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So Much for A ‘Quiet’ Day!!

Early today I looked at the economic calendar and thought–“a relaxing day ” not believing that the economic news to be released would be so market moving. Boy was I wrong with the S&P500 tumbling a full 1 1/2%. Fortunately interest rates reacted a bit less severely as the 10 year treasury rose ‘only’ to 4.69%–plenty high, but it could have been worse. I feel fortunate that my maturing CDs paid large interest payment today so I showed no losses to speak of in accounts.

So today the employment cost index showed incomes rising at a rapid clip–certainly faster than forecast. The Fed will take this pretty seriously and it will be looked at as a contributor to inflation. Then we get a very weak consumer confidence number – 97 versus a forecast of 103.5. The Case Shiller home price index showed rising home prices–much higher than forecast. So while consumers are down in the dumps prices continue to rise. The Fed will have no problem whatsoever justifying their stance of no interest rate cuts.

Well the market reaction to these statistics makes me leery of what is to come yet this week–are we going to see some sort of market blow up? Or maybe markets settle and we get muted reactions to news–but hard to believe this will be the case and the market beatings today. We’ll see.

6 thoughts on “So Much for A ‘Quiet’ Day!!”

  1. So LPL is in the news. Was just wondering how much they are paying, as a percent of assets under management, for all these acquisitions. Any guesses??

  2. To me, the Fed bias has shifted to whether they might RAISE rates a notch or two. I would not be surprised if the 10Y went into the low 5s. That said, with the election coming this Fall, I doubt they cut or raise till afterwards. That is, unless things get very dicey.

    1. watching the fed “managing inflation” reminds me of how my kids/older grandkids handle my three year old grandson when they are playing x-box games and he wants to play too.
      They give him a Wii game controller and he thinks he is playing with them. Pushes lots of buttons, cheers when “his” guy is ahead in the race. He is very serious about his game play, but of course his Wii controller isn’t actually connected to the x-box game they are actually playing.

      Similarly, the fed raises and lowers interest rates and thinks it is “managing” inflation when it is really just along for the ride on the massive tidal wave of cash that the government’s deficit spending is pouring into the economy. Inflation is here to stay for a while – and the fed can’t reduce it through interest rates. (its a supply-side problem, and they are trying to control it through demand-side actions).

      The feds actions only serve to choke off a small bit of demand for cash in the “real” economy, which pushes us toward stagflation. If they want to actually help the economy and limit the damage of the massive amount of cash sloshing around, they would LOWER rates to stimulate the real economy (a little) into sopping up some of that cash.
      It won’t solve the overall inflation problem, but it will help and will help stave off stagflation. for a while.

    2. A powell speech writer has called chairman powell out for being very political. In other words no way rates go up. A cut is definitely on the table.

  3. I’m interested to see how rising wages bear out for social safety net expenditures. I work with asset limited, income restricted job seekers and their labor has gone up large amounts nominally (e.g. parking attendant in 2018: $10 in 2024: $16)(their purchasing power has not gone up, but that is a different point when it comes to benefits thresholds) I’ve also noticed this marks a preference among my conservative state and local governments to consider increasing sales taxes, which of course, are regressive. I consider these factors, and the decreasing value of the dollar to be (gov/muni) bond bullish. bearish on the pay packets for the jobbers.

  4. For the past few days I have sold some issues that I picked up after the beat down 2-3 weeks ago. I made an unusual move for me, selling two JPM issues that go ex-div tomorrow. There are a few others that have been beaten down but I’m going to wait to see what, if anything, comes of the Fed meeting. I also shorted PFFA today which was up.

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