10 Things You Need To Know: August 13, 2024
Key data releases this week include: NFIB Small Business Optimism (Tue), PPI (Tue), CPI (Wed), retail sales (Thu), industrial production (Thu), NAHB Housing Market Index (Thu), housing starts (Fri), and consumer sentiment (Fri).
Haver
August 9, 2024
The National Association of Realtors’ Housing Affordability Index eased 0.2% (-0.4% y/y) in June to 93.3. The level of home affordability has plunged 47.9% from a peak of 179.0 in April 2020. The decline in affordability was due to a 2.4% rise (4.1% y/y) in the median price of an existing single-family home to $432,700. It was the fifth straight month of strong increase.
Bloomberg
August 8, 2024
The latest quarterly Senior Loan Officer Opinion Survey (SLOOS) shows a smaller share of banks still tightening credit conditions. Banks on net were willing to narrow the spreads they charge on loans to larger commercial and industrial borrowers. But most banks also reported tightening loan covenants and reducing maximum loan maturity.
WSJ
August 9, 2024
Japan is walking a very delicate line as it aims to level interest rates into positive territory, as evidenced by market reactions to the Bank of Japan’s rate hike and later its reassurance it would not hike rates again in the near term. BOJ governor Kazuo Ueda is under pressure to restore rate normalcy, yet some market participants believe now was the wrong time to raise rates given the market volatility they led to.
Barron’s
August 12, 2024
Recent history shows dramatic policy steps have been taken only when conditions were considerably more fraught than they are now. Inter-meeting cuts were made during times of market stress, according to a J.P. Morgan research note, including the 1998 Russian default and resulting meltdown of Long-Term Capital Management, the dot-com bubble bursting and the Sept. 11 terrorist attacks in 2001, the 2008-09 financial crisis, and the 2020 Covid pandemic response.
Torsten Sløk, Chief Economist at Apollo Global Management, Barron’s
August 12, 2024
“The unemployment rate seems to be rising because of increased immigration. More people are looking for jobs. If that’s the case, as we believe, the July jobs data aren’t as worrisome, especially as gross domestic product grew by 2.8% in the second quarter.”
Carl B. Weinberg, Chief Economist of High Frequency Economics, Barron’s
August 12, 2024
“There is room to bring down growth to increase slack in the economy and stabilize prices without bringing down the whole stack of cards. For what it’s worth, current quarter nowcasting models like the Atlanta Fed’s GDPNow are shouting out 2.9% GDP growth for the third quarter, although it is still early going in the quarterly data flow. That is no signal of recession at all.”
Bloomberg
August 8, 2024
Federal Reserve Governor Michelle Bowman said she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support an interest-rate decrease when the Fed meets in September. Meanwhile, Federal Reserve Bank of Kansas City President Jeffrey Schmid has signaled he is not ready to cut rates. “We are close, but we are still not quite there. We should be looking for the worst in the data rather than the best,” he said.
Oxford Economics
August 7, 2024
Fears over the health of the economy escalated drastically in recent days. We think that is an overreaction to what has been a steady weakening in the incoming economic data. The odds of a recession have risen. But they are still below the historical recession threshold and still lower than they were a year ago.
Bloomberg
August 10, 2024
Earnings growth is spreading beyond the largest tech companies, with S&P 500 firms excluding the top seven tech giants projected to see a 7.4% profit increase in Q2, marking the first growth since late 2022. This broader earnings strength is a positive as it provides portfolio managers with more opportunities beyond just a few stocks and provides a more balanced market.