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 21, 2024 | Daily JAM, Morning Briefing, Short Term |
Monthly employment reports overstated the number of job created by the U.S. economy by 818,000 in the 12 months that ended in March 2024, the Labor Department reported on Wednesday, August 21. That revision, part of the annual process that reconciles job reports derived from monthly surveys with state records, says that employers added about 174,000 jobs per month on average during that period, down from the previously reported pace of about 242,000 jobs. That’s a drop of about 28%.
August 14, 2024 | Daily JAM, Mid Term, Morning Briefing |
Core CPI inflation rose at a 3.2% annual rate in July. That was the slowest rate of increase since early 2021.And that rate of increase was low enough to keep the Federal Reserve on track for cutting interest rates at its September 18 meeting.
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 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.
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 26, 2024 | Daily JAM, Morning Briefing |
The Personal Consumption Expenditures index, the Federal Reserve’s preferred measure of inflation, rose by just 0.% month-over-month in June, the Bureau of Economic Analysis reported this morning. The core personal consumption expenditures price index, which strips out volatile food and energy prices, increased 0.2% from May. The annual rate of core inflation was just 2.6%. Economists had projected a core annual rate of 2.5%. With the Fed set to meet on interest rates on July 31, inflation continues to move lower towards the central bank’s 2% target. These numbers support the Wall Street consensus calling for the Fed to begin cutting interest rates at its September 18 meeting.
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.
