Larry Frantz

Bond pricing is lower and treasury yields are relatively flat in early trading. The U.S. 10 Year Treasury yield is currently 4.267%, just above the open at 4.234%. Recent comments from Fed speaking engagements seem to reiterate the wait and see approach as the Fed looks for a series of improved inflation data along with other economic signs that the economy could be weakening. With a reduction to one rate cut in their forecast, some are speculating a rate cut at end of year as the Fed looks to build confidence in their approach. Even though the Fed should act independent of politics, some wonder if the election year could begin to add some additional pressure to the mix given the Fed’s forecasted approach. Initial jobless claims released this morning came in higher than expected, showing 238,000 claims vs 235,000 forecast. Continuing claims also rose slightly to 1.828 million. On the housing front, Building permits showed a decrease of 3.8% against forecast of 0.7% increase. Housing starts also missed the mark with a decrease of 5.5% vs forecast of 0.7% increase and 4.1% prior month gain. The pullback in housing follows yesterday’s release of the Home builder confidence index which also showed decline as home builders deal with higher rates and construction loans, chronic labor shortages and lack of buildable lots. Tomorrow’s releases include a round of S&P services and manufacturing PMIs along with Existing Home sales and U.S. leading economic indicators. Mortgage rates are under slight upward pressure this morning all else constant.

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The First Cut is the Deepest -         Cat Stevens (original) Over the last month or so, there has been much debate concerning the U.S. Federal Reserve’s (Fed’s) path for rate cuts. However, the discussion moved has from “will they or won’t they” to a matter of “how much” the cut will be. Yesterday, we got our answer. The Fed announced a 50 basis points (bps) rate cut―its first rate cut since March 2020 and also the central bank’s first rate-policy move since ending its rate-hike cycle in July 2023. While some may be surprised by the magnitude of this cut, nobody should be shocked as the market had been pricing in better than a coin flip chance of the larger cut. Only time will tell of this first cut is the deepest. The Fed’s decision to cut rates was mostly based on the belief that inflation is on a path toward the central bank’s official 2% target. CPI currently stands at 2.5% in the United States, down from the 9.1% peak in June 2022. However, Fed Chair Jerome Powell alluded to the risk of weaker economic growth underlined by the current trend in the unemployment rate. It’s important to remember that full employment is the other piece of the Fed’s dual mandate. Going back to the end of Bretton Woods (the Gold Standard), the Fed, on average, cut rates by a total of 5.00% (equivalent to 20 reductions of 25 bps). However, given the varying environment and context surround the start and end points of each rate-cut cycle, we prefer to look at the number of rate cuts in a cycle relative to the starting point. What we’ve noticed is that in all periods, the Fed would typically lower rates by approximately 50% of where the policy rate was at the start of each rate-cut cycle. If this pattern holds, U.S. policy rate could hit 2.75% at the end of this cycle, in line with market expectations. During recessions, the Fed would typically lower rates by roughly 75% of where policy rate was at the start of that cycle. Again, if we were to apply that to today, assuming that the U.S. economy does slip into a recession, this would see rates hitting between 1.25% and 1.5%. Conversely, if a recession were averted, the Fed would typically lower rates by just 25% of where policy rate was at the beginning of the cycle, which in today’s case, would translate to a policy rate between 4 and 4.25%. As the market started to price in the first rate cut, yields across the U.S. Treasury curve fell, resulting in solid performance for fixed-income investors. That begs the question: Is the window for allocating to bonds now closed. We believe that’s not the case and that there are attractive opportunities that remain. The fixed-income market is deep and diverse, and there are pockets of opportunity for astute active managers from not only a yield perspective, but also from a capital gain perspective. Despite some increases in price, many fixed-income asset classes remain below their post-financial crisis average. #finance #money #stockmarket #advisors #investing #economy

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An excellent take from The FT on NFP yearly revisions post the ZH story. This obviously caused front running sellers of USD. I made it free to the first 10 people as a FREE gift. BAML nicely added: Are these figures final? No. "This is a preliminary estimate of the annual benchmark revision. The actual revision might be different, based on revisions to the QCEW data. Last year’s preliminary estimate was -306k, but the final revision was just -266k." What does this mean for the unemployment rate? Nothing. "The unemployment rate is calculated from the household survey. The QCEW impacts the establishment survey. What are the broader labor market implications? Even after these large downward revisions, the labor market looks to have been on solid footing last year and in 1Q 2024. That is consistent with the resilience in consumer spending." By contrast, employment growth in the household survey looks too weak relative to the rest of the macro data (54k on average from April 2023 to March 2024). That said, the revisions do help close the gap between the two surveys. My 3 key considerations: 1. USD sold on the ZH story rumour and bought the "fact" but we need the doves to come out AKA Dec 2023 for EURUSD to crack 1.1276 which is the 50% fib on the DAILY CHART. 2. Forget the yearly revisions and focus on lead indicators like LMCI (Kansas City FED) which looks smelly to say the least. NAIRU getting hit on my radar too. 3. Labor Costs nose diving which should drag Core PCE lower (dare I say it below 2% Happy Friday!

