Supply Shock On the Margin: Fed Cutting Cycle Imminent, What's Next for Markets? | Weekly Roundup
Sep 14, 2024
This week, the discussion dives into the Fed's potential interest rate cuts, weighing the odds between 25 and 50 basis points. The market's shift from growth to value is analyzed, alongside the latest inflation data and rising labor productivity. There's a fascinating look at how AI is reshaping productivity and employment amidst global economic challenges. Plus, insights into cryptocurrencies and how upcoming elections might influence investment strategies make for a captivating listen.
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Fed's Rate Cut Dilemma
- The Federal Reserve faces a challenging decision on rate cuts amidst mixed economic signals.
- They must consider inflation, market expectations, and global economic factors like the Japanese yen carry trade.
Economic Strength and Rate Cut Necessity
- The economy shows signs of strength, with rising full-time employment and corporate earnings exceeding expectations.
- Inflation is moving in the right direction, but there's no clear evidence that rate cuts are necessary.
Inflation Drivers
- CPI data reveals that rising shelter and owner's equivalent rent are major inflation drivers.
- This stickiness in services and shelter contributes to core CPI exceeding expectations.