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Fed Rate Cuts When Stocks are at All-Time Highs - July 17, 2019

Fed Rate Cuts When Stocks are at All-Time Highs

Last week, Fed Chief Powell all but green-lighted a rate cut at the July 31st Fed meeting and seemed to suggest additional cuts may be forthcoming.

The expected rate cut is coming at a time when the Dow1, the S&P 500 Index2 and the NASDAQ3 are at all-time highs (a/o 7/15/19 – MktWatch data).

Have central bankers cut the fed funds rate when stocks are at a record high? You bet they have.

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The Fed Sets the Stage for a July Rate Cut - July 15, 2019

The Federal Reserve is gearing up for July 31st rate cut and possibly additional cuts following Fed Chief Jerome Powell’s testimony before two Congressional committees. Last week, Powell didn’t explicitly say a rate cut is forthcoming. He’d never go that far. But his remarks opened the door pretty wide at the upcoming July meeting.

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Earnings, Profits, Earnings - July 10, 2019

Q2 earnings season is gradually getting underway.

  • Early reports are impressive relative to expectations (Refinitiv).

Analysts project Q2 S&P 500 profits will decline 0.1% from a year ago. Revenue is projected to rise 3.4% (Refinitiv a/o July 9; forecasts subject to change).

Key drivers—

  • Revenue growth is forecast to outpace profit growth for the second-straight quarter. That means margins are coming under pressure.
  • Look for commentary on the flare-up in trade tensions.
  • A strong dollar is set to chip away at sales of multinationals, as overseas sales must be translated back into a stronger dollar.

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An Expanding Economy Generates Jobs - July 8, 2019

It’s Wall Street’s monthly ritual – another first Friday and another job’s report. So, let’s dig in and offer some perspective.

Nonfarm payrolls rose a strong 224,000 in June. The unemployment rate inched up from 3.6% in May to 3.7% in June because more people started looking for jobs than landed jobs (U.S. BLS).

The monthly numbers get plenty of attention, maybe too much attention. Asking whether the U.S. economy is generating new jobs is an important question. But, monthly data can be lumpy, which whipsaws sentiment.

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