A slew of economic data did little to alter the view that the Fed will lower rates next week. Equites traded higher while bond yields dropped.
Bloomberg writes that about 350 companies in the S & P 500 advance despite weakness in most mega caps as MSFT lowered expectations for getting “business customers to spend money on the cloud unit’s marketplace for AI models and agents.”
The former top-tier private sector ADP Employment survey indicated that companies have shed payrolls in November by the most since early 2023. Services activity, which accounts for about 70% of the economy, however expanded at the fastest pace in November while a measure of priced paid dropped to a seven-month low.
Considerable attention is now focused upon Kevin Hassett, the expected nominee of the FRB. Many are publicly stating that he will cut interest rates aggressively to appease the President.
A major issue with this statement is that the Chairman does not cut interest rates. It is the decision of nine voting members of the FOMC which is comprised of 19 members. Voting members alternate.
The Chairman is only the spokesman for the Committee. The Chairman does not set monetary policy.
The dissention amongst the 19 FOMC members is great. It is not a political disagreement but rather a difference in opinions regarding the direction of the economy and inflation.
Last night the foreign markets were up. London was up 0.21%, Paris up 0.39%, and Frankfurt up 0.78%. China was Japan up 2.33% and Hang Seng up 0.68%.
Futures are quiet as the odds of an interest rate cut next week are rising further. The 10-year is off 4/32 to yield 4.08%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
