August keeps us wary, but in past week, risk of recession lower and visibility of lower inflation greater. Market increasingly needs to consider Fed could cut rates in early 2024

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The chart in this report is only accessible to members
The chart in this report is only accessible to members

Today’s note will include a short video update. We discuss:  The fact stocks traded flat on good news does add to our wariness of August.  But odds a recession fell last week and visibility for lower inflation improved.  We think markets will start to focus on fact Fed could cut rates as early as Feb/March 2024 as real rates start surging.

Please click below to view yesterday's Macro Minute (Duration: 7:22).

The chart in this report is only accessible to members
The chart in this report is only accessible to members

So far in August, equities have delivered a terrible performance with S&P 500 down 2.7% and $QQQ down -4.5%. It might be glib to dismiss this simply as "this is August" (certainly some truth). What makes us more wary is that last week's weak equity performance came as we saw good fundamental surprises on July CPI and to an extent July PPI and U Mich inflation.

There is an adage which is be careful when stocks do not rise on good news. This could mean several things:- benign: it is noise- medium bad: market is consolidating- bad: local top is in and a larger correction is underway As we noted earlier this month, when stocks front load weakness in August, the rest of the month tends to fare better. Since 1950, when equities are up >15% thru July and August down first 3 days (n=9), equities tend to gain into mo...
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