By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- The Federal Reserve (Fed) is widely expected to cut rates when its two-day meeting concludes on Wednesday. The Fed last raised rates in July 2023, and recent rhetoric has all but promised a rate reduction at the September meeting. The size of the cut remains in question between 25 and 50 basis points, with futures markets equally split between the two. The market’s most positive reaction would likely be to a quarter-point-cut, with a larger cut potentially indicating heightened Fed concerns for the economy.
- Other key global central banks will also meet this week, and many are also expected to raise rates. The Bank of Japan meets on Friday for the first time since they hiked rates and helped foment a global sell-off. Meanwhile, the Bank of England and the South African Central Bank are expected to cut rates this week.
- On the data front, retail sales and the index of leading economic indicators are expected on the soft side, and key housing market readings include existing home sales, mortgage applications and the homebuilders’ index. On Tuesday, both industrial production and capacity use are expected to rebound from soft July readings.
Three Things to Know
- The Restaurant Performance Index (RPI) fell -1.3% in July to the lowest level since the 2020 lockdowns. This index tracks the health of the restaurant industry in the United States by measuring sales, customer traffic, labor and overall business conditions. (Source: The Kobeissi Letter)
- On September 9, the Atlanta Federal Reserve updated its GDPNow indicator to 2.5% for the third quarter. GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. (Source: Federal Reserve Bank of Atlanta)
- Since the S&P 500 peaked on July 16, the Bloomberg Magnificent 7 Index is down 5.3%, while overall benchmark is down less than 1%, and utilities and real estate are both up approximately 11%. (Source: Bloomberg)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.