General market analysis 09/23/2024
The main economic event on Friday was a comment by Fed Chairman Christopher Waller, which reinforced expectations that the central bank would cut interest rates by 50 basis points at its November meeting.
However, the news that his colleague Michelle Bowman was against a 0.5% rate cut at the Fed meeting this week alerted investors and somewhat cooled the markets.
At the moment, markets are fully pricing in a decline of at least 25 basis points in November, while, according to the CME FedWatch tool, the probability of a 50 basis point decline is 48.9%.
As a result, the S&P500 declined by a slight 0.19%, and the Nasdaq – by 0.24%.
The greed/fear index fell by 3 points at the end of trading on Friday and closed at 63. The growth rate of the greed/fear index has been slowing since October 2022, which indicated its imminent reversal. We noted that this could have happened on 07/03/2023, when the index showed its highs.
The difference between 30-year and 2-year US bonds increased from +0.466 to +0.489. On 07/24/2024, this indicator came out of inversion for the first time in a long time. The recession is about to begin, if it has not already begun. The indicator's return to zero began on July 6, 2023 and is happening at a fairly rapid pace. This suggests that fundamental hidden changes in risk attitudes have begun to occur in the market and a significant correction may soon follow.
Let us note once again that the inversion of the yield curve, a one hundred percent, but strongly outstripping indicator of every recession, has persisted for a very long time since August 2022, and the moment when the curve begins to straighten sharply will mark the beginning of a full-scale crisis. We pay attention to this every time, because inversion is the most significant indicator of a crisis. The Fed is trying to keep the inversion, but sooner or later it capitulates to market forces.
Statistics calendar
The main economic event of today will be the publication of preliminary data on the business activity index (PMI) in the US services sector for September. The forecast assumes that it will decrease from 55.7 points in August to 55.3 in September.
The index fairly accurately reflects the level of business activity in the United States, and its direction of movement coincides with the direction of movement of the S&P500, ahead of it by about one to two months. Thus, the index's recovery since September 2022 has been accompanied by the current rebound in the S&P500 since October 2022.
If the data comes out worse than forecast and the markets react to them with an increase in the probability of an early rate cut, this will indicate the preservation of the logic of the market of the last year. Namely, the worse the economy, the better the markets. However, if bad melon markets react with a decline, it will mean that the economy is moving into recession.
The most significant statistics of this week, including the final GDP data for the 2nd quarter on Thursday and the basic price index of personal consumption expenditures on Friday, are presented in the table.
Dividend calendar
Today, four American companies of the first echelon have a dividend cutoff.
The amount of the dividend, the date of payment and the profitability of companies closing the register during the week are shown in the table.
There are no Russian companies whose shares are traded on the last day before the closing of the register for the payment of dividends, based on the standard T+1 trading regime for the Moscow Stock Exchange.
The amount of the dividend, the date of payment and the profitability of companies closing the register during the week are shown in the table.
Expiration calendar
There are no significant contract expirations today.
The list of contracts expiring this week is presented in the table.
In this regard, there is a high probability that previously formed trends in these instruments will continue at least until the day preceding the expiration. Market participants may try to pull contracts in order to fix profits through expiration.
Company reports
No significant reports are expected today.
This week we will be following the Micron (MU) report on Wednesday and Accenture (ACN) on Thursday.
Disclamer. The analytics presented here are designed for people who have at least a basic understanding of the Russian and international financial markets. If you have difficulties with the practical implementation of our recommendations, you can use the services of our specialists with the Portfolio Consultant package at the link: https://eraperemen.info/priobresti/
