October 6, 2024
What You Need to Know Today:
September jobs report good news for the economy
The U.S. economy added 254,000 jobs in September, the most in six months. The unemployment rate fell to 4.1% and hourly earnings increased 4% from a year earlier, according to Bureau of Labor Statistics. Strong data is reassuring investors worried that the Federal Reserve had moved too slowly to cut interest rates and that the economy was headed toward a slump.
Saturday Night Quarterback says (on a Sunday), For the week, ahead expect…
I expect a transition from a market dominated by speculation about the pace of interest rate cuts by the Federal Reserve to worries about earnings and the growth rate for corporate profits.
Albemarle, lithium stocks jump on buy-out speculation
Shares of lithium market leader Albemarle (ALB) rose 8.25% on Friday to close at $102.O9 on speculation in Australia that mining giant Rio Tinto (RIO) will pursue a major lithium deal with Albemarle cited as a possible target. Shares of Arcadium Lithium (ALTM), Lithium Americas (LAC) and Sociedad Quimica y Minera (SQM) also jumped, +10%, +7.1% and +3.1%, respectively. The speculation makes sense to me.
Strong September jobs report lowers expectations for 50 basis point cut from the Fed
Odds on a 50 basis point cut from the Federal Reserve at its November 7 meeting plunged to 0% today on the CME FedWatch tool after a strong jobs report for September showed a tick down in the unemployment rate.
September jobs report good news for the economy
The U.S. economy added 254,000 jobs in September, the most in six months. The unemployment rate fell to 4.1% and hourly earnings increased 4% from a year earlier, according to Bureau of Labor Statistics. Strong data is reassuring investors worried that the Federal Reserve had moved too slowly to cut interest rates and that the economy was headed toward a slump.
Money-market fund assets rise to record $6.46 trillion–but what does it mean?
Total assets under management in U.S. money-market funds rose by $38.7 billion in the week week ended October 2, according to the latest Investment Company Institute data released on Thursday. The increase puts total assets at a record $6.46 trillion, and caps the biggest quarter of inflows since the March 2023 banking crisis. The old record was set when the collapse of Silicon Valley Bank and other lenders sent a flood of cash into money-market funds as the Federal Reserve raised rates. What’s odd now is that the Federal Reserve is cutting interest rates and the financial system doesn’t seem particularly stressed.
Special Report “10 Trump and 10 Harris winners (and 5 losers)–first 3 picks
I don’t know which candidate will win the election. Right now the polls are within the margin of error on the national level–and even tighter in the seven battleground states that will likely decide the electionm. But I do know the results on November 5 will move stocks. Some right off the bat even before the results are certified. Ans more significantly as a new administration clarifies its policy views and takes office.The results will move the stock market in general
And they will move individual stocks and sectors in particular.
Live Market Report (20 minute delay)
Saturday Night Quarterback says (on a Sunday), For the week, ahead expect…
I expect a transition from a market dominated by speculation about the pace of interest rate cuts by the Federal Reserve to worries about earnings and the growth rate for corporate profits.
Albemarle, lithium stocks jump on buy-out speculation
Shares of lithium market leader Albemarle (ALB) rose 8.25% on Friday to close at $102.O9 on speculation in Australia that mining giant Rio Tinto (RIO) will pursue a major lithium deal with Albemarle cited as a possible target. Shares of Arcadium Lithium (ALTM), Lithium Americas (LAC) and Sociedad Quimica y Minera (SQM) also jumped, +10%, +7.1% and +3.1%, respectively. The speculation makes sense to me.
Strong September jobs report lowers expectations for 50 basis point cut from the Fed
Odds on a 50 basis point cut from the Federal Reserve at its November 7 meeting plunged to 0% today on the CME FedWatch tool after a strong jobs report for September showed a tick down in the unemployment rate.
September jobs report good news for the economy
The U.S. economy added 254,000 jobs in September, the most in six months. The unemployment rate fell to 4.1% and hourly earnings increased 4% from a year earlier, according to Bureau of Labor Statistics. Strong data is reassuring investors worried that the Federal Reserve had moved too slowly to cut interest rates and that the economy was headed toward a slump.
Money-market fund assets rise to record $6.46 trillion–but what does it mean?
Total assets under management in U.S. money-market funds rose by $38.7 billion in the week week ended October 2, according to the latest Investment Company Institute data released on Thursday. The increase puts total assets at a record $6.46 trillion, and caps the biggest quarter of inflows since the March 2023 banking crisis. The old record was set when the collapse of Silicon Valley Bank and other lenders sent a flood of cash into money-market funds as the Federal Reserve raised rates. What’s odd now is that the Federal Reserve is cutting interest rates and the financial system doesn’t seem particularly stressed.
Right now markets aren’t pricing in regional war in Middle East–that could change fast
What’s amazing to me right now is how complacent Wall Street is about the prospects for a wider regional war in the Middle East. Which could include an attack by Israel on Iran’s nuclear facilities.On a day when Israel vowed to retaliate against a barrage from Iran that rained down missiles on Israel’s Iron Dome defense, West Texas Intermediate oil rose by just 0.39% to $70.10 a barrel. International benchmark Brent crude was ahead just 1.43% to 74.61.
Tesla misses on quarterly deliveries–again
Tesla (TSLA) delivered 462,890 vehicles in the three months to 30 September. That was up 6.4% from the preceding quarter. But the delivery total missed Wall Street expectations for it to deliver 469,828 vehicles. That left the company facing the daunting task of delivering a record 516,344 vehicles in the fourth quarter in order to match its 2023 delivery figure of 1.81 million vehicles. A shortfall would result in Tesla recording its first ever annual drop in deliveries.
