The link below is from this morning and talking about global markets getting hammered...and of course the U.S. markets being set up for another fall. Big indicators are the drop in rates for bonds and treasuries where people are dumping stocks to run to bonds and cash.

https://www.reuters.com/markets/us/us-yi...024-08-05/

Quote:Friday's nonfarm payrolls data - which showed the U.S. unemployment rate unexpectedly rose in July and jobs growth slowed - followed a slew of disappointing earnings results from major tech firms, setting off a global stock selloff and driving investors to safe haven assets.

Investors are also grappling with a dramatic rally in the Japanese yen which has rocked the country's markets, helping send the Nikkei 225 stock index (.N225), opens new tab down 12.4% on Monday in its biggest one-day drop since 1987. U.S. S&P 500 futures were down 2.7% .

The yield on the benchmark U.S. 10-year Treasury note was down 5 bps at 3.742%, having touched a one-year low of 3.678% earlier in the session. The yield sank nearly 40 basis points last week, the largest weekly fall since March 2020.
Michael Weidner, co-head of global fixed income at Lazard Asset Management, said the rally in bond markets was being amplified by investors worrying about their positions in tech stocks and by thin summer markets.

Here is where it may get sticky. What's going on with inflation? July numbers won't be out until 8/14. Inflation has been stubborn this month and has ranged from 3.0 to 4.1 month to month since 6/23. Now in 6/24 it hit 3.0 so maybe we're on that trend to break into the 2.X's? Well...consider that inflation in 6/23 was 3.0 as well. Based on the numbers, it appeared we were going to drop under 3.0 for the first time in years LAST YEAR. That didn't happen and it remained very stubborn. Gas prices in my area have bounced around but remain stubbornly high. Food prices are still stubbornly high and I still think they are slowly increasing still - plus shrinkflation is still a thing in groceries. I get that if inflation went to zero we would still see the high prices today - just locked in. At this point in time the only way to not only halt price increases but possibly get prices to "have a correction" - to steal a phrase used for the markets - is for an actual recession to take place. To me, this looks like the environment of the early 80s where interest rates needed to be kept high to intentionally tank the economy until inflation was tamed completely (until the next major problem). Inflation data below.

https://www.usinflationcalculator.com/in...ion-rates/

(08-05-2024 07:41 AM)miko33 Wrote:  The link below is from this morning and talking about global markets getting hammered...and of course the U.S. markets being set up for another fall. Big indicators are the drop in rates for bonds and treasuries where people are dumping stocks to run to bonds and cash.

https://www.reuters.com/markets/us/us-yi...024-08-05/

Quote:Friday's nonfarm payrolls data - which showed the U.S. unemployment rate unexpectedly rose in July and jobs growth slowed - followed a slew of disappointing earnings results from major tech firms, setting off a global stock selloff and driving investors to safe haven assets.

Investors are also grappling with a dramatic rally in the Japanese yen which has rocked the country's markets, helping send the Nikkei 225 stock index (.N225), opens new tab down 12.4% on Monday in its biggest one-day drop since 1987. U.S. S&P 500 futures were down 2.7% .

The yield on the benchmark U.S. 10-year Treasury note was down 5 bps at 3.742%, having touched a one-year low of 3.678% earlier in the session. The yield sank nearly 40 basis points last week, the largest weekly fall since March 2020.
Michael Weidner, co-head of global fixed income at Lazard Asset Management, said the rally in bond markets was being amplified by investors worrying about their positions in tech stocks and by thin summer markets.

