace and start paying attention to where the endpoint is going to be,’” Waller said.

    In the wake of the CPI report, investors who trade fed funds futures contracts see the Fed’s terminal rate at 5%-5.25% next spring and then quickly falling back to 4.25%-4.5% by November. That’s well below the levels prior to the CPI data.

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  • Another jumbo Fed rate hike is expected this week — and then life gets difficult for Powell

    Another jumbo Fed rate hike is expected this week — and then life gets difficult for Powell

    First the easy part.

    Economists widely expect Federal Reserve monetary-policy makers to approve a fourth straight jumbo interest-rate rise at its meeting this week. A hike of three-quarters of a percentage point would bring the central bank’s benchmark rate to a level of 3.75%- 4%.

    “The November decision is a lock. Well, I would be floored if they didn’t go 75 basis points,” said Jonathan Pingle, chief U.S. economist at UBS.

    The Fed decision will come at 2 p.m. on Wednesday after two days of talks among members of the Federal Open Market Committee.

    What happens at Fed Chairman Jerome Powell’s press conference a half-hour later will be more fraught.

    The focus will be on whether Powell gives a signal to the market about plans for a smaller rise in its benchmark interest rate in December.

    The Fed’s “dot plot” projection of interest rates, released in September, already penciled in a slowdown to a half-point rate hike in December, followed by a quarter-point hike early in 2023.

    The market is expecting signals about a change in policy, and many think Powell will use his press conference to hint that a slower pace of interest-rate rises is indeed coming.

    A Wall Street Journal story last week reported that some Fed officials are not keen to keep hiking rates by 75 basis points per meeting. That, alongside San Francisco Fed President Mary Daly’s comment that the Fed needs to start talking about slowing down the pace of hikes, were taken as a sign of a slowdown to come by the stock and bond markets.

    “No one wants to be late for the pivot party, so the hint was enough,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

    Luke Tilley, chief economist at Wilmington Trust, said he thinks Powell will signal a smaller rate hike in December by focusing on some of the good wage-inflation news that was published earlier Friday.

    There was a clear slowdown in private-sector wage growth, Tilley said.

    See: U.S. third-quarter wage pressures cool a little from elevated levels

    But the problem with Powell signaling he has found an exit ramp from the jumbo rate hikes this year is that his committee members might not be ready to signal a downshift, Pingle of UBS said. He argued that the inflation data writ large in September won’t give Fed officials any confidence that a cooling in price pressures is in the offing.

    See: U.S. inflation still running hot, key PCE price gauge shows

    Another worry for Powell is that future data might not cooperate.

    There are two employment reports and two consumer-price-inflation reports before the next Fed policy meeting on Dec. 13–14.

    So Powell might have to reverse course.

    “If you pre-commit and the data slaps you in the head — then you can’t follow through,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

    This has been the Fed’s pattern all year, Stanley noted. It was only in March that the Fed thought its terminal rate, or the peak benchmark rate, wouldn’t rise above 3%.

    While the Fed may want to slow down the pace of rate hikes, it doesn’t want the market to take a downshift in the size of rate rises as a signal that a rate cut is in the offing. But some analysts believe that the first cut in fact will come soon after the Fed reduces the size of its rate rises.

    In general terms, the Fed wants financial conditions to stay restrictive in order to squeeze the life out of inflation.

    Pingle said he expects Kansas City Fed President Esther George to formally dissent in favor of a slower pace of rate hikes.

    There is growing disagreement among economists about the “peak” or “terminal rate” of this hiking cycle. The Fed has penciled in a terminal rate in the range of 4.5%–4.75%. Some economists think the terminal rate could be lower than that. Others think that rates will go above 5%.

    Those who think the Fed will stop short of 5% tend to talk about a recession, with the fast pace of Fed hikes “breaking something.” Those who see rates above 5% think that inflation will be much more persistent.

    Ultimately, Amherst Pierpont’s Stanley is of the view that the data aren’t going to be the deciding factor. “The answer to the question of what either forces or allows the Fed to stop is probably not going to come from the data. The answer is going to be that the Fed has a number in mind to pause,” he said.

    The Fed “is careening toward this moment of truth where it has very tight labor markets and very high inflation, and the Fed is going to come out and say, ‘OK, we’re ready to pause here.’ “

    “That strikes me that is going to be a very volatile period for the market,” he added.

    Fed fund futures markets are already volatile, with traders penciling in a terminal rate above 5% two weeks ago and now seeing a 4.85% terminal rate.

