American Equity Exchange Club, York, NY (2026)

09/06/2023

Investors are awaiting key data, including the Federal Reserve's economic report, for clues about its interest rate path.
"The Eurozone and the UK are slipping into recession, something the markets forgot about three months ago," said Rupert Thompson, Chief Economist at Kingswood Holdings Ltd. "It's clear that economic growth in the coming months is heading in the wrong direction, which means that the stock market will continue to face downward pressure."
Hedge funds are "playing with fire" again! Is a $25 trillion market storm coming?
Hedge funds increasingly using leverage in the $25.1 trillion U.S. bond market have once again become a focus on Wall Street, posing a potential risk to financial stability.
Deutsche Bank pointed out that hedge funds have pushed their short positions in U.S. bonds to historic highs, and if a significant economic downturn in the U.S. forces them to quickly unwind, it could lead to a replay of the liquidity crisis in March 2020, a scenario the Federal Reserve "hopes to avoid."
Veteran market observers: The "super bull market" in U.S. stocks isn't happening, and the Fed won't allow it.
After a strong rally at the beginning of the year, the momentum in the U.S. stock market has waned. Barry Bannister, a market strategist at Stifel who successfully predicted the first-half rally in U.S. stocks, believes that expectations of a "super bull market" may fall flat, and U.S. stocks are more likely to tread water.
He suggests that for the S&P 500 index to reach new all-time highs, the financial conditions index would need to fall to "near multi-decade lows," something it's hard to imagine the Federal Reserve being willing to do.
Is a crisis brewing in the market? JPMorgan (145.2, -1.62, -1.10%) warns: Severity may be higher than expected.
JPMorgan's Chief Global Market Strategist, Marko Kolanovic, has been bearish throughout 2023, and his concerns have deepened due to factors such as the Russia-Ukraine conflict exacerbating geopolitical tensions.
Now, he warns, "Over the past few months, the premises of our cautious outlook on rates and geopolitics have become even more negative, and with positions and valuations rising, we believe there is a higher likelihood of a crisis erupting in the next 6-12 months, and the severity of the crisis may be higher than what market participants expect."
Furthermore, he emphasizes that while there may be some lag effects, the long-term impact of interest rate hikes will ultimately have negative effects on asset prices and the broader global economy.

09/05/2023

After the U.S. holiday on Monday, U.S. Treasury yields surged. Ahead of more economic data and the Federal Reserve's policy meeting later this month, the 10-year U.S. Treasury yield climbed to 4.21%. The focus this week will be on the Consumer Price Index data, which may provide clues about inflation pressures in August. The next Federal Reserve policy meeting is scheduled for September 20th.
The Fed watch tool on the Chicago Mercantile Exchange shows that the market expects a 93% likelihood that the Federal Reserve will keep interest rates unchanged later this month, with about a 60% probability that there won't be any more rate hikes this year.
A "major crisis" moment! The U.S. fiscal deficit for the 2023 fiscal year is expected to double. Despite overall strong economic growth, due to rising interest rates and reduced taxes, the U.S. deficit for this year is projected to increase by approximately double. The latest forecast from the independent research organization, the Federal Budget Accountability Committee, shows that the U.S. federal deficit will double to around $2 trillion for the 2023 fiscal year ending on September 30th.
The Congressional Budget Office estimated last month that the federal budget deficit had already reached $1.6 trillion within the first 10 months ending in July. This is the highest deficit in U.S. history, except for during major crises like World War II, the 2008 financial crisis, or the COVID-19 pandemic.
Former senior economist in the Obama administration and current Harvard University economics professor Furman stated that such a significant increase in the deficit is only seen during "major crises" such as World War II, the 2008 financial crisis, or the COVID-19 pandemic.
Goldman Sachs has lowered its expectations for a U.S. economic recession. Goldman Sachs currently believes there is a 15% chance of the U.S. entering a recession, down from the previous 20%. This is due to cooling inflation and continued resilience in the labor market, suggesting that the Federal Reserve may not need to further raise interest rates.
Goldman Sachs Chief Economist Hatzius stated in a research report, "First, against a backdrop of steadily growing employment and rising real wages, real disposable income in the U.S. seems set to reaccelerate in 2024. Second, we continue to strongly oppose the view that the increasingly severe drags from monetary policy 'long and variable lags' will push the economy into recession."
It's worth noting that this is the second time in nearly two months that Goldman Sachs has lowered the probability of a U.S. economic recession.
In July, citing slowing inflation, Goldman Sachs reduced its forecast of the likelihood of the U.S. entering an economic recession in the next 12 months from 25% to 20%. Furthermore, Hatzius' estimate of a 15% probability of a recession is much lower than the market's widely expected 60% probability.

