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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts
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To: Libbyt who wrote (87298)8/2/2024 3:59:37 PM
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The last time we had an August cut in between meetings that I can recall was August 2007. That was after several mortgage companies began to get in trouble and fail.

The data-dependent Fed may wait until the September meeting to cut. There are things that can somewhat mitigate a slowdown, like lower prices for consumers and producers. Record S&P profit margins also will need to come down.

While 4.3% unemployment is 0.8% higher than the low of the cycle, it is still quite low historically. There was a time when the Fed thought 7% unemployment was an equilibrium level of unemployment.

The largest component of the CPI is the housing component. That's not been going down. Rents still continue to climb and lag other CPI components a bit. Services, which are a decent chunk of the CPI, have also been sticky and rising while goods have been flat to down.

Services and housing may need to move closer to 2.5% MOM for a couple of months for the Fed to really have cover to cut 25 to 50BP. T-Bills suggest a cut is coming, and the Fed may go 50bp and wait until December to cut any more.

Once the cuts start, patterns suggest they will continue on down to a 3.5% Fed Funds Rate in 2025.
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