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With the Sprott Uranium Trust's discount to NAV at a near YTD high, notable events this past month included: 1) The Department of Energy's $3.40B RFP for low-enriched #uranium . 2) Renewed M&A in the Athabasca Basin via Paladin Energy's takeout bid for Fission Uranium (fair bid, we don't envision any competing bids). Spot uranium ended the month of June -4.5%, settling at $85.50 per lb (Numerco). **Not investment advice, just opinion, observation & analysis. Pls note the disclaimer** https://lnkd.in/gYAn38_d #equityresearch #investmentbanking #nuclear #greentransition #zerocarbon #economics #mining

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Most recent blog - ALL Financial Advisors, Registered Investment Advisors and DIY-Investors should take heed from this article. NEVER buy an ETF without learning what its real structure is and how the math behind the product works. In other words, ALWAYS read the summary prospectus before recommending or buying anything you think is an ETF and make sure it is actually an exchange traded mutual fund, not just a structured product that uses the "ETF wrapper." https://lnkd.in/ecdkPsgx Georgia Broker-Dealer Learns Costly Lesson From FINRA This is something that every investment industry reporter should read as well - this is an important story that FINRA needs to address by rule, not just after the fact - IMHO. In this case, the product was an exchange-traded note offered by Direxion and Credit Suisse based on the inverse of the VIX called XIV. The price of the stock associated with the note climbed steadily while market volatility remained low but as soon as the VIX had a sudden spike (Redundant, all spikes are sudden), the value of the product plummeted toward zero causing a ripple effect throughout the industry. Attention: Deborah Fuhr, CFA fellow (who has also been teaching investors about this for years); Peter Shea; Dalia Blass; David Mahle; Bibb Lamar Strench; Michael Greaney; Aaron Lucchetti; Morrison Warren; Edward Baer; Walt Draney; Dimitra D.; Lara Crigger; Dan Mika; Sumit Roy; Aniket Ullal; Sam Stovall; Steve Oh; John Jacobs, MBA, CPA; Rob Ivanoff; Stephanie Dumont; David Smith; Dorothy Hinchcliff; Jerilyn Klein; Paul Henneman; Trish Twining; Rajesh Jain; Gayathiri Sri Rangan; Patricia Baronowski-Schneider

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I just posted my latest #StockMarket note and commentary, "'Jackets and Packets' Stock Market (and Sentiment Results)..." You can find it here 👇👇 https://lnkd.in/ehpAtsCk

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Reuters quoted us today regarding Fed Chair Jerome Powell's testimony to the Senate this morning: "Fed's Powell: 'More good data' will 'strengthen' case for rate cut." 📰The big take-away was to see if #Powell outright mentioned the presidential #election or if he implied that he’s waiting for the presidential election results in November. That would have helped provide a timetable for future moves because how investment markets and the economy reacts may partially hinge on that and hence influence Federal Reserve Board actions --> But he declined to directly say anything about the elections (as expected). Powell provided more emphasis on what we already know: that he plans to keep politics out of fed decision-making --> This could imply no #Fed rate cut till at least after the November elections. 💡Noticeably different compared to the recent past is that as #unemployment has ticked up and the #economy has shown signs of lessening strength, Powell emphasized more of a balance between unemployment and taming #inflation rather than just inflation control (which has been the Fed's main emphasis the last couple years) --> Powell just implied that the Fed put is alive and well if unemployment ticks up. That is huge! 🏛The senators focused many of their questions on upcoming Basel III regulations, implying how that may affect #banks and available general credit for the economy, implying that more restrictive #credit may further weaken growth. Outside of banks specifically, I question how much investors are focused on Basel III, especially since #privatecredit has stepped in to replace banks by lending to #businesses. Also quoted were: Jay Woods, CMT of FREEDOM CAPITAL MARKETS Christopher Hodge of NATIXIS Lawrence Gillum, CFA of LPL Peter Cardillo of SPARTAN CAPITAL Brian Jacobsen of ANNEX WEALTH Stephen Brown of CAPITAL ECONOMICS Marc Chandler of BANNOCKBURN GLOBAL FOREX QUOTED EXCERPT: MICHAEL ASHLEY SCHULMAN, CHIEF INVESTMENT OFFICER, RUNNING POINT CAPITAL ADVISORS, LOS ANGELES “I heard three things so far: strong, weakening and normalizing – all economic terms relatively positive for an eventual cut by the Fed, but the Fed still remains data dependent.” #familyoffice #uhnwi #guidance #outlook #future ~~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-24-98

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When it comes to AI, have we gone too far too fast or are the markets reacting appropriately? I spoke with Chuck Jaffe on the MoneyLife podcast earlier this week about how we’re thinking about AI, the possibility of sticky inflation, where we see opportunities in the alts market and more. https://lnkd.in/gAVYKQYw #Investments #Markets #Alternatives

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Mackenzie’s original four fixed income ETFs have passed their eight-year anniversary. In that time MKB, MUB, MGB and MFT have demonstrated how actively managed fixed income can add value in your client’s portfolios. Here’s how: https://ow.ly/Y5s830sCeU0

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We use the VecViz dashboards to review a third party price forecast for Gold in order to illustrate how they can facilitate related understanding and dialogue in: https://lnkd.in/eu9b8Y5k #forecasting #visualization #cognition #investing #dialogue

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Interesting insights in our recent US High Yield Market Outlook and Positioning!

