Inflation Takes a Positive Turn Inflation has slowed to a three-year low, according to this morning’s Consumer Price Index, showing a 2.5% increase compared to the previous year. This marks a significant improvement from the 40-year high inflation rates of recent years, which had previously forced the Federal Reserve to raise interest rates to levels not seen in over a decade. The report strengthens expectations of a shift in monetary policy, set to be addressed at next week’s FOMC meeting. The Federal Reserve is expected to implement its first interest rate cut since the start of the rate hike cycle—a move deemed "necessary" following recent labor market data. Tight monetary policies have led to widespread layoffs and hiring freezes, pushing...
Powell Spoke at Jackson Hole. Here’s the Summary:
Stocks rocked back and forth this afternoon after Powell finished his long awaited speech at the Economic Symposium. He started out his speech by stating that the “time has come” for policy change. He celebrated the progress that the central bank has made over the past three years, specifically noting the low U.S. unemployment rate during the process.
Powell’s tone seemed upbeat, more positive than meeting in recent history. His comments, combined with The FOMC Minutes released earlier this week, are reassuring that an interest rate cut is coming in September. Small caps reacted positively to the update, with the Russell 2000 (IWM) soaring 3% on the day.
Bears are active this week as markets prepare for Friday’s speech from Fed Chair Jerome Powell. He will be speaking at the annual Economic Symposium amongst other central bankers and influential financial personas from across the globe. The biggest focus of the speech will be on where the United States central bank stands on monetary policy, especially after the latest developments in the U.S. unemployment rate and the decline in inflation. The U.S. unemployment rate has accelerated to 4.3% in the last two months, the highest level since 2021. Heightened interest rates have slowed hiring and increased lay-offs, which The Fed acknowledged was to happen; but if they leave rates unchanged for too long then they risk leading the...
Stocks out of China - Too Cheap to Ignore U.S. investors have taken a cautious approach to Chinese stocks in the past 12 months, however the latest earnings from Alibaba and JD re-sparked interest around these foreign investments. Stocks out of other parts of Asia, such as Taiwan Semiconductor (TSMC), have rewarded investors this year, but Chinese stocks have lagged far behind the market rally due to uncertainty around China’s economy and political relations. This uncertainty seems to be improving thanks to the latest agreement between the U.S. and China to cooperate on financial stability. This shows an unusual level of cooperation between the two countries, which restored faith in Chinese stocks trading on the American stock market. Amongst the...
Jackson Hole Conference - How it will Impact the Stock Market Investors are getting ready for the annual kickoff of The Jackson Hole Economic Symposium this week, which is set to be focused on “Reassessing the Effectiveness and Transmission of Monetary Policy.” Central bank leaders from across the globe will attend this meeting, but the biggest focus for American investors will be on what Fed Chair Jerome Powell will say. Powell is expected to address the vast array of headwinds the economy has faced in 2024, especially The Fed’s approach to monetary policy. Just earlier this month, we saw markets nosedive after recession fears resurfaced, which was a result of a rise in unemployment. Strict monetary policy has led to...