Special Report “10 Trump and 10 Harris winners (and 5 losers)–first 3 picks
I don’t know which candidate will win the election. Right now the polls are within the margin of error on the national level–and even tighter in the seven battleground states that will likely decide the electionm. But I do know the results on November 5 will move stocks. Some right off the bat even before the results are certified. Ans more significantly as a new administration clarifies its policy views and takes office.The results will move the stock market in general
And they will move individual stocks and sectors in particular.
Saturday Night Quarterback Part 2 says, For the week ahead expect…
We’re looking at a huge week of economic data that will support or disturb the current coin-flip odds of a 25-basis-point/50-basis-point cut when the Federal Reserve meets on November 7. Let’s start with the week’s Big Guy, the September jobs numbers due on Friday.
Saturday Night Quarterback says, For the week ahead expect…
Like thousands of other investors and traders, you will have to make a decision on whether to stick with very expensive stocks–especially very expensive technology stocks– in order to catch a potential market melt-up for the end of 2024. Here’s the crunch.
Consumer sentiment rebounds on final revision
U.S. consumer sentiment continued to rise in late September, reaching a five-month high on more optimism about the economy. The University of Michigan’s final September sentiment index rose to 70.1 from the 69 preliminary reading released earlier this month. The latest figure issued Friday follows an August index of 67.9.
Fed’s favorite inflation measure rose more slowly than expected in August
The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose at a slower pace than expected on a monthly basis in August. The core PCE, which strips out the cost of food and energy, rose 0.1% from the prior month during August, below Wall Street’s expectations for 0.2% and the 0.2% reading seen in July.
Micron surge shows why it’s so hard to leave this market
This is why it’s so hard to sell this market in spite of stunningly high valuations. “This” is the 14.7% gain today in shares of Micron Technology after the company announced results for the fiscal fourth quarter and forecasts for fiscal first quarter revenue and earnings yesterday.
Today’s GDP revision unchanged at 3% growth–and that’s the news
The Bureau of Economic Analysis’s third estimate of second quarter US gross domestic product (GDP) was unchanged from the second estimate which had shown 3% annualized growth. Economists had estimated the reading to show annualized growth of 2.9%. Add in a separate report on initial claims for unemployment the Labor Department that showed 218,000 new claims for unemployment were filed in the week ending September 21–Wall Street had been expecting 223,000 new claims for the week–and the data clearly show that the economy is, as Fed chair Jerome Powell said last week when the Fed cut interest rates, in good shape.
More monetary stimulus in China–but it’s the wrong medicine
China’s central bank lowered the interest rate charged on its one-year policy loans by the most on record today, September 25. The People’s Bank of China cut the rate of the medium-term lending facility to 2% from 2.3%. The 30-basis-point cut was the biggest since the bank began using the monetary tool to guide market interest rates in 2016.
The move followed the bank’s announcement yesterday of a broad stimulus package.
Income yield canary: Goldman cuts yield on its Marcus savings account
Goldman Sachs’ consumer bank, Marcus, has reduced the rate on its high-yield savings account following the Federal Reserve’s interest rate cut in more than four years.
Marcus flagship offering now has a 4.25% annual percentage yield, down from 4.4%. I think this is just the canary in a coal mine for yield on income products.
China fires the big bazooka again–a sign of a panic?
There was a whiff of panic to the big moves by the People’s Bank today.China’s central bank cut a key short-term interest rate and announced plans to reduce the reserve ratio, the amount of money banks must hold in reserve, to the lowest level since at least 2018. This marked the first time reductions to both measures were revealed on the same day since at least 2015. And that wasn’t all.
Special Report: “10 New Stock Ideas for an Old Rally”–first 2 picks
The Standard & Poor’s 500 Index had a banner first half of 2024 with the index climbing more than 17% as of June 30. But two-thirds of that gain is attributable to just six stocks: Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), Meta Platforms (META), and Apple (AAPL.).Track the performance of equal-weighted version of the S&P 500–rather than the commonly tracked index where the contribution of any stock to the index is weighted by market cap–and the index was up just 3.9% in the first half of 2024. For the second half of 2024 and looking ahead to 2024, I’m not so much worried about the fundamentals of this extraordinary rally as I am by a failure of market imagination Everybody owns the same 6 stocks. Hey, I get the excitement around these stocks and the boom in Artificial Intelligence. I share it. Which is why I own shares of Nvidia, Amazon, and Alphabet in my online portfolios. But there are 494 other stocks in the S&P 500. And 2000 stocks in the small-cap Russell 2000.(Up 9% in the first half of 2024.)After a rally that has recorded 30 new record highs for the S&P 500 just the first half of n 2024, some of that other 494–or 2000–are actually better stock buys, and likely to out perform the 6 stocks everybody owns from their current record high prices. But which ones? That’s what my Special Report: “10 New Stock Ideas for an Old Rally” is all about.
Stocks and bonds are really expensive now
I understand why no one wants to get off the rally bus. Last week’s gains pushed the Standard & Poor’s 500’s total return for 2024 above 20% again. The index jumped 1.7% on Thursday, putting in its 39th record close of the year. Both stocks and Treasuries are headed for a fifth straight month of gains. But anyone expecting the S&P 500 to build on its year-to-date gain should consider that Wall Street’s own strategists already see the upside exhausted.
Saturday Night Quarterback says (on a Sunday), For the week ahead expect…
I expect investors and traders to be looking to Friday’s PCE inflation report for confirmation of the Federal Reserve’s 50 basis-point interest rate cut and for evidence that the Fed will cut by 50 points again at its November 7 meeting.
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