PCE Report : Key to US Market Blast Off !
Have you been keeping track of all the economic reports out this week ?
If you have not, then you have come to the right place.
Below is a quick summary of all economic reports released so far. (see below)
I think they are “music” to the Fed’s ears in their quest to bring US inflation back to 2%. It certainly looks like things are taking shape.
All that is left is the missing jigsaw puzzle piece, that will be released on Fri, 28 Jun 2024’s morning - the personal consumption report (PCE) for May 2024.
If the PCE report is able to show proof of even a -0.1% cooling, I think it will be the perfect “alibi” needed for US market to close June 2024 - the week, the month, the quarter and the half year on a “high”.
US Consumer Confidence report - 25 June 2024
The Conference Board Consumer Confidence Index dipped slightly to 100.4 (1985=100) in June, down from May’s 101.3.
The Present Situation Index (based on current business and labour market conditions) increased, while the Expectations Index (based on short-term outlook) fell.
The mixed survey from the Conference Board on Tuesday also showed consumers' perceived likelihood of a recession over the next 12 months retreated this month after rising in April & May.
Consumers expressed mixed feelings, with concerns about the future but improved sentiment about the current labour market.
US Weekly Jobless Claims - 27 June 2024
Fewer people applied for unemployment benefits last week, with jobless claims falling by 6,000 (-2.51%) claims to 233,000 from previous week’s 239,000.
However, the total number of Americans collecting unemployment benefits rose for the 8th straight week to 1.84 million, the highest since November 2021.
Labor-market resilience is driving consumer spending that is underpinning the US economy.
US Unemployment Rate - 27 June 2024
The unemployment rate increased slightly to 4.0%, the first time it breached that level since January 2022.
Job gains were concentrated in health care, government, and leisure and hospitality sectors.
Q1 2024 GDP (Final estimates) - 27 June 2024
Real GDP growth in Q1 2024 was 1.3%, revised downward from the initial forecast of 1.6%.
The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month.
In the 2nd estimate, the increase in real GDP was 1.3%.
Consumer spending, residential and nonresidential fixed investments, and state/local government spending contributed to growth.
Imports increased, while federal government spending declined.
Thursday’s report was the 3rd and final government estimate of first-quarter GDP growth.
The Commerce Department will issue its 1st estimate of the current quarter’s economic performance on 25 Jul 2024.
Fed’s Interest Cut in 2024.
There are 4 FOMC meetings left in this year - July, September, November and December.
Based off the latest economic reports out so far, the likeliest month that the Fed might initial an interest cut (economic conditions permitting) will be September 2024. (see above)
The probability stands at 57.9%.
Who knows, if inflation continues to dip in October & November, Santa-Fed might reward us with a bonus December interest cut ?
Although, strategically October should be a “better” month (politically).
What the Federal Reserves Think?
So far, based on all released reports, the data shows a mixed picture.
While consumer confidence weakened slightly, jobless claims fell, and GDP growth was modest.
The Fed should be cautiously optimistic.
However, to achieve the 2% inflation target remains a challenge given the varied economic indicators.
All that is left is for the May 2024 PCE report to work its magic.
If the US’s May 2024 - core CPI YoY report (released on 12 Jun 2024) is anything to go by, the odds are a cooling PCE is on target.
Based on the May 2024 report for core CPI (YoY), the odds of a cooling PCE data is within sight.
Looking ahead, Where to invest?
Of the sectors contribution “positively” to US GDP growth, I feel (a) Financial services and (b) Healthcare remains viable options to park our hard-earned monies.
Retail is too frothy to bring in real profits; not unless its Hermes or Chanel.
As long as interest rates remain elevated, Construction growth potentials (I feel) is limited in the immediate to short term.
Financial stocks (for considerations) - $Berkshire Hathaway(BRK.B)$ , $JPMorgan Chase(JPM)$ and $Visa(V)$ .
Healthcare stocks (for considerations) : $Eli Lilly(LLY)$ , $Novo-Nordisk A/S(NVO)$ and $UnitedHealth Group(UNH)$.
Do you think above recommendations are worth a consider, for 6 months down the road sell off?
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Do you think US market will end off June 2024 on a “high” ?
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All data look good in an election year 🫤
Pls help to "Re-post". Tks! Rating is important (to me).
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