The Buzz on Business for August 1st, 2024 

While this is probably the case with all press conferences, especially those held by political figures, there seem to be three broad categories of questions posed to Federal Reserve Board Chairman Jerome Powell, by reporters at the press conferences he holds every six weeks after each Fed meeting. 

The first category, and the ones we like best, include questions that touch on genuine economic issues or those that ask about the operation of the Fed. For instance, a reporter from Barrons, after pointing out that all of the recent rate hike decisions by the committee had been unanimous, asked the Chairman about the role of unanimity in its decisions. We thought the Chairman was pleasantly surprised by this question as well. 

The second set of questions appear to be from those reporters who are looking to add color to a story that they’ve already been writing. Perhaps they’re trying to flesh out some real or perceived controversy between personalities or are looking for a human-interest anecdote. 

And then there are questions that we find disappointing or that even anger us. They’re always political but political in a backhanded, snide fashion. And at this press conference, all seemed designed to get Chairman Powell to admit or concede that his failure to cut rates was cruel. Cruel to the little people. That’s an oversimplification but it’s not wrong. 

Do you want to know what’s really cruel to the little people? Inflation. And the Fed’s biggest failure? Waiting too long to raise rates, when it was obvious to anyone paying attention that the fiscal policy of the Federal Government was wildly inflationary. 

Despite higher for longer interest rates, the labor market is doing fine. The unemployment rate is low. Wages are growing. Job formation, while hardly gangbusters, is well into positive territory. 

We will never understand the motivations of those who incessantly harangue the Fed and its chairman to cut rates, while ignoring the history of what inflation has done to interest rates and to the lives and the balance sheets of the little people they claim to care so much about. 

Stock Market Report 

Stocks posted solid gains on Wednesday but faded after the Fed announcement and finished well off their highs for the day as volume soared. 

• The Dow Jones Industrials had been up by more than 450 points but finished with just a ninety-nine-point gain. That’s one quarter of one percent and it closed at 40,843. 

• The S&P 500 finished with an 86-point gain, again, well off its high and it closed at 5,522 up 1.60%. 

• The NASDAQ Composite had a really good day. It was up 2.60%, that’s good for 452 points and it starts the day today at 17,599. 

• The small caps had a brutal afternoon but still finished with gains. The Russell 2000 closed at 2,254, up eleven points or one half of one percent. It had been up over 2.5% with just an hour to go in the session 

Bond Market Report 

Rates fell across the board and fell dramatically on the session yesterday. 

• The yield on the 2-year treasury was off nine basis points and it closed at 4.270% 

• The 20-year was likewise off nine ticks and now yields 4.405%. 

These are the lowest rates we’ve seen for the 2- and 20-year treasuries since February and March respectively. 

Oil, Gold, and Bitcoin 

• An industry report indicating that inventories had been drawn down much more dramatically than expected sent oil racing higher. It was up $3.81, and a barrel now changes hands at $78.54. 

• Rates were down. Gold must be up, and it was. Gold rallied another $43.10, and it closed at 2,495.30, a new all-time high. 

• Not so much Bitcoin which posted losses for the third straight day. It was off $638.26 and at 4:00 PM ET stood at $65,269.73. 

Fed Holds Rates, Changes Tone Pending More Data 

The Fed did not cut rates at its meeting which ended yesterday afternoon but there was a decided change in tone in both the statement and in Chairman Jerome Powell’s press conference. While clearly a graduate school seminar in political speak, and never coming right out and saying that rates would be cut—ever. Powell seemed to imply that they would be, unless there was data to the contrary. 

That differs from the language out of the last meeting which seemed to say that the Fed was looking for data that would increase its confidence that inflation pressures were easing. 

The Fed meets again in six weeks, September 17^th and 18^th. 

Between now and then we can expect: 

• The Producer Price Index for July on Wednesday the 14^th 

• The Consumer Price Index for July on Thursday the 15^th. 

• The Personal Consumption Index for July, probably during the week of August 23^rd. 

• And then another set of PPI and CPI data, for August in mid-September, probably just before the Fed meets. 

That’s a lot of data and a lot that can still go wrong. 

Speaking of going wrong, the ADP nonfarm payrolls report came in below expectations on Wednesday. The street was expecting that 147,000 new jobs had been created but 122,000 was what we got. 

And on the earnings front, Boeing missed on both the top and bottom lines, and by a wide, wide margin. Truly horrible numbers from Boeing. As we have come to expect, the stock rallied, perhaps on the announcement that the company had appointed a new CEO. 

Otherwise, the earnings data was good. Facebook parent Meta posted blowout numbers, despite its Meta Labs project burning through over $4.5 billion in cash. Yikes! 

Today, Apple, Amazon and Intell along with fifty-one other public companies report 2^nd quarter results. As if that’s not enough, we get Initial and Continuing Jobless Claims as well as some data from the housing and manufacturing sectors. 

We’re actually bringing in busloads of Proles here to the Ministry of Truth to help with the analysis so we can report all of it to you early tomorrow, here on the Buzz.