    Over the month of October, the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    4.046%
    rose steadily above 4.2% before softening to 4% in recent days.

    “When you get close to the end, every move really counts,” Stanley said.

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  • Another jumbo Fed rate hike is expected this week — and then life gets difficult for Powell

    Another jumbo Fed rate hike is expected this week — and then life gets difficult for Powell

    First the easy part.

    Economists widely expect Federal Reserve monetary-policy makers to approve a fourth straight jumbo interest-rate rise at its meeting this week. A hike of three-quarters of a percentage point would bring the central bank’s benchmark rate to a level of 3.75%- 4%.

    “The November decision is a lock. Well, I would be floored if they didn’t go 75 basis points,” said Jonathan Pingle, chief U.S. economist at UBS.

    The Fed decision will come at 2 p.m. on Wednesday after two days of talks among members of the Federal Open Market Committee.

    What happens at Fed Chairman Jerome Powell’s press conference a half-hour later will be more fraught.

    The focus will be on whether Powell gives a signal to the market about plans for a smaller rise in its benchmark interest rate in December.

    The Fed’s “dot plot” projection of interest rates, released in September, already penciled in a slowdown to a half-point rate hike in December, followed by a quarter-point hike early in 2023.

    The market is expecting signals about a change in policy, and many think Powell will use his press conference to hint that a slower pace of interest-rate rises is indeed coming.

    A Wall Street Journal story last week reported that some Fed officials are not keen to keep hiking rates by 75 basis points per meeting. That, alongside San Francisco Fed President Mary Daly’s comment that the Fed needs to start talking about slowing down the pace of hikes, were taken as a sign of a slowdown to come by the stock and bond markets.

    “No one wants to be late for the pivot party, so the hint was enough,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

    Luke Tilley, chief economist at Wilmington Trust, said he thinks Powell will signal a smaller rate hike in December by focusing on some of the good wage-inflation news that was published earlier Friday.

    There was a clear slowdown in private-sector wage growth, Tilley said.

    See: U.S. third-quarter wage pressures cool a little from elevated levels

    But the problem with Powell signaling he has found an exit ramp from the jumbo rate hikes this year is that his committee members might not be ready to signal a downshift, Pingle of UBS said. He argued that the inflation data writ large in September won’t give Fed officials any confidence that a cooling in price pressures is in the offing.

    See: U.S. inflation still running hot, key PCE price gauge shows

    Another worry for Powell is that future data might not cooperate.

    There are two employment reports and two consumer-price-inflation reports before the next Fed policy meeting on Dec. 13–14.

    So Powell might have to reverse course.

    “If you pre-commit and the data slaps you in the head — then you can’t follow through,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

    This has been the Fed’s pattern all year, Stanley noted. It was only in March that the Fed thought its terminal rate, or the peak benchmark rate, wouldn’t rise above 3%.

    While the Fed may want to slow down the pace of rate hikes, it doesn’t want the market to take a downshift in the size of rate rises as a signal that a rate cut is in the offing. But some analysts believe that the first cut in fact will come soon after the Fed reduces the size of its rate rises.

    In general terms, the Fed wants financial conditions to stay restrictive in order to squeeze the life out of inflation.

    Pingle said he expects Kansas City Fed President Esther George to formally dissent in favor of a slower pace of rate hikes.

    There is growing disagreement among economists about the “peak” or “terminal rate” of this hiking cycle. The Fed has penciled in a terminal rate in the range of 4.5%–4.75%. Some economists think the terminal rate could be lower than that. Others think that rates will go above 5%.

    Those who think the Fed will stop short of 5% tend to talk about a recession, with the fast pace of Fed hikes “breaking something.” Those who see rates above 5% think that inflation will be much more persistent.

    Ultimately, Amherst Pierpont’s Stanley is of the view that the data aren’t going to be the deciding factor. “The answer to the question of what either forces or allows the Fed to stop is probably not going to come from the data. The answer is going to be that the Fed has a number in mind to pause,” he said.

    The Fed “is careening toward this moment of truth where it has very tight labor markets and very high inflation, and the Fed is going to come out and say, ‘OK, we’re ready to pause here.’ “

    “That strikes me that is going to be a very volatile period for the market,” he added.

    Fed fund futures markets are already volatile, with traders penciling in a terminal rate above 5% two weeks ago and now seeing a 4.85% terminal rate.

    Over the month of October, the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    4.030%
    rose steadily above 4.2% before softening to 4% in recent days.

    “When you get close to the end, every move really counts,” Stanley said.

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