New YorkCNN — The Dow Jones Industrial Average closed above the 40,000 mark Friday for the first time in its 139-year history. The blue-chip index initially crossed the key threshold early Thursday but ended that day lower. Wall Street has been boosted in recent days by renewed hopes of rate cuts from the Federal Reserve that would loosen monetary conditions for consumers and businesses.
Yep, Goldilocks is front and center and investors remain unconcerned about any credit issues that may loom on the horizon. Consumer demand is beginning to moderate - which is good news as we can't get to desired inflation targets without - we'll see how well the balancing game plays out between moderating consumer demand and employment. Stay tuned...
Jobs report came out earlier this week. "Good" news: the economy added 250K+ jobs which was more than expected. Buried in that data was the fact that there were approx 650K LESS full time workers in the force. Fed won't take any action on rates with inflation still above target, and jobs seeming to be strong.
Double the fun today.....CPI release and Fed Meeting day. First the CPI data - needless to say the market is very happy. As Scott indicated, solid jobs report now coupled with lessening price pressure = goldilocks for many investors. Don't see any pundits predicting rate cuts today, but expectations for reductions by end of year have increased. We'll see....the day is yet young UPDATED WED, JUN 12 20249:04 AM EDT Dow futures jump 300 points on cool inflation report ahead of Fed decision: Live updates https://www.cnbc.com/2024/06/11/stock-market-today-live-updates.html
At noon, it's tailed off to 94 points and could go red by the end of the day. Maybe the movers and shakers have seen Scott's post. I'm certain they follow this topic at least weekly.
Federal Reserve issues FOMC statement FOMC members now only projecting one rate cut for 2024, down from 3 earlier in the year noting that while progress in reducing inflation is evident, remains above target and pace of easing slower than anticipated earlier this year. Labor market cooling, but remains strong "Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective."
As if the world's central bankers don't have a hard enough job already to battle global price pressures, they now have to worry about Travis Kelce's girlfriend coming to town.....quite the phenom. Swedish Core Inflation Unexpectedly Speeds Up as Taylor Swift Fans Boost Hotel Prices | Financial Post
Fed says it’s not ready to cut rates until ‘greater confidence’ inflation is moving to 2% goal Fed says it's not ready to cut rates until 'greater confidence' inflation is moving to 2% goal Minutes released today from the FOMC's last meeting in June, a big day for all econ/market nerds and junkies as it provides a great bit of context for their policy decisions and insights into their current thinking. Some softening in the labor market and household balance sheets are beginning to show some deterioration with the Fed suggesting that "Labor demand and supply continued to move into better balance." That said there was some debate about whether the next move was a rate hike or cut showing the degree of uncertainty? I do believe if we see a continued slowdown in the labor market as we have seen in the most recent jobs reports we'll see a rate cut perhaps as early as September. Point being monetary policy operates with a lag and if they wait until such time as we get a 2.0% PCE print, it will be too late. Time will tell..
U.S. economy added 206,000 jobs in June, unemployment rate rises to 4.1% "U.S. economy added 206,000 jobs in June, unemployment rate rises to 4.1% The U.S. economy again added slightly more jobs than expected in June though the unemployment rate increased, the Labor Department reported Friday. Nonfarm payrolls increased by 206,000 for the month, better than the 200,000 Dow Jones forecast though less than the downwardly revised gain of 218,000 in May, which was cut sharply from the initial estimate of 272,000. The unemployment unexpectedly climbed to 4.1%, tied for the highest level since October 2021 and providing a conflicting sign for Federal Reserve officials weighing their next move on monetary policy. The forecast had been for the jobless rate to hold steady at 4%." In my view an additional data point on the side of labor market dynamics coming back into balance. The 206,000 adds is not a sign of an economy falling out of bed, but the downward revisions of prior months show a softening trend....good news for the inflation fighters at the Fed. Still looks like to me the appropriate policy stance is an easing bias, next move is down perhaps as early as September for a rate cut. If next round of data shows an accelerating weakness in the labor market and household balance sheets, all bets are off....we shall see
Inflation falls 0.1% in June from prior month, helping case for lower rates "Inflation falls 0.1% in June from prior month, helping case for lower rates" Data supporting rate cuts continues to mount. Chair Powell, FOMC and prices breath a sigh of relief but whether of not it makes sense from a monetary policy standpoint, stand by for the politicians to enter the fray in a big way. Powell gave his regularly scheduled testimony to Congress this week with the Dems asking why he hasn't cut rates yet and the Repubs threatening him if they do.....what a thankless job. Data supports a cut soon, my guess is September, most recent CPI data has some pundits suggesting as early as this month. I'm hopeful he is strong enough to tune it out and follow the data. My guess is he will