(910) 319-7834
The market is relatively flat for the week, with few stocks showing strength or weakness because of earnings announcements. Retailers Target and TJ Max both rallied after strong earnings. Peloton, which saw its stock sell off 98% from its Covid highs, rebounded 36% Thursday after reporting better than expected earnings. To date, 475 of the S&P 500 have reported earnings, with only 16% of those missing estimates.
Investors are anxiously awaiting Jerome Powell’s comments from Jackson Hole on Friday. After a recent announcement that 818,000 fewer jobs were created than initially reported in the last 12 months, another indicator of a weakening economy. Powell needs to be as stone-cold as a Poker Player on the championship table, making sure he does not tilt his hand. A rate cut is almost certain, whether it’s .25% or .50%, but with employment and inflation data to be released before the next meeting, anything is possible.
Powell’s speech will have implications. In fact, much of the week has been tepid across all markets and election uncertainty could cause continued hesitation in both consumer and business spending. Economic uncertainty produces temporary demand shock, leading to delays in investment and household spending. Whether you’re supporting Harris or Trump, the fact is, their economic proposals could not be more different. At stake are policies that could determine whether households see tax rebates, whether corporations in various sectors will have to pay more or less tax, and whether owners of capital will face a higher tax on gains.
There is plenty of evidence that uncertainty is already affecting business owners and consumers, for example:
- In August’s preliminary University of Michigan survey, some consumers said that if the candidate they expect to win does not, the economy’s expected trajectory “would be entirely different.”
- A respondent from the information industry in the July ISM Services survey noted that new projects were “not moving forward as expected,” with many customers “waiting for the election results to develop new projects.”
- Tim Fiore, chairman of ISM — whose manufacturing purchasing managers’ index is closely watched — said, “Companies continue to avoid investing in inventory due to the current economic uncertainty.”
It should be quite a ride for the next 74 days. I expect unemployment to continue rising, inflation should ease (except food prices and rent), and political uncertainty will accelerate.
Moving closer to a pivotal election, it is likely we will experience a larger division in America as voters become more passionate about their candidates. Try to tune out the negativity being promoted by both factions and vote based on facts. Whether you are a Democrat or a Republican, don’t forget that we are Americans first, one nation under God.
Have a great weekend.
