“He who chases two hares catches neither.”
-Desiderius Erasmus
Here’s what you need to know this week:
· Stocks gain despite a wobbly jobs report
· A key inflation report will point to the Fed’s next move
Bad News is Good News(?)
Stocks rose last week despite tumultuous news on the labor front. Markets initially fell on Tuesday in anticipation of a lackluster nonfarm payrolls (NFP) report on Friday. However, markets rose on Friday after the weak NFP report materialized; the Dow Jones, S&P 500 and NASDAQ all reached new all-time highs on Monday.
The report showed the US economy adding a paltry 22,000 jobs in August and revised the numbers for June and July downwards. In fact, the after the revision the June jobs report showed the first month of negative growth since 2020:
In fact, the June report is now the first negative jobs report since 2020. Additionally, the unemployment rate rose slightly from 4.2% to 4.3%:
This all sets the stage for the Federal Reserve meeting next week on September 16-17th. The Federal Open Market Committee (FOMC) will make their next decision regarding interest rate policy and investors are virtually certain the Fed will finally cut interest rates for the first time this year. This may explain why stocks rose after the light jobs report; the Fed has a dual mandate of managing inflation and unemployment. Unemployment rising has all but confirmed a rate cut next week; however, with two key inflation reports coming ahead of the meeting, some analysts are debating the size of the interest rate cut.
Medium or Large?
With one week left to go before the pivotal Fed meeting next week, analysts are attempting to divine the tea leaves of economic reports. As of writing, the bond market is assigning a 92% chance of the Federal Reserve cutting rates by 25 basis points (0.25%); however, the market is also assigning an 8% chance of a jumbo cut of 50 basis points (0.50%)[1].
The magnitude of the cut may hinge on Thursday’s Consumer Price Index (CPI) report for August. The CPI report is expected to show annualized inflation at 2.9% which would be a modest increase from the 2.7% annualized rate over the prior two months[2]. If the report comes in lighter than expected the Fed may consider a “jumbo cut” of 50 bps (0.50%) but otherwise investors seem to think a 25 bp cut is locked in.
What Else
· Legendary fashion designer Giorgio Armani passed away at the age of 91
· President Trump changed the name of the Department of Defense to the Department of War
· Congress continues to look into HHS Secretary Robert F. Kennedy’s decisions as head of the national health agency
· Israel has moved into Gaza City despite condemnation from multiple European nations
· The record $1.787 billion jackpot had two winning tickets, one in Missouri and one in Texas
What We’re Reading
An interstellar comet known as 3I/Atlas will pass between Earth and Mars within the next two weeks. This comet is the third known interstellar traveler ever sighted by humans and was first discovered by astronomers in Chile. Experts say the comet will pass Earth at a speed of 37 miles per second, but the comet will pass safely by at nearly 150 million miles away. Click below to learn more about the comet and how to view it before it leaves our celestial neighborhood for good:
What’s Happening Downtown
Scissortail Park is hosting their annual Fall Block Party this Saturday, September 13th from 9:00 AM to noon. This year’s theme is fitness and will feature wellness classes, a mobile gym, sporting & wellness vendors, food trucks and a DJ. This will largely take place in the southern half of Scissortail Park on the south side of I-40. Click below to learn more:
· Scissortail Park Block Party
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess
Sources: [1] CME Group [2] Yahoo! Finance