Good Friday AM,
Main stage for this AM was Fed Chairman Powell’s speech in Jackson Hole. “The Federal Reserve must continue raising interest rates and hold them at a higher level until it is confident inflation is under control. While the central bank’s steps to slow the rate of investment, spending and hiring “will bring down inflation, they will also bring some pain to households and businesses,” “Those are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
On top of that and by no means any less important as the Fed is watching all data like a hawk at this point:
- PCE which is the Fed’s favorite inflation metric was released today and was weaker than expected.. Month over month, -0.1 vs 0.6; Core PCE 0.1 vs 0.3.
- Personal income was down 0.2 vs 0.6 and Personal Spending was weak at 0.1 vs 0.4
- The only win was Consumer Sentiment in at 58.2 vs 55.2
Bond markets got it right, stocks not so much. Bonds are flat to up, stocks are getting beaten up by 2%. Crypto, well, its crypto and its following the tech sector down today as well.
Blood in the streets and more I suspect to come.. Reali, the San Mateo, California-based firm founded in 2016, provides “buy before you sell” and cash-offer financing, will lay off most of its workforce Sept. 9. It and will close out active transactions through the end of the year with a small team. Bigger fish in this same pond are also in trouble. For example, Home Partners of America, the single-family landlord owned by Blackstone Inc., will stop buying homes in 38 US cities, becoming the latest institutional investor to back away from an overheated housing market.
Rates will come down and inventory will as a result as well. Buy the dip. It is likely to be short lived.
Please remain safe and healthy, enjoy the weekend, first make today great.