Economic News Thread | 3Q Annual GDP 2.8%

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Really felt they should have cut by .25 today and skipped September. If they overdo this and send the economy into recession, cutting interest rates won't fix that: it will take one trillion of stimulus.
Interest rate hikes IMO are sort of like chemotherapy: apply enough to try and cure the patient but too strong or too long can also do damage. The Fed is currently administering a big dose of chemo daily (hurting among others consumers, potential home owners, low-income folks, as wellas the debt). The patient has gotten better (inflation is declining firmly) so should cut before causing more harm. Hopefully, a September cut will not be too late.
 
superrific said:
I don't get it. They are looking for "progress" on inflation? Inflation is less than 3%. What more do they want?
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The fed has projected for many quarters that the rate cut would likely come in September. Nothing about today was a surprise. Cutting now would have actually jolted the market.
 
UNCatTech said:
I read an article yesterday about the soft landing of the economy. Seems that through all the uncertainty of the economy since covid and the compounding of the issues with supply chain and other variables, we are coming out much better than it could have been.
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Better than pretty much anybody predicted, or even hoped for.
 


Raising heat on Fed decision not to lower interest rates.
 

“… America is still adding jobs. But the labor market’s strength has been fading, and Friday’s report adds to evidence that it could be on its way to weakness.

… Average hourly earnings were up 3.6% in July from a year earlier—above the recent pace of inflation, but the smallest gain since May 2021.

The jobs count for May and June was revised down by a combined 29,000. The labor-force participation rate, the share of working-age people who were employed or seeking work, rose slightly to 62.7% from 62.6% in June.

The increase in the unemployment rate was in part a reflection of more people entering the labor market.

Stock futures, which were already down before the jobs report, fell further after the data came out. Treasury yields sank.

July’s job gains were concentrated in the healthcare sector, which added 55,000 jobs, construction, which added 25,000, and leisure and hospitality, which added 23,000. On the other side of the ledger, the information sector shed 20,000 jobs.

Better news on inflation and a desire to prevent a significant rise in joblessness are two major reasons why Federal Reserve policymakers on Wednesday cleared the path for a September interest-rate cut. “I would not like to see material further cooling in the labor market,” said Fed Chair Jerome Powell at his press conference following the central bank’s policy meeting. …”
 
nycfan said:

“… America is still adding jobs. But the labor market’s strength has been fading, and Friday’s report adds to evidence that it could be on its way to weakness.

… Average hourly earnings were up 3.6% in July from a year earlier—above the recent pace of inflation, but the smallest gain since May 2021.

The jobs count for May and June was revised down by a combined 29,000. The labor-force participation rate, the share of working-age people who were employed or seeking work, rose slightly to 62.7% from 62.6% in June.

The increase in the unemployment rate was in part a reflection of more people entering the labor market.

Stock futures, which were already down before the jobs report, fell further after the data came out. Treasury yields sank.

July’s job gains were concentrated in the healthcare sector, which added 55,000 jobs, construction, which added 25,000, and leisure and hospitality, which added 23,000. On the other side of the ledger, the information sector shed 20,000 jobs.

Better news on inflation and a desire to prevent a significant rise in joblessness are two major reasons why Federal Reserve policymakers on Wednesday cleared the path for a September interest-rate cut. “I would not like to see material further cooling in the labor market,” said Fed Chair Jerome Powell at his press conference following the central bank’s policy meeting. …”
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That last paragraph is the most important. While a good argument could be made that rates should have been cut this month, a September cut will be good news at a great moment politically. These numbers make that cut even more likely.
 
lawtig02 said:
That last paragraph is the most important. While a good argument could be made that rates should have been cut this month, a September cut will be good news at a great moment politically. These numbers make that cut even more likely.
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Yes

the pressure is on now for 50 bps cut in September... or perhaps a rate cut next week to correct its f*ck up two days ago ?
 
heelinhell said:
Yes

the pressure is on now for 50 bps cut in September... or perhaps a rate cut next week to correct its f*ck up two days ago ?
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Yes, a 50 bps is needed.

Part of the problem with the fed, culturally, is that the people who work for the Fed are commonly friends with bankers and other finance types. Those are people who don't really GAF about unemployment, but care very much about inflation. I think that accounts for at least some of the Fed's bias toward inflation in its "dual mandate." When I attended a sit down event with the head of the NY Fed about 20 years ago or so, someone asked him whether he is constantly getting barraged by questions or "suggestions" about policy. He said that he had a sharp line against ever answering questions (for obvious reasons), but he would usually let people make suggestions. He figured that it was harmless, because he would make the decisions himself without influence.

I then pointed out that it's really hard to do that, right? If you've got people around you all day saying, "you know, we should really cut rates," isn't it hard to block that out, because it affects your subconscious perceptions and just your general framing of the issue? To his credit, he said that he hadn't thought about that too much, and that I made a good point and he would have to consider it. I'm 99% confident he did not consider it. I mean, for real -- the president of the NY Fed isn't going to change his personal policies because some young guy he's never met asks some questions.
 

Turbulence started in Japan before losses cascaded across Europe and the U.S. Concerns about a slowing U.S. economy are prominent after job growth slowed sharply in July. Investors are worried the Federal Reserve will need to play catch up in cutting rates.


Japan’s Nikkei Suffers Worst Day Since 1987, Hit by U.S. Concerns​

Poor American economic data and yen’s surge hit stock prices, raising memories of Black Monday​

 
Time to buy Bitcoin which is immune to these high-fallutin’ central bank machinations.

Wait! Bitcoin is tumbling too!?
 

“…

Magnificent Seven Tech Stocks Shed More Than $700 Billion in Market Value​


https://www.wsj.com/news/author/hannah-miao

“Monday's stock-market selloff is hitting the Magnificent Seven stocks hard.

The Magnificent Seven—Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla—have collectively lost about $753 billion in market capitalization , according to Dow Jones Market Data as of around 10:15 a.m. ET.

If that holds, it would mark the largest one-day market cap loss on record for the cohort.
Nvidia alone has lost around $288 billion in market value, on pace for the largest one-day market cap loss for any U.S. company on record.

Despite Monday's losses, all the Magnificent Stocks except for Tesla remain up year to date. Nvidia has roughly doubled in 2024.”
 
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