Market News by OnEquity

[OnEquity]

According to FRED data, the threshold will be breached if the unemployment rate rises to 4.2% in this week’s employment report, which is set for release on August 2.

Economists’ Forecast for the July 2024 Employment Report​

The preliminary forecast for the July employment report, to be released Friday, calls for a net gain of 200,000 jobs, with the unemployment rate expected to fall from 4.1% to 4%, according to the analyst blog The Real Economy on July 29.

Analyst Joseph Brusuelas also anticipates a 0.2% increase in average hourly earnings, which corresponds to a year-over-year increase of 3.7%. Seasonal hiring in the leisure and hospitality sector will likely be an important factor in the report. July usually presents seasonal adjustment challenges for the Bureau of Labor Statistics, and this year is no exception.

If the estimate is incorrect, it could point to a faster pace of hiring overall. Additionally, the direction of the unemployment rate will be a key issue, as it has been rising due to more people entering the labor market, enticed by higher wages.

Expert Urges Fed to Cut Rates Soon to Ease Recession​

While Wall Street expects Fed Chairman Jerome Powell to cut the prime rate at a Fed meeting in September, experts warn that it may already be too late to avoid a recession. Goldman Sachs and UBS predict a rate cut before the November presidential election, but not as soon as the Fed’s July meeting.

One supporter of an earlier rate cut is former New York Fed President Bill Dudley, who initially advocated for higher rates for longer but now urges an immediate cut.

The former New York Fed president argues that the economic outlook has shifted due to slowing consumer spending, rising auto repossessions, and loan defaults.

“The facts have changed, so I’ve changed my mind. The Fed should cut, preferably at next week’s monetary policy meeting,” Dudley said on July 24.

He believes the Fed should act quickly despite skepticism about the severity of rising unemployment. Dudley stresses that delaying rate cuts could raise the risk of recession, even if it is already inevitable.

 

[OnEquity]

According to FRED data, the threshold will be breached if the unemployment rate rises to 4.2% in this week’s employment report, which is set for release on August 2.

Economists’ Forecast for the July 2024 Employment Report​

The preliminary forecast for the July employment report, to be released Friday, calls for a net gain of 200,000 jobs, with the unemployment rate expected to fall from 4.1% to 4%, according to the analyst blog The Real Economy on July 29.

Analyst Joseph Brusuelas also anticipates a 0.2% increase in average hourly earnings, which corresponds to a year-over-year increase of 3.7%. Seasonal hiring in the leisure and hospitality sector will likely be an important factor in the report. July usually presents seasonal adjustment challenges for the Bureau of Labor Statistics, and this year is no exception.

If the estimate is incorrect, it could point to a faster pace of hiring overall. Additionally, the direction of the unemployment rate will be a key issue, as it has been rising due to more people entering the labor market, enticed by higher wages.

Expert Urges Fed to Cut Rates Soon to Ease Recession​

While Wall Street expects Fed Chairman Jerome Powell to cut the prime rate at a Fed meeting in September, experts warn that it may already be too late to avoid a recession. Goldman Sachs and UBS predict a rate cut before the November presidential election, but not as soon as the Fed’s July meeting.

One supporter of an earlier rate cut is former New York Fed President Bill Dudley, who initially advocated for higher rates for longer but now urges an immediate cut.

The former New York Fed president argues that the economic outlook has shifted due to slowing consumer spending, rising auto repossessions, and loan defaults.

“The facts have changed, so I’ve changed my mind. The Fed should cut, preferably at next week’s monetary policy meeting,” Dudley said on July 24.

He believes the Fed should act quickly despite skepticism about the severity of rising unemployment. Dudley stresses that delaying rate cuts could raise the risk of recession, even if it is already inevitable.

Market News by OnEquity

U.S. Recession Indicator Close to Turning On
According to FRED data, the threshold will be breached if the unemployment rate rises to 4.2% in this week’s employment report, which is set for release on August 2.

Economists’ Forecast for the July 2024 Employment Report​

The preliminary forecast for the July employment report, to be released Friday, calls for a net gain of 200,000 jobs, with the unemployment rate expected to fall from 4.1% to 4%, according to the analyst blog The Real Economy on July 29.

Analyst Joseph Brusuelas also anticipates a 0.2% increase in average hourly earnings, which corresponds to a year-over-year increase of 3.7%. Seasonal hiring in the leisure and hospitality sector will likely be an important factor in the report. July usually presents seasonal adjustment challenges for the Bureau of Labor Statistics, and this year is no exception.