09/01/2023

The employment report due on Friday may provide further evidence that the still-tight U.S. labor market is cooling slightly. The question is whether this is enough to deter the Federal Reserve from its tightening cycle or even lead to an early rate cut.
"A tighter-than-expected job market would fuel inflation, while an economic slowdown would be welcome, indicating that monetary tightening policies are starting to have some effect," said Sophie Lund-Yates, an analyst at Hargreaves Lansdown Plc. "People are increasingly hoping that rates will stay at current levels rather than rise at the next meeting, and employment data will be a crucial part of that."
Kevin Thozet, a member of the Carmignac Investment Committee, expects the Federal Reserve to keep rates unchanged in September, with a 50% probability of a rate hike when they meet again in November, as the momentum in the job market begins to fade. He said, "The U.S. economy is very resilient and has been postponing the possibility of a recession. This means that the likelihood of a soft landing is increasing, reducing the risk of the Fed taking too many measures. This is one of the reasons why the market is performing well."
Guy Miller, Chief Market Strategist at Zurich Insurance Group, also anticipates that the Federal Reserve will hit the pause button on rate hikes this month, as the market bets on a soft landing for the U.S. economy after a series of rate hikes, which has boosted the stock market. "Momentum factors are very important. But it's a tug of war between the camp that believes in a strong soft landing and deteriorating fundamentals," Miller said. "One of the reasons the Fed is pausing rate hikes is that economic growth is slowing down."
Analysts suggest that as the eurozone economy falters, there is also doubt in the market about whether the European Central Bank will raise rates at its meeting this month.
The CME Group's FedWatch tool shows that a series of employment and inflation data this week has paved the way for the upcoming nonfarm payrolls report, with most of the data coming in weaker than expected, causing traders to reduce the odds of a rate hike on September 20th from 18% a week ago to 12%.
The August nonfarm payrolls report is expected to show continued slowing in the U.S. labor market, partly due to a Hollywood actor strike and the bankruptcy of a major freight company. However, due to the still-tight labor market conditions, the unemployment rate may remain at its lowest level in over 50 years.
Additionally, the report is expected to show modest wage growth for the month, which is likely to reinforce the view that the Federal Reserve will not raise interest rates this month. According to surveys, economists expect the U.S. to add around 170,000 nonfarm jobs in August, compared to an increase of 187,000 in July. This would be the third consecutive month of employment growth below 200,000 since December 2020.
Nevertheless, U.S. job growth is still expected to exceed the growth of around 100,000 jobs per month needed to keep up with the growth of the working-age population.
The U.S. savings indicator is flashing red! A survey shows that 63% of U.S. employees cannot afford $500 in emergency expenses. Due to persistent inflation driving up prices and rising interest rates increasing the cost of debt, many U.S. workers are facing financial pressure and may struggle to come up with cash for emergency expenses.
A survey conducted by the financial technology platform SecureSave shows that, so far, 63% of employees cannot afford $500 in emergency expenses. Another troubling sign is that the scale of withdrawals from retirement accounts for emergency funds has been on the rise recently.
The survey found that respondents either borrow money from friends or family (19%) or use credit cards (18%), with only 4% seeking help from their employers. Even high-income earners are struggling, with 64% of employees earning over $100,000 a year stating that financial pressure affects their job performance.

