Market Update – Sept 30th, 2024
During the last full week of September, equites saw gains, as softer-than-expected PCE inflation data signaled continued disinflation. The PCE Index showed annual headline inflation at 2.2% and core inflation at 2.7%, reflecting minimal monthly price increases of just 0.1% for both measures. Meanwhile, personal income and spending grew by 0.2% in August, and the personal savings rate held at 4.8%, indicating a fair balance of income, spending, and saving.
Market Update – Sept 23rd, 2024
Last week, stocks hit new all-time highs, driven by the Federal Reserve’s jumbo 50 basis point rate cut, the first in over four years, reducing the Federal Funds Rate to 4.75%–5%. Additionally, in the Fed’s quarterly Summary of Economic Projections, the central bank reflected a more aggressive trajectory for future cuts.
Manager’s Thoughts: The First Rate Cut
Wednesday’s FOMC meeting marked a pivotal moment as the Federal Reserve implemented its first rate cut in four years. This was not just any rate cut; it was a substantial reduction of 50 basis points, exceeding market expectations of a 25 bps cut, which had already been fully priced in.
Market Update – Sept 16th, 2024
Stocks regained ground last week as inflation data lifted confidence ahead of this week’s highly anticipated Federal Reserve meeting, where the Fed’s first rate cut is expected. The August CPI report showed inflation at 2.5%, slightly below estimates, while core inflation, which excludes food and energy, came in at 3.2%, slightly above forecasts. Similarly, the Producer Price Index indicated stable wholesale inflation in August, consumer sentiment improved for the second consecutive month, reflecting optimism despite election concerns, and the Employment Trends Index indicated stable labor market conditions.
Market Update – September 9th, 2024
Last week, stocks tumbled as concerns over an economic slowdown intensified, driven by weaker-than-expected job gains in August. The unemployment rate edged down to 4.2%, but only 142,000 jobs were added, falling short of projections.
Market Update – August 26th, 2024
While some indicators have become more bearish in recent months, we remain cautiously optimistic for a soft-landing scenario, especially as the Federal Reserve appears more committed to cutting rates in the coming months.
Market Update – August 19th, 2024
Last week, stocks gained ground as July’s inflation came in softer than expected, and retail sales exceeded forecasts, easing recession worries. The Consumer Price Index showed annual inflation at 2.9%, with core inflation at 3.2%, both down from June. The Producer Price Index also reflected a sharp drop in producer inflation. Meanwhile, retail sales surged by 1% month-over-month, led by auto-related purchases, fueling hopes for a “Goldilocks” economy. Consumer confidence rose slightly in August, as consumers cited recent changes in perceptions about the upcoming presidential election.
Market Update – August 12th, 2024
On the other hand, the labor market is showing signs of softening, with the highest level of insured unemployed persons since November 2021. Despite this, some metrics like the Employment Trends Index suggest this softening represents a normalization of the labor market rather than moving towards a full-blown recession. Q2 earnings have been largely positive, with most sectors surpassing expectations, though recession indicators remain mixed, keeping our market view cautious.
Market Update – August 5th, 2024
Stocks saw a sell-off last week due to intensified recession concerns following a weak July employment report and other bearish indicators, coupled with the absence of a definitive timeline for rate cuts from the Federal Reserve. The July Fed meeting left policy unchanged but hinted at a potential rate cut in September, with the market now pricing in a 79.5% chance of 50 basis points of cuts.
Market Update – July 29th, 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
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