August 14, 2024 | Daily JAM, Mid Term |
A plunge in new corporate borrowing in China combined with Chinese households preferring to repay debt rather than expand borrowing saw bank loans in China shrink last month for the first time since July 2005. That deepened China’s years-long battle with weak credit demand, as a property slump spurs caution on buying homes and expanding investment. This has raised fears that China’s first bank loan contraction in nearly two decades could send the world’s No. 2 economy toward a “balance sheet recession” similar to that in Japan decades ago.
August 14, 2024 | Daily JAM |
Economic models from Goldman Sachs and JPMorgan Chase show that higher odds of an economic downturn have risen materially, judging by signals in the U.S. bond market and to a lesser extent the performance of stocks that are acutely sensitive to the ebbs and flows of the business cycle.
August 12, 2024 | Daily JAM, Mid Term |
Profit growth at the Magnificent 7–Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and Nvidia-—still raced ahead of the rest of the S&P 500 in the second quarter, But for the first time in five quarters, the rest of the S&P 500–the S&P 493 if you will–showed positive year-over-year growth in profits.
August 11, 2024 | Daily JAM, Morning Briefing |
Expect a final inflation test before the Federal Reserve meets on September 18. Unless there’s a huge surprise in the Wednesday, August 14, CPI report, the Fed will cut interest rates for the first time at that meeting.
August 8, 2024 | Daily JAM, Morning Briefing |
The number of Americans filing initial claims for unemployment benefits fell more than expected last week. Initial claims fell 17,000 to a seasonally adjusted 233,000 for the week ended August 3, the Labor Department said today, August 8. That was the largest drop in 11 months. Economists polled by Reuters had forecast 240,000 claims for the latest week. The data calmed fears on an impending recession raised by last Friday’s unexpectedly weak jobs report for July.
August 8, 2024 | Daily JAM, Short Term |
I’d worry less about the U.S. slipping into recession if the rest of the global economy wasn’t so challenged on growth. For the first quarter of 2024, the annual growth rate in the European Unpin was just 0.6%, for example. And now we have data out of China showing that export growth unexpectedly slowed in July. That signals cooling global demand at a moment when China needs export growth to make up for a sluggish domestic economy. Exports rose 7% in July in dollar terms from a year earlier, falling short of economists’ median forecast of a 9.5% gain.
August 7, 2024 | Daily JAM, Morning Briefing, Short Term |
The options market is implying the S&P 500 Index will move 1.2% in either direction that morning on the report on U.S. initial and continuing claims for unemployment.
August 6, 2024 | Daily JAM, Short Term |
Briefly on Monday’s scary stock market volatility, traders and investors decided that the Federal Reserve would make its first interest rate cut at its September 18 meeting not a “business-as-usual” 25 basis points but a “market emergency” 50 basis points. On the CME FedWatch tool the odds of a 50 basis point cut jumped to 85% from just 13.2% on July 30
August 6, 2024 | Daily JAM, Morning Briefing, Short Term |
Today, Tuesday August 6, the Nikkei 225 index closed up 10.23% in Tokyo. That erased most of Mondyay’s 12% loss. And it led to the U.S. futures market opening higher and U.S. stock indexes moving up today. At the close in New York, the Standard & Poor’s 500 was ahead by 1.03%, and the Dow Jones Industrial Average was higher by 0.76%. The NASDAQ Composite had gained 1.03% and the small cap Russell 2000 had added 1.23%.The volatility eertainly isn’t over but today the market is following the usual patterns–with buying on the drop emerging after a big sell off–and that’s a big relief after the panic-inducing movement of the last three sessions. Those on Wall Street trying to figure out where we are in the unwinding of the yen/dollar carry trade that has lent so much intensity of the drop ay that the selling of dollar assets to buy ten isn’t over. Which makes sense.
August 5, 2024 | Daily JAM, Morning Briefing, Short Term |
Okay, the correction in the NASDAQ and the near correction in the Standard & Poor’s 500 isn’t all about Japan. U.S. stock valuations are stretched. Air is coming out of the AI bubble. The U.S. economy is slowing But to me those factors don’t explain the stunning rapidity of this drop. Nor why the biggest damage to any global market is taking place in Tokyo. To me this event has all the hallmarks of a move that has more to do with the unwinding of massive speculative trades than with anything we might label “fundamentals” or “macro economics.”Edward Yardeni, president of Yardeni Research and one of the smartest long-time observers of the financial markets I follow, points his finger at Japan and the surprise interest rate increase from the Bank of Japan that has led to a rapid unwinding of the speculative dollar/yen carry trade.
August 5, 2024 | Daily JAM, Morning Briefing, Short Term |
Yeah, I know you can read a calendar, but take a moment to think about how the extraordinary August economic news vacuum feeds into the current market plunge. No Federal Reserve meeting in August so no interest rate cut until September 18. Which also means no new economic projections from the Fed on GDP growth or the likelihood of recession. No Fed Speak at all, really, with reassurance that the economy is slowing but not headed for recession, until the August 22-24 central bank gab fest in Jackson Hole. No significant earnings news–big enough to affect sentiment at least–until Nvidia’s (NVDA) earnings on August 28.
August 2, 2024 | Daily JAM, Morning Briefing, Short Term |
The U.S.economy added only 114,000 jobs in July. Economists surveyed by Bloomberg had projected an increase of 175,000 jobs in the month. The unemployment rate unexpectedly climbed by 0.2 percentage points to 4.3% in July, exceeding all 69 estimates by economists. Average hourly earnings rose 0.2% on a monthly basis, also less than forecast, and on an annual rate increased by 3.6%–the least since May 2021. The jump in the unemployment rate triggered the Sahm Rule. Coined by former Federal Reserve economist Claudia Sahm, the rule says that when the average jobless rate over three months is 0.5 percentage point above the 12-month low, a recession is coming. And that’s exactly where we are now. “We’re not headed in a good direction,” Sahm said on Bloomberg Radio Friday. It’s fair to say the stocks weren’t happy on Friday.
