August 24, 2024 | Daily JAM, Short Term |
Speaking at the Kansas City Fed’s Jackson Hole central bankers gab fest, Jerome Powell, the chair of the Federal Reserve, clearly said on Friday that the central bank was poised to cut interest rates at its September 18 meeting. “The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.” He then added: “We will do everything we can to support a strong labor market as we make further progress toward price stability.” All this shifts market attention from WHEN the Fed will begin cut interest rates to HOW FAST those cuts will be.
August 18, 2024 | Daily JAM, Morning Briefing |
Economists at Goldman Sachs have lowered the probability of a U.S. recession in the next year to 20% from 25%, citing this week’s retail sales and jobless claims data. If the August jobs report set for release on September 6 “looks reasonably good, we would probably cut our recession probability back to 15%, where it stood for almost a year” before a revision on August 2, the Goldman economists said in a report to clients on Saturday. And that would unwinded the recession fears that sent stocks plunging at the beginning of the month.
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 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 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.
July 31, 2024 | Daily JAM, Morning Briefing |
At today’s meeting the Federal Reserve left its benchmark interest rate unchanged at 5.25% to 5.50%. Fed Chair Jerome Powell said an interest-rate cut could come as soon as September. “The question will be whether the totality of the data, the evolving outlook, and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market,” Powell told reporters Wednesday. “If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September.”
July 18, 2024 | Daily JAM, Morning Briefing |
With the first Federal Reserve interest rate cut likely at the central bank’s September 18 meeting, some current economic data raise the possibility that the economy is slowing more than the Fed–and Wall Street–would desire.
July 12, 2024 | Daily JAM, Morning Briefing |
The all-items Consumer Price Index (CPI) declined 0.1% In June from May on a seasonally adjusted basis, the Bureau of Labor Statistics reported this morning. The month-to-month CPI inflation rate was unchanged in May.
Over the last 12 months, the all items index increased 3.0% before seasonal adjustment. Economists surveyed by Bloomberg had projected a 3.1% rate. The all-items index rose at a 3.3% annual rate in May. The core index rose at a 3.3% annual rate in June. That was the smallest 12-month increase in that index since April 2021.
July 7, 2024 | Daily JAM |
I expect data showing a slowing economy to increasingly point to an interest rate cut by the Federal Reserve at its September 18 meeting. Right now, in the short-run, financial markets look likely to see a slowing economy as a positive and to rally on the increasingly likelihood of an interest rate cut at the September 18 meeting–and maybe even a second cut at the December 18 meeting. But I’m keeping an eye out for any shift in sentiment.
July 5, 2024 | Daily JAM, Morning Briefing, Short Term |
The U.S. economy added 206,000 jobs in June, the Bureau of Labor Statistics reported today, July 5. That was above the median forecast of 190,000 new jobs in a Bloomberg survey of economists. But even though the June number came in above expectations, the overall message in the data was that the labor market is slowing. The Bureau of Labor Statistics revised job growth in the prior two months down by 111,000. Average monthly job growth over the last three months slowed to the lowest rate since the start of 2021. And the unemployment rate rose to 4.1%
