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Market ignores macro trends before Fed meeting The market has been rising a lot lately, with many turning bullish. We have a critical event coming that will dictate the direction of the market sentiment. Market broadly believes Fed will reduce rate hike from .50 to .25. I have concerns with this conclusion Unemployment has been decreasing regularly. Inflation is reducing but still high. We see a continuing trend of layoffs primarily occurring in tech while other sectors are still highering. Fed has warned that the recent rally will only lead to greater pain down the road. The fed is aware of the greedy sentiment and has a history of tampering down greed while fighting inflation. My belief is that the markets sentiment of reduction to .25 is more based on wanting to see a light at the end of the tunnel, less on macro trends. My view is that fed will hold at .5 rate increase reiterating long road ahead. This will bring a shock to the greedy markets and trigger a wave of selling. Greed is definitely the sentiment right now. Buy the fear, sell the greed.
AMEX:SPYShort
by ratchet-mint
1
Here's Why We're Probably Already in a RecessionHi everyone! 👋 This is my first ever video on TradingView . In this video, I explain how a deep dive into the continuing U.S. jobless claims (USCJC) could reveal that a recession is actually already underway. Later in the video, I explain my thoughts about the future direction of the market and why I believe we're entering into a period of stagflation . In this video, I also explain how you can use several tools on TradingView including the Polyline tool, and the Export Data tool (which is accessible by Pro+ and Premium subscribers). Let me know if you find this video to be helpful! Leave a comment below with ideas about what you'd like me to discuss in the future!
AMEX:SPY
by SpyMasterTrades
68
Recession on the Horizon - FOMC and LayoffsYesterday, the FOMC confirmed the backing of higher interest rates for longer. The market reacted negatively signaling negative sentiment on rate expectations for the following quarters. Federal Reserve official, Neel Kashkari, who often has the most dovish views on market anticipation stated that inflation may have peaked but sees interest rates rising higher for the next few meetings. He sees the FED raising rates by a whole percentage point from the current level of 4.25%-4.5% to 5.4% (MarketWatch, Jan. 5). The inflation fight is not over yet, and it remains sticky despite all the economic weakening observed. In a previous thesis where I challenged the US economy about a year ago, I warn of massive layoffs in 2023 despite most analysts and the Fed saying otherwise. Meta and Tesla have already laid off thousands of employees just months ago. Today, large layoffs in tech are happening with Salesforce: “layoff about 10% of its employees, the company also says it will close some offices as part of its recruiting plan, but it is still unclear if any of the bay area offices will be impacted, undertaking major cost cuts in a challenging economy.” (CNBC, Jan. 5). Amazon Chief Executive Andy informed his employees that the number of layoffs in the company has now been increased to more than 18000 roles (ArabianBusiness, Jan. 5). Other firms are cost cutting, most cutting employee benefits. It is just a matter of when or not we are going to see higher unemployment rates in 2023. The most obvious fundamental reason for these layoffs and cost cuts is the fact that all these companies responded to the “bubble” fueled by stimulus and extensive quantitative easing. As a response, the Fed is raising interest higher, and tightening the monetary policy and we see the equity evaluation of these companies dropping significantly. Eventually, that demand is gone, and these companies are left with thousands of employees hired in response to a "fake" demand, over-hired. As equity evaluation is going down, they have to improve the margins by laying off employees and reducing expenses since revenue is going down. I see another reason for large layoffs, perhaps, a more IMPORTANT and IMMEDIATE aspect. Salesforce admitted business activities going down, demand slowing, and growth staggering, however, their stock went higher because they laid off employees, reducing their expenses. On paper, it shows higher margins, and thus, the stock reacted positively. What can become a norm during this economic environment is that we see more companies, especially in the tech industry which saw major lows, employing this technic by raising their stock prices with restructuring and engaging in mass layoffs. My plan of limiting my exposure to risks has not changed. I am holding a majority in cash and short-term government bonds. Looking to increase exposure to my trading in gold when the US 10-Year Real Rates falls from the inverse correlation between the two. Reminder: Higher real yields = expensive to hold gold when compared to other yielding investments such as fixed income, thus the inverse correlation on the charts. This is for personal recording but feel free to comment and argue.