If the estimate is incorrect, it could point to a faster pace of hiring overall. Additionally, the direction of the unemployment rate will be a key issue, as it has been rising due to more people entering the labor market, enticed by higher wages.

Expert Urges Fed to Cut Rates Soon to Ease Recession​

While Wall Street expects Fed Chairman Jerome Powell to cut the prime rate at a Fed meeting in September, experts warn that it may already be too late to avoid a recession. Goldman Sachs and UBS predict a rate cut before the November presidential election, but not as soon as the Fed’s July meeting.

One supporter of an earlier rate cut is former New York Fed President Bill Dudley, who initially advocated for higher rates for longer but now urges an immediate cut.

The former New York Fed president argues that the economic outlook has shifted due to slowing consumer spending, rising auto repossessions, and loan defaults.

“The facts have changed, so I’ve changed my mind. The Fed should cut, preferably at next week’s monetary policy meeting,” Dudley said on July 24.

He believes the Fed should act quickly despite skepticism about the severity of rising unemployment. Dudley stresses that delaying rate cuts could raise the risk of recession, even if it is already inevitable.

 

[OnEquity]

U.S. stock markets plunge on economic worries and tech slump
U.S. stock indexes fell sharply on Monday during the European session amid growing concerns about an economic slowdown, with technology stocks mainly being hit.

Fear of economic slowdown hits Wall Street​

The sharp losses in Wall Street futures came after U.S. stock markets in the U.S. had been rattled the previous week on fears of a possible economic slowdown.

A series of poor readings increased concerns that the Federal Reserve had kept interest rates at high levels for quite some time, and that the odds of a soft landing for the economy were slipping.

It seems that this notion came to a head on Friday after July’s nonfarm payrolls data missed estimates by a wide margin, signaling a sizable cooling in the labor market.

Although the data raised hopes of further interest rate cuts by the Federal Reserve, it did dampen appetite for risk-linked assets.

Technology stocks, which benefited greatly from the positive tone at the beginning of the year, have been significantly affected, and the NASDAQ Composite, with a strong technology component, has lost close to 10% from its all-time high at the beginning of the year, entering correction territory.

More economic data​

More economic data will be released on Monday, including the ISM services PMI for July, and San Francisco Fed President Mary Daly will speak at a conference after the close of business on Monday.

Investors will be looking for more signals regarding the strength of the world’s largest economy, after Friday’s jobs report made the sentiments n of fears of a recession.

The volatility index for U.S. stocks, the VIX index, surpassed the 40 level early Monday, reaching its highest level since October 2020, Bloomberg reports.

The index has surged to nearly 79%, the biggest rise on record since February 20018, and has reached its highest intraday level in four years.

Right now, markets are forecasting a near 78% chance that the Fed will not only cut rates by September, but by nearly 50 basis points.

High-profile earnings follow​

Most of the major companies have already reported their results, although some high-profile results are expected in the coming days.

Caterpillar (CAT), the industrial leader, and Uber Technologies (UBER), the ride-sharing company, will release their results on Tuesday.

Super Micro Computer (SMCI), which saw a considerable valuation spike on the back of artificial intelligence hype, will also release its results on Tuesday, while media giants Walt Disney (DIS) and Warner Bros.

Crude oil falls as a result of growth concerns​

Crude oil prices fell on Monday, trading near eight-month lows, due to growing concerns about the economic slowdown in the United States, the world’s largest crude oil consumer.

Weak U.S. economic data in the previous week has hit sentiment in crude oil markets, as estimates of a recession in the world’s largest economy are a bad sentiment for future demand, even as recent inventory data indicated that increased travel demand during the early summer had kept gasoline consumption high.

This comes on top of disappointing growth figures from China, the world’s largest oil importer, and surveys indicating weaker manufacturing activity in Asia and Europe, adding to concerns about oil consumption.

 

[OnEquity]

Trump plans to use cryptocurrencies to pay off U.S. debt and be a leader in the sector
Former President Donald Trump recently hinted at the potential usefulness of cryptocurrencies to pay down the $35 trillion U.S. national debt. In an interview on Fox Business and while participating in the Bitcoin2024 Conference, Trump argued that the cryptocurrency sector could play a role in the national financial strategy, although he did not provide specifics on how this proposal would be carried out.