08/31/2023

Data released so far this week shows that the growth rate of the US economy in the second quarter was slightly lower than initially expected. July saw a decrease in job openings to the lowest level in nearly two and a half years, signaling a gradual slowdown in the employment market.
Rising inflation, often attributed to the surge in the stock market, might have accelerated in July. The upward movement of the US stock market in July is undoubtedly pleasing for investors, but it could pose a threat to the Federal Reserve, which has been striving to make sustained progress in curbing inflation.
Forecasts from experts such as Omair Sharif, President of Inflation Insights LLC, and Skanda Amarnath from the US think tank Employ America, indicate that a more specific inflation metric monitored by the Federal Reserve—known as the super core inflation— is projected to rise by 0.5% on a month-on-month basis in July. This comes after two months of relatively mild month-on-month increases, both at 0.2%.
Bullish sentiment on Wall Street suggests that US stocks are poised for a month-long rebound, with the S&P 500 index potentially returning to its high point for the year. Tom Lee, Co-founder and Head of Research at the US investment firm Fundstrat Global Advisors, anticipates a month-long rebound for US stocks, which could propel the S&P 500 index back to its 2023 peak.
Despite the prevailing belief on Wall Street that US stocks might show weakness in September, this analyst predicts a 2% to 3% increase for the S&P 500 index next month, reclaiming the 4,600-point level and recovering the lost ground from August.

08/30/2023

As of July, the 12-month overall inflation rate in the United States stands at 3.2%, which is getting close to the Federal Reserve's target of around 2%.
Expectations for a "soft landing" are growing, but low-income groups are struggling to afford basic necessities. Data indicates that an increasing number of low-income American households are falling behind on rent payments and struggling to afford food, further highlighting the worsening financial difficulties faced by low-income consumers in the U.S.
A report from welfare software developer Propel reveals that among U.S. households benefiting from the Supplemental Nutrition Assistance Program (SNAP), as much as 42% of the group stated they couldn't afford meals even in August. Additionally, 55% of respondents said they had to cut down on their food intake due to the inability to afford expensive groceries. These figures are more than double compared to the statistics from the previous year.
Those participating in the U.S. SNAP program typically belong to households with incomes below the poverty line. Furthermore, the statistics also indicate that the overall living conditions of low-income families in the U.S. have worsened in August compared to the previous month.
David Rosenberg, a well-known Wall Street bear and former Chief North American Economist at Merrill Lynch, warns that with economic pressures intensifying, the U.S. stock market is on the brink of a steep decline. The historic surge in mortgage interest rates means that many Americans are now becoming "prisoners in their own homes."
Rosenberg cautions that labor market stickiness might prevent the unemployment rate from rising enough to alleviate the Federal Reserve's concerns about ongoing inflation threats and an overheating economy. This could lead the Federal Reserve to further raise interest rates, putting pressure on both the stock market and the economy.
Rosenberg emphasizes that the Federal Reserve lowered interest rates close to zero in 2020 and 2021, allowing homeowners to secure long-term mortgages at rates of 2% to 3%.

08/29/2023

Despite a rise this week, global stock markets are set to experience their worst month in nearly a year, as policymakers remain determined to curb inflation. Federal Reserve Chair Powell reiterated last week at Jackson Hole that the central bank is prepared to further raise interest rates if the data warrants it. Therefore, the significance of economic data is higher than ever.
"August has proven to be a challenging month for the markets, with investor sentiment cautiously picking up once again," stated Victoria Scholar, Head of Investments at Interactive Investor. "This week's focus will be on key economic data from the United States, with hopes that these numbers will either confirm or challenge the expectation of a soft landing for the U.S. economy."
Traders will closely monitor U.S. consumer confidence data on Tuesday. Other reports for the week include U.S. job growth, the core personal consumption expenditures index, and August's employment and wage data. In addition, inflation data from the Eurozone will also be a point of focus this week.
Is the "Bull Run" for U.S. Stocks Imminent? Citigroup Thinks So: The Second Wave of "AI Tech Fever" to Boost the Entire Market.
According to Citigroup strategist Scott Chronert, the breakthroughs in the first wave of artificial intelligence (AI) technology boosted the stock prices of companies like NVIDIA that were at the forefront of this trend. The second wave of this fever is expected to elevate the entire market.

