August 26, 2024
Good morning,
The new week begins with stocks and bonds following through on last Friday’s Jerome Powell-inspired price action, with markets once again pushing the envelope on how much easing they are prepared to discount. All Powell said was that the “time has come” to adjust policy and there are now 106 bps worth of rate cuts priced in by the end of the year. That’s 13 more than were priced in one week ago – and only three meetings remain: Sept., Nov., and Dec. Powell’s straightforward comments on the labor market are the inspiration for the extreme cut expectations, but they are likely to leave the market vulnerable to a significant reversal if the next payroll figure happens to be even slightly stronger than expected.
Payrolls are more than a week away (9/6), and all investors’ attention this week is on Nvidia’s earnings announcement on Wednesday. Seven quarters in a row of blowout earnings for NVDA have expectations riding very high for this week’s report. And against the backdrop of a less than stellar earnings season for the other Magnificents, that’s an awful lot of weight for one company to carry.
It’s the last week of summer, and except for one (big) company earnings report, it should be an otherwise quiet week as many traders are squeezing in their last chances before the summer holiday. There will not be a Morning Note this Thursday. See you next Tuesday for the official beginning of the second half of the year. Hope you have a great week.
Be well,
Mike
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