Trump’s changing perspective on cryptocurrencies​

Trump, a Republican candidate for president, stated that the U.S. should take the lead in the cryptocurrency sector, which he called having a “very high intellectual level.” This change represents a marked difference from his previous comments, as he has in the past branded digital assets as “a disaster waiting to happen” and, in May 2018, during his presidency, went so far as to order then-Treasury Secretary Steven Mnuchin to take action against Bitcoin for alleged fraud. At the Bitcoin2024 Conference, Trump made the case that, if re-elected, he would prevent the government from selling seized Bitcoin on the open market. Instead, he would hold the asset strategically as an investment, indicating a more positive view regarding the potential of cryptocurrencies.

Campaign strategy and cryptocurrencies​

Trump’s latest comments also correspond with his efforts to raise funds for his election campaign by positioning himself as a supportive candidate for cryptocurrencies, unlike President Joe Biden. This approach indicates Trump’s recognition of the increasing importance of cryptocurrency in U.S. economic and political debates. Ultimately, Trump’s statements show a nuanced shift in his attitude toward cryptocurrencies, viewing them as a tool for managing the national debt and strengthening his campaign by appealing to cryptocurrency advocates.

Senator Cynthia Lummis has recently proposed a bill to constitute a strategic Bitcoin reserve in the United States to combat the harmful effects of rampant monetary printing and preserve U.S. financial supremacy in global markets and trade.

The Wyoming senator has set a goal of having the U.S. Treasury purchase 5% of the total Bitcoin supply, preserving the scarce decentralized asset for at least 20 years as a bulwark against central bank monetary devaluation and poor fiscal policy.

 

[OnEquity]

Market Highlights for the week: Economy, market, oil
Concerns about the economy continue, especially over fears that the Federal Reserve has kept interest rates high for too long, hurting growth. More high-profile earnings reports are expected and oil prices look set to remain volatile due to a combination of recession fears and geopolitical risks. Here’s a look at what will happen in the markets this week.

U.S. data and Fed speeches.​

After Friday’s weak July jobs report, which fueled fears about the eventuality of a recession, the economic calendar for next this week is notably lighter. On Monday, the Institute for Supply Management will release its service sector index, which is expected to indicate moderate growth. On Thursday, investors will hear about the state of the labor market with the weekly release of initial jobless claims, which are expected to pull back slightly from their highest level in nearly a year. Investors will also hear from San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin, who kept rates unchanged last week but left the possibility of a rate cut in September.

More earnings reports​

While most large-cap companies have already released their results, a few high-profile ones are expected in the coming days. Results from Caterpillar (CAT) and Walt Disney (DIS) will provide more information on manufacturing and consumer health. In addition, reports are expected from healthcare heavyweights such as Eli Lilly (LLY) and Super Micro Computer (SMCI), at the center of the market’s enthusiasm for artificial intelligence. U.S. stock markets fell for a second straight day on Friday, pushing the Nasdaq Composite into correction territory, as hints of an economic slowdown fueled fears that the Federal Reserve has delayed a rate cut too long. Adding to the downward pressure were declines in Amazon (AMZN) and Intel (INTC) following disappointing quarterly results and outlook.

China outlook​

This week, investors will be treated to information on how China’s economic recovery will evolve in the second half of the year through a series of economic data. The week begins with a private sector survey on services activity, to be followed by trade data on Wednesday and a consumer price reading at the end of the week. Recent data point to a gloomy outlook for the world’s second largest economy, and recent rate cuts have highlighted the urgency of Beijing’s efforts to shore up growth. Policymakers will be closely watching Friday’s inflation figures for clues on how much more needs to be done to boost weak domestic demand.

Reserve Bank of Australia decision​

The Reserve Bank of Australia is expected to leave interest rates unchanged at its next policy meeting on Tuesday after data last month indicated that core inflation unexpectedly slowed to a two-year low in the second quarter and that economic growth moderated in the first quarter.

Market participants will be looking to future central bank guidance, with a 70% chance of a rate cut later in the year if inflation continues to slow.

Oil prices​

Oil prices declined on Friday, settling at their lowest level since January, as economic data from the US and China, the largest oil importer, heightened concerns about demand expectations.

The weak U.S. jobs report, coupled with slowing manufacturing activity in China, pressured prices lower on the risk that the sluggish global economic recovery will impact oil consumption. Oil investors are also keeping an eye on the Middle East, where the Iranian-backed Lebanese group Hezbollah said its conflict with Israel had entered a new phase. Meanwhile, last Thursday’s OPEC+ meeting did not change the group’s production policy, which plans to start withdrawing production cuts from October.

 

[Fxzombie]

The RBA's decision to maintain high interest rates at 4.35% may be because inflation is still high above the inflation target, but I see the impact on AUD is not big enough, but may be supportive in the long term.