{"id":197088,"date":"2024-08-23T12:15:00","date_gmt":"2024-08-23T16:15:00","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/the-walk-down-the-monetary-policy-stairs-begins-next-month\/"},"modified":"2024-08-26T09:04:26","modified_gmt":"2024-08-26T09:04:26","slug":"the-walk-down-the-monetary-policy-stairs-begins-next-month","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/the-walk-down-the-monetary-policy-stairs-begins-next-month\/","title":{"rendered":"The Walk Down the Monetary Policy Stairs Begins Next Month: Aug. 23, 2024"},"content":{"rendered":"\n

Federal Reserve Chairman Jerome Powell told this morning\u2019s Jackson Hole audience that it\u2019s time to walk down the monetary policy stairs. Markets rejoiced initially, but the mighty bears are energized and motivated during a seasonal period that\u2019s traditionally brought choppy, turbulent waters. Powell said that the timing and pace of reductions would depend on the incoming data, and just as he was speaking, New Home Sales hit the wire at 10 am Eastern Time. The result was a monumental surge in transactions that is undoubtedly inflationary as lighter financing costs push folks from all around the world to clamor for the American Dream. After all, the lofty bar for homeownership has been persistently moved further north generation after generation. As I recently explained in a Yahoo Finance<\/a> interview, the nightmare for the Fed, however, could be a continued increase in housing costs that bolsters price pressures well above the central bank\u2019s target.<\/p>\n\n\n\n

Powell Proclaims Enough is Enough<\/strong><\/h2>\n\n\n\n

Fed Chair Jerome Powell acknowledged this morning that it\u2019s time for rate cuts and said the central bank believes that the labor market has weakened enough to help thwart a rebound in inflation. Perhaps more significantly, during his Jackson Hole presentation, he explained that policymakers would not \u201cwelcome further cooling in labor market conditions,\u201d pointing to a sense of urgency in making monetary policy less restrictive. Inflation doves maintain that Powell and his fellow policymakers have good reason for fretting, with the unemployment rate having climbed from 3.4% in April of 2023 to 4.3% as of last month. While part of the increase resulted from a higher labor participation rate, other signs of weakness exist, including job creation being led by non-cyclical sectors and the BLS recently lowering<\/a> the number of jobs created during the 12-month period ended March 2024 by 818,000.<\/p>\n\n\n\n

New Home Sales Jump<\/strong><\/h2>\n\n\n\n

New home sales in July jumped to one of their tallest levels in over two years as mortgage rate relief brought in hungry, prospective buyers. Transactions jumped to 739,000 seasonally adjusted annualized units, a whopping 10.6% month-over-month (m\/m) leap despite median estimates hovering at 630,000, which would\u2019ve been 1% higher than June. We saw broad-based growth from sea to shining sea with the West, Midwest, Northeast and South sporting m\/m progress of 33.8%, 9.9%, 6.9% and 2.9%. The median sales price also climbed, its second-consecutive monthly gain, moving to $429,800 from $416,700.<\/p>\n\n\n\n

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Past performance is not indicative of future results.<\/p>\n\n\n\n

Artificial Intelligence Fuels Earnings Optimism<\/strong><\/h2>\n\n\n\n

Artificial intelligence (AI) has led to Intuit providing an optimistic outlook, but in the retail segment, discount-store operator Ross is cautious regarding the spending clout of low-to-middle income customers. On a positive note, Mediterranean restaurant operator Cava has increased its guidance following a strong quarter. Consider the following earnings highlights:<\/p>\n\n\n\n