Archive for July 2024

It was a busy week ahead of this week’s Fed meeting, with PCE inflation slightly decreasing to 2.5%, while core PCE remained steady at 2.6%. Personal income and spending saw modest increases, with the savings rate dipping to 3.4%, indicating slower economic growth. Q2 GDP growth exceeded expectations at 2.8%, driven by consumer spending and investment. On the other hand, the housing market showed signs of cooling, with existing home sales volumes down -5.4% a

Geopolitical events characterized the week, including a global technology outage on Friday and President Biden’s decision not to run for re-election over the weekend. Chip stocks led a market decline last week on trade policy and geopolitical concerns with China, lowering tech-heavy indexes. June retail sales outperformed expectations, but still demonstrated a slower economy, suggesting a potential Federal Reserve rate cut in September.

Another bullish week went down for stocks and bonds, as June’s CPI fell to -0.1% monthly and 3% annually, the lowest since June 2023. Core CPI dropped to 3.3%, a low since 2021. On the other hand, the Producer Price Index posted hotter than expected data, however this was largely overlooked by markets.

In Q2, both our economic cycle and tactical market cycle assessments remained positive, but less bullish than at the start of the quarter. This shift indicates emerging concerns in economic data, suggesting the US economy might be at a transitional point between downturn and recovery.

This week echoed the likelihood of a soft landing as June’s jobs report showed mixed results with nonfarm payroll rising, but an unexpected increase in the unemployment rate, hinting at a higher chance of Federal Reserve rate cuts in September. Both the ISM Manufacturing and Services Indexes indicated sector-wide weaknesses in June, suggesting an increased risk of an economic slowdown. Monitoring economic and inflationary data, especially the CPI print and the start of Q2 earnings in the week ahead, will be crucial.

Despite being more muted last week, stocks posted a positive first half of 2024. In this past week’s economic news, PCE inflation remained flat at 2.6%, personal income rose 0.5% in May, and consumer spending grew 0.2%. Consumer confidence fell slightly, with concerns about future economic conditions.