RSMR’s Post

Overall, economic fundamentals remain broadly supportive of equity markets with economic growth resilient, even as inflation proves stickier and the challenge of the last mile decline to the 2% level seems a way off. A challenging backdrop for government bonds but equities remain supported by strong earnings growth and the prospect of rate cuts to come. Find out what's going on in the world and what that means for investors with Graham O'Neill's full economic and market update... https://lnkd.in/eXduG_nt #worldmarketupdate #valuations #interestrates #economicdata #uselection #employment #geopolitics #emergingmarkets

US Economic Trends Weaken as Markets Anticipate Significant Monetary Easing (8/9/24): The central capital markets issue in 2H 2024 is if/when the US economy will decelerate. Currently, markets are anticipating a marked US slowdown requiring significant monetary easing of over five cuts in the Federal Funds target rate by early 2025. Into mid-August ‘24, US data trends are now weakening on balance, with July ’24 labor market reports reflecting a deceleration of US economic activity. Consistent with US economic trends moderating, July ’24 US Nonfarm payrolls increased just +114K, below expectations of +175K, with two-month revisions totaling -29K. July ’24 US monthly labor market growth is the second lowest in 2024, with the unemployment rate increasing to 4.3%, the highest level since October ‘21. Importantly, the ‘Sahm Rule’ was triggered in July ‘24, indicating that a US recession may have already begun. However, a valuable gauge of US economic direction and magnitude, Atlanta Fed GDPNow forecasts for US GDP into 2H 2024 expects maintaining of above-trend growth at +2.9%, reflecting a positive forecast that economic trends may not be moderating. The current Fed Funds futures curve anticipates -130 basis points of monetary policy reductions by early 2025, more than five 25 basis point rate reductions. However, if economic data remains mixed, Federal Reserve will likely remain conservative to avoid a ‘policy mistake’ by easing monetary policy to aggressively and overreacting to isolated data points. Given mercurial US economic, inflation, financial, and labor market trends, significant easing of monetary policy in 2024 is a possible outcome, but may fail to meet aggressive market expectations and further weigh on risk assets. 

What will 2024 be for the US Economy...... Key Factors: ✔️ The turbulence of the political landscape amidst a Presidential election ✔️ Unpredictability brewing in the Middle East ✔️ The potential avalanche called inflation ✔️ The tactical U-turns the Fed might perform on monetary policy I personally am an optimist and believe that the US economy will hold up better than expected. I hope I am right! Here is an interesting article on the topic https://lnkd.in/e3ZN2Qwp

Our monthly newsletter is live! “The US economy shows mixed signals amid rising interest rates and inflation concerns.” Read our newsletter here: https://bit.ly/4crwSuy #InvestmentNews #Investment #EconomicTrends #EconomicGrowth

Interesting article looking at combined impact of fiscal and monetary policies over the past four years. The overwhelming strength of the US Economy vs large developed peers provides meaningful context to examine the success of the combined fiscal and monetary policies. With inflation rate nearly down to FED 2% target level and wage growth, unemployment and GDP at very strong (even historic) levels, it appears that the sometimes chaotic policies have delivered results that may keep the US out of the recession that lots of pundits believed was inevitable.

According to many economists, this was a worst of both worlds report – slower than expected growth, higher than expected inflation. Are we headed for Stagflation? #Stagflation represents a rare economic environment of high #inflation coupled with #stagnant #demand and rising #unemployment. The FED and the government must act decisively to prevent this hazardous scenario. #Policy recommendations include maintaining #disciplined #fiscal policies to avoid further #debt, while enacting supply-side reforms to #boost #productivity and #competitiveness. #Manufacturing base needs to be re-established and that should be #incentivised by lower corp taxes and other incentives for setting of manufacturing industries and skill development centers in high unemployment areas. The #FED can for now forget about #lowering market interest rates in 2024 (if at all) to focus on restoring price stability through additional calibrated monetary tightening. #Promoting #labor market flexibility, reducing #regulation, incentivizing #investment, and diversifying economic bases are also vital. With prudent management of aggregate demand and supply-side measures to increase potential output, economies are known to break the vicious stagflation cycle. Coordinated fiscal, monetary, and structural policies are key to neutralizing stagflationary forces. #stagflation #FED #economic #development #manufacturing #monetary #monetarypolicy #interestrates

2024 The Year that Defines Jay Powell’s Legacy... Early in 2023, Powell talked about ‘navigating by the stars under cloudy skies’. What have the surprises been over the last year, what has come to fruition and what does the future hold? If the employment market stays strong, what need is there for the Fed to cut rates early?   Graham O'Neill's latest economic update addresses inflation, unemployment, policy tightness, projections, forecasting and outlier possibilities. https://lnkd.in/eeCxJGjQ #inflation #monetarypolicy #interestrates #unemployment

S&P500 Earnings are underway with the backdrop of slowing growth and rebounding inflation. In this article, I dive into the aspects of growth to find evidence there is life in this economy. Join me in this 10 minute read to prep for jobs data and the upcoming Federal Reserve policy announcement this week. #economics #federalreserve #useconomy #earnings

More-demanding valuations appear to signal investors have become more confident of a “soft landing” outcome. This article provides an update on the macro environment and its implications for portfolios. #Economy #Inflation #CentralBanks

Why did economists predict a recession in 2023 and why were they wrong? PGIM Wadhwani reflects on the lessons from the past year in PGIM’s 2024 Best Ideas. Download here: https://on.pru/47EeknO #BestIdeas