08/25/2023

The stock market has been struggling to find direction throughout the week. As the market's focus shifted from Nvidia's earnings to interest rate trends, it experienced a strong surge the previous day, only to give back its gains the next day. The Nasdaq 100 index futures saw a slight increase on Friday after the index had fallen over 2% the day before.
Federal Reserve Chairman Jerome Powell is scheduled to deliver a keynote speech at the annual central bank symposium held in Jackson Hole on Friday evening (Beijing time).
Following Nvidia's impressive performance earlier this week, the renewed discussions about artificial intelligence ended up in a debacle on Thursday. Market concerns about the speech largely explain this situation.
"Uncertainty might enter another phase, and there could be broad sell-offs depending on the extent of hawkishness in the Jackson Hole conference," said Carlos von Hardenberg, Portfolio Manager at Mobius Capital Partners. "But the market is quite discerning leading companies that have shown very strong profit growth in the medium term."
Although there haven't been significant shifts in pricing, if Powell indeed intends to signal an end to the Fed's rate-hiking activities, this potential change of direction would put the responsibility on him to guide the market back.
Some of his colleagues suggested on Thursday that the central bank might have done enough in terms of tightening policy rates and could continue to rein in inflation by keeping rates elevated for a longer period. This allows the traditional credit tightening lag effect to play out while keeping the long-term bond market vigilant.
Both the Philadelphia Fed President Harker and the Boston Fed President Rosengren temporarily welcomed the recent surge in bond market yields. They believed this could help the Fed achieve its 2% inflation target without resorting to further rate hikes.
"We may be getting close, or we may be at a level where we can stand pat," Rosengren said. "Higher long-term rates are consistent with our understanding that this will take some time."
Of course, the latest US economic data hasn't shown signs of weakness. Initial jobless claims came in below expectations last week, and core durable goods orders for July remained robust.
J.P. Morgan: US economic "hard landing" is inevitable.
J.P. Morgan's Chief Global Equity Strategist, Dubravko Lakos, stated that the stock market's rebound this year has concluded, as several factors will pressure the market before the end of 2023. These factors include relatively high stock valuations, overly bullish investor positions, potential continued tight monetary policy, and fiscal policy tightening.
Lakos noted that consumer savings are also rapidly decreasing, leaving the economy with less cushion in times of financial stress. He believed that while optimistic market commentators think the US might avoid an economic recession this year, any resilience in the economy currently is primarily attributed to robust fiscal and consumer spending, both of which are expected to decrease through 2024, making a US economic downturn inevitable.
Bank of America: Even AI can't save US tech stocks in a prolonged high-interest-rate environment.
Strategist Michael Hartnett and his team remarked, "We think trouble, not a new era of AI rules, lies ahead in H2."
Hartnett projected a 4% decline in the S&P 500 to 4200 points and suggested that the Jackson Hole annual central bank conference "could flip the script for September." The benchmark index has averaged a 1.5% decline in September over the past decade.
More concerned about entering a bear market than missing out on a bull market? Sharp drop in investor sentiment might become a "contrary indicator."
The weekly investor sentiment survey by the American Association of Individual Investors (AAII) revealed a significant drop in bullish responses. In the recent survey, only 32.3% of respondents expressed optimism about the stock market, below the historical average of 37.5%, and far below the early-month level of 49.0%.
Additionally, the NAAIM Exposure Index, which tracks active investment managers' stock exposure, plummeted in August. Media outlets noted that the sharp decline in sentiment indicates investors are more concerned about a downturn into another bear market than missing the next round of a bull market rebound.
While there's potential for further stock market declines, any unexpected upward shifts in the economy or unforeseen dovish remarks from the Fed could have significant impacts on stock prices, as investors search for opportune moments to re-enter the market.