Here is where it may get sticky. What's going on with inflation? July numbers won't be out until 8/14. Inflation has been stubborn this month and has ranged from 3.0 to 4.1 month to month since 6/23. Now in 6/24 it hit 3.0 so maybe we're on that trend to break into the 2.X's? Well...consider that inflation in 6/23 was 3.0 as well. Based on the numbers, it appeared we were going to drop under 3.0 for the first time in years LAST YEAR. That didn't happen and it remained very stubborn. Gas prices in my area have bounced around but remain stubbornly high. Food prices are still stubbornly high and I still think they are slowly increasing still - plus shrinkflation is still a thing in groceries. I get that if inflation went to zero we would still see the high prices today - just locked in. At this point in time the only way to not only halt price increases but possibly get prices to "have a correction" - to steal a phrase used for the markets - is for an actual recession to take place. To me, this looks like the environment of the early 80s where interest rates needed to be kept high to intentionally tank the economy until inflation was tamed completely (until the next major problem). Inflation data below.

https://www.usinflationcalculator.com/in...ion-rates/

Generally inflation will slow when unemployment ticks up, but there is some lag to that. I would not be surprised if inflation stays put for the July number then starts to drop in August.

I wouldn't be surprised either if inflation remains higher for the next couple of months. The idea of the soft landing was a myth IMHO because inflation has never decreased significantly nor have prices actually dropped until one of 2 things happens: 1) We start experiencing negative GDP numbers for an extended period of time - like 6 months min which means recession or 2) Innovation on the supply side of the ledger causes the prices of goods and services to fall - which is more likely than not sector specific and not across the board.

Powell took forever to hike rates and now he's going to be forced to wait to drop them.

I think the Fed wants to see a market sell-off, as long as it doesn't result in a technical recession (otherwise known forever as a recession).

You're seeing housing sales go down + market sell-off, which is a sign that the rate hikes are finally working.

(08-05-2024 09:43 AM)miko33 Wrote:  I wouldn't be surprised either if inflation remains higher for the next couple of months. The idea of the soft landing was a myth IMHO because inflation has never decreased significantly nor have prices actually dropped until one of 2 things happens: 1) We start experiencing negative GDP numbers for an extended period of time - like 6 months min which means recession or 2) Innovation on the supply side of the ledger causes the prices of goods and services to fall - which is more likely than not sector specific and not across the board.

ISM Manufacturing had a big decline MoM.

Rents have stayed stubbron though.

I wouldn't be surprised if next months job report is better.

(08-05-2024 09:50 AM)WalkThePlank Wrote:  Powell took forever to hike rates and now he's going to be forced to wait to drop them.

I think the Fed wants to see a market sell-off, as long as it doesn't result in a technical recession (otherwise known forever as a recession).

You're seeing housing sales go down + market sell-off, which is a sign that the rate hikes are finally working.

I think Powell knew this was the end result that has to happen if you want inflation under control once and for all. There's no free lunch and the soft landing being peddled was the myth that a free lunch exists.

(08-05-2024 10:03 AM)miko33 Wrote:  

(08-05-2024 09:50 AM)WalkThePlank Wrote:  Powell took forever to hike rates and now he's going to be forced to wait to drop them.

I think the Fed wants to see a market sell-off, as long as it doesn't result in a technical recession (otherwise known forever as a recession).

You're seeing housing sales go down + market sell-off, which is a sign that the rate hikes are finally working.

I think Powell knew this was the end result that has to happen if you want inflation under control once and for all. There's no free lunch and the soft landing being peddled was the myth that a free lunch exists.

No doubt, and he's partly responsible for the inflation crisis by buying whatever the Biden white house was saying. They denied it for months until the toothpaste was out of the tube.

(08-05-2024 10:09 AM)WalkThePlank Wrote:  

(08-05-2024 10:03 AM)miko33 Wrote:  

(08-05-2024 09:50 AM)WalkThePlank Wrote:  Powell took forever to hike rates and now he's going to be forced to wait to drop them.

I think the Fed wants to see a market sell-off, as long as it doesn't result in a technical recession (otherwise known forever as a recession).

You're seeing housing sales go down + market sell-off, which is a sign that the rate hikes are finally working.

I think Powell knew this was the end result that has to happen if you want inflation under control once and for all. There's no free lunch and the soft landing being peddled was the myth that a free lunch exists.

No doubt, and he's partly responsible for the inflation crisis by buying whatever the Biden white house was saying. They denied it for months until the toothpaste was out of the tube.

and by "months" you mean about 14 of them.