Greetings,
The United States: Here, we have the case for and against rate cuts by the Fed (see chart below).
– The case for:
• Manufacturing recession
• Tumbling inflation expectations
• The inverted yield curve
• A strong US dollar
• Global economic uncertainty
– The case against:
• The stock market near records
• Elevated risk appetite (tight credit spread, etc.)
• Extremely low unemployment rate (below the longer-term sustainable levels)
• Improving global leading economic indicators
• Relatively stable underlying inflation rates
The Eurozone: The latest ECB easing expectations boosted periphery nations’ credit. Below is Portugal’s credit default swap spread, which is now below 50 basis points.
Equities: The news of Trump and Xi planning to have an ‘extended’ meeting at the G-20 sent stocks sharply higher. Here is the Dow Jones Industrials Average.
Global Developments: Lately, central banks around the world have only been cutting rates (no hikes).
Food for Thought: Building permits per 1000 people:
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Edited by Joseph N Cohen
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Thanks to Josh Marte (@joshdigga), Matt Garrett (@MattGarrett3), Joseph Cohen (@josephncohen), Ycharts.com, S&P Global, and Moody’s Investors Service for helping with the research for the Daily Shot.
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