NYSE:CRMShort
by ssavi
Leading Indicators - PPI (PPIACO) vs. Unemployment (UNRATE) I wanted to highlight how the peak (downward move) in the Producer Price Index (PPIACO) typically corresponds with the trough (upward move) in the Unemployment Rate (UNRATE) (inverse correlation), as a period of Recession takes hold on the economy, & the financial markets. I also wanted to compare the above correlation with cycle tops in WTI Crude Oil (WTISPLC) , & also with respect to the OECD Leading Indicators (USALOLITONOSTSAM) — as this helps to pinpoint some of the historic baseline(s) for predicting the peak &/or trough in the business vs. market (financial) cycles. Here is the key for the attached chart(s): Top Chart Black Line (Unemployment Rate - UNRATE): *Black Vertical Dotted Line* = Recession Timing Trough Blue Line (Producer Price Index - PPIACO): *Blue Vertical Dotted Line* = Recession Timing Peak Orange Line (WTI Spot Crude - WTISPLC): *Orange Vertical Dotted Line* = Recession Timing Peak Red Shaded Areas (Recession): Indicator via @chrism665 Bottom Chart OECD Leading Indicators (USALOLITONOSTSAM): *Black Dashed Line* = Pre-Recession Indicator Peak Green Horizontal Dotted Line = Expansion Baseline (100) Orange Horizontal Dotted Line = Current Reading (98.62) Red Horizontal Dotted Line = Danger Zone (<97) Red Shaded Areas (Recession): Indicator via @chrism665 Looking at the larger picture of both charts, you can see that typically in previous periods of Recession you would see this flow of the signals (first to peak/trough, last to peak/trough): Peak - OECD Leading Indicators (USALOLITONOSTSAM) Trough - Unemployment Rate (UNRATE) *Peak - Producer Price Index (PPIACO)* *Peak - WTI Spot Crude (WTISPLC)* *Note* - As you can see PPIACO & WTISPLC are very closely correlated as demand peaks out, you then see a shift downward in WTISPLC as this is a signal of the topping of economic growth. Now let's dive close-up into each time period of recession, as we can see some linkages/similarities in the 1991, 2001, & 2009 recessions vs. the what is (likely) a 23' recession, depending how the economic , markets , & financial data plays out this upcoming year — potentially into 24'. 1991 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): July 1987 Trough - Unemployment Rate (UNRATE): Mar. 1989 Peak - Producer Price Index (PPIACO): Oct. 1990 Peak - WTI Spot Crude (WTISPLC): Nov. 1990 2001 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): Jan. 2000 Trough - Unemployment Rate (UNRATE): Apr. 2000 Peak - WTI Spot Crude (WTISPLC): Nov. 2000 Peak - Producer Price Index (PPIACO): Jan. 2001 2009 Recession Timeline Trough - Unemployment Rate (UNRATE): May 2007 Peak - OECD Leading Indicators (USALOLITONOSTSAM): June 2007 Peak - WTI Spot Crude (WTISPLC): June 2008 Peak - Producer Price Index (PPIACO): July 2008 2023(24) Recession Estimated? Peak - OECD Leading Indicators (USALOLITONOSTSAM): May 2021 Peak - Producer Price Index (PPIACO): June 2022 Peak - WTI Spot Crude (WTISPLC): June 2022 Trough - Unemployment Rate (UNRATE): Sept. 2022 What do you think about this macro analysis? Have we potentially been in a recession in 22' — or are we moving closer to higher unemployment (UNRATE) in 23' as the macro/market conditions worsen, & the Federal Reserve's tighter monetary conditions (liquidity & credit) take their toll on the economy? Let me know what you think in the comments below! 👇🏼
FRED:UNRATEShort
by kylemusserco
The Inflation of the 1980s Tells the Same Story: Pivot=DeclineI have heard both sides: 1) Historically, the Fed pivot will result in a decline in equities because they are pivoting in response to negative economic data which drags on equities, and 2) this time is different, negative economic data is positive for equites because it means inflation is on its way down. When people reference the former, for whatever reason, they don't take a look at the effective Fed Funds Rate in the high inflationary period of the late 1970's and early 80's and compare the Fed's pivot to equities. In the chart shown, you can see that once Volcker, the Chairman of the Fed, finally took a steadfast position against inflation and rose rates violently, inflation began to cool. Both in part of this raise in rates and the public's belief that Volcker had no intention of letting up, ridding the public of inflationary expectations. If you look at the charts, you can see that as inflation rose so did the markets. But as Volcker stamped his foot and pushed rates up, inflation began to cool. USIRRY, the third chart down, shows this. Equities began to decline due to this restrictive economic environment and belief the Volcker would not let up. Notice that, as a result, unemployment (bottom chart) began to rise. This had no positive impact on equities, contrary to what some might think because it would indicate inflation was being taken care of. Instead, the U.S. entered a recession and equities continued to decline. It was only once the Fed stopped lowering rates, unemployment