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Listen to the latest episode of the Emerald Wit & Wisdom Podcast (5/29/24)

 

Good morning.

Stocks are jockeying between positive and negative territory as the S&P is trying to reach another intraday record which it achieved earlier in the session.

Attention is firmly focused on the Fed and while nothing is expected to occur (regarding rate cuts) at next week’s meeting, there will be heightened importance on their message … especially since the European banks just announced their own rate reduction – even as their own inflation has yet to have dropped to an ideal level.

Bloomberg reported that consensus now sits at 2 rate cuts to happen this year … but let’s be fair, this changes with every new data point thrown in our direction.  Still, Mohamed El-Erian shares the minority view that a Fed cut should take place as soon as July … and, as pointed out in the second article below … feels the Fed to be “traumatized” by a big mistake made in 2021 (when they gleefully mislabeled inflation as “transitory”), and suggests they are now being overly cautious due to this.

Is there an economic slowdown?

While the Labor Department reports that more Americans have applied for jobless benefits, Associated Press concludes layoffs “remain at healthy levels despite lingering inflation and high interest rates” and goes on to point out recession may have been avoided due to the “sturdier-than-expected” labor market and strong consumer demand.

It is uncertain to what degree consumer demand will continue to keep the economy afloat as the ability to spend was bolstered by the pandemic-era excess savings but how much remains is up for debate.

On the one hand, MUFG Securities concludes the savings has been exhausted and we will now see weaker consumer demand while Haver Analytics feels there is enough gas left in the tank as “excess savings remains more substantial than commonly reckoned.” Two organizations, looking at the same data and coming to different conclusions.  What a world!

That about wraps it up for me today as I head out to the gym to try to get in “summer shape.”

As you get older, even simple things get more difficult.

I thought I would start simple, setting a goal yesterday to do 100 sit-ups … but didn’t come close to finishing.

… as I realized my stomach couldn’t handle that kind of ab use.

Have a great day,

Joseph G. Witthohn, CFA
Have any questions? Please contact info@teamemerald.com

 

A Look At The News | June 6, 2024

As of 1o:50 AM today

Over in Europe, the Central Bank has cut the interest rate – even in the face of relatively high inflation resulting in some here to wonder if the Fed will follow suit (CNBC)

https://www.cnbc.com/2024/06/06/european-central-bank-heads-for-first-rate-cut-since-2019-live-updates.html

 

… one economist thinks they should, as Mohamed El-Erian feels the Fed should accept an error made in 2021 and move on, though he understands their caution (Benzinga)

https://www.benzinga.com/analyst-ratings/analyst-color/24/06/39204474/economist-mohamad-el-erian-says-fed-traumatized-by-big-mistake-it-made-in-2021-call

 

Meanwhile, employment numbers should not be a reason for the Fed to make a move at this time, as recent layoffs might not show a storm ahead (ClickOrlando)

https://www.clickorlando.com/business/2024/06/06/slightly-more-americans-apply-for-jobless-benefits-but-layoffs-remain-at-healthy-levels/

 

While there are some areas for which costs are settling down, utilities might see much higher prices this summer … as forecasts for record high temperatures are plenty (MotherJones)

https://www.motherjones.com/environment/2024/06/report-utility-costs-will-skyrocket-across-the-us-this-summer/

 

… but the sun does offer an advantage as a source of energy … and this is being put to good use as the growth in solar manufacturing is soaring (Electrek)

https://electrek.co/2024/06/05/us-solar-q1-2024/

 

An interesting study shows that being altruistic actually brings quite a bit of happiness to the one who gives to others (PsychologyToday)

https://www.psychologytoday.com/us/blog/purpose/202406/want-to-be-happy-help-other-people

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The statements above are supplied for educational purposes only. The statements depict the viewpoints and opinion of the author and are not necessarily the views of Emerald Asset Management or its affiliates. The information described herein is taken from sources which are believed to be reliable, but the accuracy and completeness of such information is not guaranteed by us.