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The Hunt for Red or Blue November has all the makings of a thriller.   That said, we may have to wait to learn how the story ends.   Although voters in the U.S. cast their ballots tomorrow, opinion polls show a dead heat, and the outcome could be unknown for days or even weeks.   U.S. history offers few examples on how investors might respond to a potential delay, but we know markets hate uncertainty.   The most famous deadlocked result in modern times occurred in 2000, when the presidential contest went all the way to the U.S. Supreme Court in Bush v. Gore.   In the 24 trading days between Election Day and the Supreme Court’s mid-December decision, the S&P 500 Index fell more than 4% and was down almost 8% by the end of 2000.   Circumstances were quite different then, with the election taking place amid a bursting dot-com bubble, a rising rate environment and a weak earnings backdrop.   However, U.S. equity market valuations today are uncannily similar to those in early November 2000 — and likely a warning to expect heightened volatility in the near term.    The S&P 500 is currently valued 2 multiple points above its 5 year average (21.7x vs its 5-year average of 19.7x) on a price to earnings basis and its year-to-date return is the strongest we have seen in an election year in nearly a century (the prior high was +22% in 1936).    I had the opportunity to address these topics on this morning’s edition of Bloomberg TV Surveillance. Special thanks to hosts Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern for inviting me to participate in the discussion on elections and the implications for the #economy and financial #markets. #LITrendingtopics

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Is this portfolio commentary, I quickly discuss three items: 1. I take a look at traditional election year patterns for the stock market. 2.I also discuss why I think the probability of a larger conflict has increased from 1.5% to 10% with the passage of the $95 billion package for Ukraine, Israel, and Taiwan. 3. I point out that small capitalization stocks are following a traditional recessionary recovery playbook. https://lnkd.in/eTaXbcaT https://lnkd.in/eR3RPJgV #stockmarket #recession

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The 2024 election cycle has had no shortage of surprises. However, amid the perpetual media frenzies and ongoing political uncertainty, it’s crucial for investors to stay focused. Stay the course, stay informed, and remember that wise investment strategies transcend political headlines. Read Haverford's most recent market commentary here: https://ow.ly/mQOq50SJqkz

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Florida Man (and Woman), Credit Card Chaos, and How To Calculate Retirement Numbers | COT 48 Join Jeff and Ron in this week's episode of the Cents of Things podcast as they discuss some interesting business decisions made by companies like Google and Blockbuster. They also dive into the hilarious world of Florida Man (and now woman) headlines. Additionally, the hosts provide valuable insights into retirement planning, breaking down how to calculate the amount needed for retirement using a simple back-of-the-napkin method.   Don't miss out on this informative and entertaining episode! Stay tuned for: Insights on business decisions made by tech giants like Google and Blockbuster Hilarious Florida Man headlines and stories A step-by-step guide to calculating the amount needed for retirement Tips on financial planning and strategies for a secure retirement Subscribe to the Cents of Things podcast for more weekly updates on business, economics, and fun stories. Don't forget to like, comment, and share your thoughts with us. We appreciate your support!   [00:01:26] Blockbuster rejecting to buy Netflix. [00:07:44] Florida man antics. [00:10:22] Retirement planning strategies.  [00:15:10] Strategies for retirement planning. [00:17:19] Retirement planning and savings goals. CLICK HERE FOR PODCAST - https://lnkd.in/gqQCMwhy   To follow Jeff Kikel: https://lnkd.in/guyC3uch www.freedomdaywealth.com   To Follow Ron Lang: https://lnkd.in/gJvBbyjA www.atlasbuildswealth.com   #centsofthings #podcast #markets #stockmarket #economy #economics #finance #investments #investing #trailingstops #atlaswealth #ronlang #jeffkikel #freedomday #financialplanning #retirementplanning #estateplanning #atlasbuildswealth #marketmanipulation #fedfutures #ratecuts #treasury #treasuries #cfo #ceo #accounting #CPA #benefits #hr #humanresources #aapl #msft #googl #nvda #sp500 #nasdaq100 #taxbrackets #irs #irsgov #tax #taxes #atlaswealth #401k #sep #solo401k #403b #tsp #taxfiling #inflation #cpi #ppi #pce #stockmarket #dowjones #sp500 #sp500index #spy #qqq #financialplanning #estateplanning #trust #estate #gifting #tod #qdro #jtwros #ronlang #atlasbuildswealth

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Here are some ideas advisors might think about when building #retirement income portfolios to withstand market #volatility and #inflation Important disclosures: https://bit.ly/2JzEDWl

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