By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Global monetary policy will be the main focus this week with three central banks meeting on interest rates. On Wednesday, the U.S. Federal Open Market Committee will announce its rate decision. The Fed is widely expected to leave interest rates unchanged at 5.5%. On Thursday, the Bank of England meets and the opinion is split between no change and 25 basis points. The bank will be influenced by the inflation data released the day before, with a slight increase from the previous month expected. On Friday, the Bank of Japan meets with no change expected, although central bankers there are contemplating ending the period of negative interest rates by year-end.
- In addition to the aforementioned Group of Seven economies, interest rate decisions are also due from the central banks of Norway, Sweden and Switzerland.
- Economic reports due during the week include updates on housing starts, crude oil inventories, leading economic indicators and initial jobless claims. The leading index is expected to be down for the 16th consecutive month, an extended period of weakness last seen in the Global Financial Crisis.
Three Things to Know
- The S&P 500 trades at 19X P/E on a next-12-months earnings estimate basis. But if you remove the seven-biggest stocks from the index (Facebook, Amazon, Netflix, Alphabet, Microsoft, Apple and Tesla.), the remaining 493 stocks trade at a more reasonable 17X P/E. And the median stock in the index also trades at 17X — a median stock multiple that seen frequently since 1995. (Source: The Market Ear)
- Personal interest payments in the U.S. hit a record $506 billion in July. During the first seven months of 2023, Americans paid a total of $3.3 trillion in personal interest. This is up a staggering 80% since 2021 and nearly above the entire 2022 total. These numbers do not include interest on mortgage payments. (Source: The Kobeissi Letter)
- American workers are now striking at some of the highest levels on record. Last month alone, large stoppages from strikes resulted in 4.1 million missed days of work. This is, by far, the largest volume of work stoppages since August 2000. (Source: The Kobeissi Letter)
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.