08/24/2023

Nvidia's financial report has brought a ray of sunshine, breathing new life into the global market. European stocks are carrying forward their rebound, while most U.S. stock futures are on an upward trajectory. Market attention is now shifting towards Friday's speech by Federal Reserve Chairman Powell at the Jackson Hole Symposium.
The renewed focus on this year's artificial intelligence craze is one of the catalysts for the end-of-month rebound in global stock indices. Today, global stock indices are poised to achieve a rare feat of four consecutive trading days of gains after over a month of stagnation.
Although concerns about rising bond yields dominated the market last week, the spotlight quickly returned to large tech stocks and whether their earnings can provide the impetus for a stock market that has remained stagnant for the past month.
Investors are currently anticipating the central bank summit taking place in Jackson Hole. A series of lackluster manufacturing surveys released on Wednesday has also rekindled hopes of central banks around the world nearing the end of their tightening cycle.
"Let's see what Powell has to say in the face of some potentially weak economic data. How will he convey the message? Are we at a peak? Should we hold our positions? I believe these are crucial questions at the moment."

08/23/2023

Before Federal Reserve Chair Powell's speech at the Jackson Hole Economic Symposium on Friday, the broader market was also in a wait-and-see mode. The resilient U.S. economy has prompted investors to bet that the Fed will continue to raise borrowing costs.
"The market is in a watchful state, awaiting this week's major catalysts: Nvidia's earnings report and the Jackson Hole conference," said Ulrich Urbahn, Head of Multi-Asset Strategy and Research at Berenberg. "Given the strong yields since July, investors are particularly interested in the Jackson Hole conference."
Following the Fed's move last month to raise rates to the highest level in 22 years at 5.25%-5.5%, investors are seeking clues about the rate outlook. The U.S. PMI data measuring economic activity in August, scheduled to be released later on Wednesday, will provide insights into economic strength ahead of Powell's speech on Friday.
Stephen Auth, Chief Investment Officer of Federated Hermes, said, "One risk of the Fed being so close to its inflation target is that the bond market is ahead of it, stimulating the economy through significant yield drops."
Increasingly, data suggests that the U.S. economy is poised for a "soft landing."

08/22/2023

Global stock markets continued their rebound on Tuesday, with the benchmark U.S. Treasury yields hitting a 16-year high. This was due to market concerns that interest rates might remain elevated for a longer period, and the safe-haven U.S. dollar retraced from its recent 10-week peak.
After experiencing three weeks of decline, the stock market began to bounce back. Investors are keeping a close eye on major tech companies and the speech by Federal Reserve Chairman Powell scheduled for Friday at the Jackson Hole Economic Symposium.
Current U.S. Treasury futures imply a decrease of less than 100 basis points in interest rates by the Federal Reserve in 2024, compared to a reduction of 130 basis points just a few weeks ago.
Meanwhile, inflation expectations have remained almost unchanged, resulting in a surge in the "real" yield after accounting for inflation expectations. This development could prompt investors to reassess their willingness to take on risks.

08/21/2023

Good morning traders. This week we have the most important economic data event on the horizon. The main focus will be the upcoming Fed Jackson Hole Symposium, which begins on Thursday, with investors eagerly seeking insights from the Fed and the major central banks in attendance to better understand the global economic economic situation and the potential trajectory of interest rates. Historically, the Jackson Hole Symposium has been a platform for major shifts in Fed policy, but at this year's event such a drastic change is considered unlikely. Fed Chairman Jerome Powell is scheduled to speak on Friday, and his remarks are expected to be consistent with recent Fed communications. This means that the possibility of further tightening measures is reserved if the upcoming data requires them. Financial markets will be watching Powell speech closely, as well as statements from other central bankers in attendance about the recent rise in long term yields and how this development may affect the outlook for global growth. Today is going to be a great day. Let's get after it relentlessly

08/15/2023

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