Equities liked that Friday's PCE was in line with expectations, giving some relief to investors that inflation wasn't re-accelerating. Core PCE was 0.25% MoM and 2.75% YoY. Headline PCE was 0.26% MoM and 2.65% YoY. The report also showed weak spending with real spending falling. The 2Y is 4.88% and the 10Y at 4.50% to start the month.
The ATL Fed GDPNow released on Friday downgraded 2QGDP estimates to 2.7% from 3.5% and the NY Fed nowcast moved to 1.76% from 2.04%, both reports cited weaker than expected consumption data as the driver.
Over the weekend OPEC+ extended cuts through 2025. Per Reuters: On Sunday, OPEC+ agreed to extend the cuts of 3.66 million bpd by a year until the end of 2025 and prolong the cuts of 2.2 million bpd by three months until the end of September 2024. OPEC+ will gradually phase out the cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.
On the week ahead it will be all about Jobs data.
Monday: S&P flash mfg pmi, ISM Mfg
Tuesday: Factory Orders, JOLTS
Wednesday: ADP Employment, ISM Services, S&P flash services pmi
Thursday: Jobless claims
Friday: Jobs Day in 'merica!
If you missed John Cochrane's recent Substack posts regarding inflation, monetary and fiscal policy, today is not the day I summarize them...but maybe one day I will.
XTOD: I accidentally said “debt” instead of “leverage” and my managing director took me into the conference room and slapped me with his Gucci loafer
XTOD: "According to this model, inflation does not fall to near to 2 percent until mid-2027. Taken together, these model-based forecasts indicate notable upside risk to forecasts that see inflation back to 2 percent by spring of next year," says one Cleveland Fed economist. https://clevelandfed.org/publications/economic-commentary/2024/ec-202409-inflations-last-half-mile
XTOD: Astrologers are better at forecasting the future than Economists ... only problem with this is Economists in a position to influence policies pursued based on their inaccurate forecasts ...
XTOD: Core PCE inflation came in above the Fed's target for the 4th straight month. But it moderated from Q1 and the elevation was entirely due to imputed portfolio fees resulting from the strong stock market.
Annual rates:
1 month: 3.0%
3 months: 3.5%
6 months: 3.2%
12 months: 2.8%
XTOD: What stage? *PRIVATE CREDIT FIRM NINEPOINT HALTS CASH PAYOUTS ON THREE FUNDS
XTOD: Senior U.S. Officials have reportedly conveyed to the Ukrainian Government that they are Extremely Concerned about Two Attacks recently by the Ukrainian Armed Forces that attempted to Strike at Russian Nuclear Over-the-Horizon Early-Warning Radar Sites along the Southern Border of the Country. With an Attack by Ukrainian One-Way “Suicide” Drones on a Early-Warning Site near the Town of Armavir in the Krasnodar Krai Region, believed to have caused Damage to a Radar System; while another Attack on an Early-Warning Site near the City of Orsk along the Russian Border with Kazakhstan, which is over 1,100 Miles from Ukraine, is believed to have Failed. U.S. Officials state that these Sites have No Involvement with the Russian War in Ukraine and that Attacks on them could Dangerously Unsettle the Russian Government who may see this as an attempt at “Blinding” them to a Western Nuclear Attack.
XTOD: A while back, one of our pro guys told me, "Our training in college was excessive and absurd. Our training in pro ball has been insufficient and absurd." Development won't happen at extremes. It happens at the sweet spot where work capacity is challenged, but not overwhelmed.
https://x.com/litcapital/status/1796600748165431714
https://x.com/nomiprins/status/1796986890089902483
https://x.com/tyillc/status/1797011483093508287
https://x.com/jasonfurman/status/1796531574189826094
https://x.com/INArteCarloDoss/status/1796521644263166010
https://x.com/sentdefender/status/1796213623355855245
https://x.com/EricCressey/status/1797000486454804747
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