Euro jumps to highest since July 2023 following dovish Powell remarks
The most important statement in his speech: “We do not seek or welcome further cooling in labor market conditions.” Source: Bloomberg, HolgerZ
BREAKING - Jackson Hole - it seems the Fed Pivot is here
Here's a summary of Fed chair Powell's remarks (8/23/24): 1. "The time has come for Fed policy to adjust" 2. Fed "will do everything" to support a strong labor market 3. Fed does not welcome further weakening of the labor market 4. Confidence has grown that inflation is heading to 2% 5. Balance of risks to Fed mandates has changed 6. Inflation has declined significantly toward the goal As mentioned by Nick Timiraos, the Powell pivot is complete: “The cooling in labor market conditions is unmistakable.” “It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon.” “We do not seek or welcome further cooling in labor market conditions.” “The time has come for policy to adjust. 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.” “We will do everything we can to support a strong labor market as we make further progress toward price stability.” equities, bonds, cryptos, gold, etc. are all rallying post-statement. Bottom-line: Fed Chair Powell validates rate cuts soon, but didn't make any promises on size and extent. We believe that moving away from a restrictive monetary policy, to a more neutral stance, makes sense. We continue to believe the first fed funds rate cut will be -25bp in September.
French Economy Gets Olympic Boost as Germany’s Malaise Deepens French composite PMI rises to 52.7; Germany’s down to 48.5.
‘August is likely an outlier due to the Olympic Games’ French services expanded at the fastest pace in more than two years, driving Europe’s second-biggest economy as visitors from around the world flocked to Paris for the Olympic Games. S&P Global’s Purchasing Managers’ Index for the sector surged to 55 in August from 50.1 in July, far above the 50 threshold that divides growth from contraction and the median estimate of 50.3 in a Bloomberg survey. Source: Bloomberg
Ranked: The Countries That Added the Most Gold Reserves (2013-2023)
Source: Visual Capitalist, Elements, Jesse Felder on X
This is the reality the old continent needs to face: There is only one way to prosperity, hard work and higher productivity
UK and the eurozone have been lagging the US big time. Time for a wake-up call? Source: FT. Michel A.Arouet
The Bank of Japan (boj) is still on a path toward higher interest rates provided inflation and economic data continue in line with its forecasts
“If we are able to confirm a rising certainty that the economy and prices will stay in line with forecasts, there’s no change to our stance that we’ll continue to adjust the degree of easing,” Ueda said in response to questions in parliament Friday. Source: Bloomberg
Fed Funds Futures pricing in nearly 200 bps of cuts over the next year, which seems quite aggressive and presumes a rather hard landing scenario
Based on current macro data, there's no reason for the Fed to cut this aggressively. Let's see how Powell manages it today at jacksonhole. Source: Markets & Mayhem
TGI Thursdays
The S&P 500 is up an annualized +46.0% on Thursday so far in 2024. This would be the best return for Thursday since '21 (+51.5%) and best for any day since Friday last year (+53.0%). Bottom line, in bull markets you tend to see strength ahead of the weekend. ✔☑✅ Source: Ryan Detrick, CMT @RyanDetrick on X, Carson research
