A "bold" FED cut of 50bps made stock and money markets rally initially but bonds didn't care. The real winner is Gold.
I'll wager the FED definitely didn't want that !
25bps would have set the pace for a cut every meeting for some time, and 75bps (as requested by Democrats) would have meant imminent recession.
So 50bps is worrying.
The Gold chart tells the story of investors looking for insurance as we move towards the election, as the federal and budget deficits continue rising and as increased immigration wreaks havoc across the US.
Equally the Bank of Japan has lost control of monetary policy (see below), the Chinese economy is a train wreck (dragging Australia down) and Europe stagnant.
Hard assets like Gold and Silver will persistently outperform in this environment. Maybe Bitcoin too.
Of course it the currency devaluing.
Democratic Senators Call on Fed to Cut Rates by 75 Basis Points [Bloomberg]
Gold Daily
Silver Daily
World economy faces pressures similar to 1920s slump, warns Christine Lagarde[FT]
PBoC held rates for now but we know an easing is on it's way.
A 2 day holiday in China contributed to a quiet week but it's still top of our watch list, especially for it's knock-on effects for a stagnant Australian economy.
Xi Unleashes a Crisis for Millions of China’s Best-Paid Workers[Bloomberg]
Slowing Chinese economy leaves Australian lobster, wheat, iron exporters exposed[ABC]
The Bank of Japan left rates unchanged this week. What an opportunity missed !
An aggressive FED cut, CPI towards the higher end of expectations with growing exports, the BoJ missed the chance to hike (they say they want to) leaving the markets fully in charge of outcomes.
This won't end well. USD / YEN up 4 big figures from the lows already.
Statement on Monetary Policy [BoJ]
USD / YEN Daily
Japan Trade Balance August 2024
Japan National CPI August 2024
Super-aged Japan now has 9 million vacant homes. And that’s a problem [CNN]
Skip to 57:30 for Mr Powell
US Retail Sales August 2024
US Housing Starts August 2024
US Existing Home Sales August 2024
A very mixed bag of economic indicators tell of the difficulty separating the statistics from the anecdotal evidence.
Savings have been negative for the last 6 quarters, the 2nd longest streak in at least 70 years.
FedEx Slumps as Lowered Outlook Offers Economic Warning Sign[Yahoo Finance]
Dow's 111-point fall led by losses for Walmart, Verizon stocks[MarketWatch]
No matter how tariffs may support US manufacturing, they are undoubtedly inflationary and if we get a global trade war there will be trouble brewing.
Canada CPI August 2024
Canada IPPI August 2024
Retail sales following building permits higher, from last week, gives more credence to the idea that the 3 interest rate cuts are at least buoying consumer confidence.
CPI and IPPI still slowing may suggest otherwise.
The Bank of England held rates steady.
UK inflation holds at 2.2% but services prices keep BoE on alert[Reuters]
UK CPI, PPI August 2024
A mixed bag in the UK and BoE waiting for more data.
Wages In Euro Zone Q2 2024
EU CPI August 2024
Germany Car Registrations August 2024
Ms Lagarde said it all (in the Breaking section above) although I am very surprised at her candid wording and using the World instead of just Europe. The news from Volkswagen below may not be entirely accurate but the atrocious car registration numbers above tell the story exactly. What seems like years of bad news for the German manufacturing sector is finally taking effect.
Australia Unemployment August 2024
No reason to change interest rates at the RBA meeting next week. The A$ has stood it's ground in face of a collapsing iron ore price and lack of Chinese demand. It's getting to very interesting levels.
AUD / USD Monthly
Australian Boomers Retiring With Less Than Half the Money Needed[Bloomberg]
Developer V-Leader abandons $1b of Melbourne office projects [AFR]
Australia's Harvey Norman served with class action over warranties [Reuters]
Former Macquarie star bets on private market reckoning[AFR]
Powell, PCE and RBA in that order.
Lots of talking heads praying for a stock market meltdown but every time the share prices consolidate / correct there is another attempt at all time highs.