peaked, and inflation neared their target rate did equities bottom. It is not fair to compare equities and pivots to the Great Recession or the .com Bubble, yet even in historical inflationary periods the same story plays out: the markets bottom well after the Fed pivots However, this time could be different in that Powell showed no hesitation in attacking inflation and destroying inflationary expectations. He has taken a direct lesson from history. As a result, unemployment could potentially peak faster than expected, inflation could decrease faster than expected, and equities could bottom faster than expected. I believe today's outcome will be similar to that of the early 80's, but that outcome will happen much, much faster. The markets have not bottomed in my opinion, but I expect them to in mid-late 2023. It's always best to keep equity exposure to avoid missing the bottom. Because you never know . InTheMoney
SP:SPXShort
by InTheMoneyAdam
6
Pound takes a dive, retail sales nextThe British pound is sharply lower on Thursday as the US dollar has rebounded against the major currencies. In the North American session, GBP/USD is trading at 1.1787, down 1.07%. We continue to see sharp swings from the pound in November. Jeremy Hunt's Autumn Statement was much more in keeping with the difficult economic times than the ill-fated mini-budget back in September, which set off a financial crisis and emergency intervention from the Bank of England. The Finance Minister's budget outlined major spending cuts and tax hikes and Hunt stated that the government and the BoE were working in "lockstep".  The fiscal austerity in the new budget is a step in the right direction, but the pound nevertheless has taken a tumble today. The Office for Budget Responsibility (OBR) forecast indicated that the UK is currently in a recession, which will see unemployment jump from 3.5% to 4.9%. The BoE's outlook is even worse, with unemployment forecast to hit 6.5% and negative growth expected in the second half of this year, throughout 2023 and into the first half of 2024. GDP declined by 0.2% in the third quarter, and the headwinds look formidable for the UK economy and the British pound. The investor euphoria which sent the stock markets rallying after the soft inflation report has taken a pause, and the US dollar has rebounded. Fed policy members sought to dispel any thoughts of a Fed pivot, reminding the markets that the Fed was planning to raise rates higher than they had anticipated. The hawkish Fed speak may or may not have convinced investors to settle down, but a strong US retail sales report clearly did the job. The headline and core releases both posted strong gains of 1.3%, dampening sentiment that the Fed was turning dovish. US consumers continue to spend despite inflation and rising rates, an indication that the Fed can continue to raise rates and probably avoid a deep recession. Interest rates are expected to peak at 5% or slightly higher, which means that the Fed is highly likely to continue tightening into next year. . There is resistance at 1.1961 and 1.2030 GBP/USD has broken below support at 1.1896 and 1.1786. Below, there is support at 1.1660
by OANDA
Pound soars despite weak job dataThe British pound has reversed directions on Tuesday and posted sharp gains. In the European session, GBP/USD is trading at 1.1902, up 1.22%. The pound has punched above 1.19 for the first time since August 19th. The UK employment report was soft, with unemployment ticking higher to 3.5%, up from 3.4%. Unemployment rose by 3.3 thousand, down from 3.9 thousand but well off the consensus of -12.6 thousand. The BoE will be most concerned about the increase in wage growth, which will create even more inflation, at a time when inflation is above 10%. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. There isn't much slack to speak of in the labour market and the BoE will be under pressure to continue hiking aggressively, even though this will hurt the struggling UK economy. The Fed may be breathing a bit easier today, as the exuberance which sent the stock markets flying last week appears to have subsided. Investors jumped all over the soft inflation report, as risk sentiment soared and the US dollar retreated. Fed members have responded by sticking to a hawkish script, as any dovish signals could complicate its battle to bring down inflation. Fed Vice Chair Brainard said on Monday that she favored slowing the pace of rate hikes, but that further hikes were required in order to bring down inflation. Brainard's stance was echoed by Fed member Waller who said that while the Fed may ease up on the size of future rate hikes, it should not be seen as a "softening" in its fight against inflation. Waller added that the 7.7% inflation reading in October was "enormous", a possible rebuke of the exuberance shown by investors to the drop in inflation. . GBP/USD has broken through several resistance lines today. The next resistance lines are 1.2030 and 1.2224 1.1703 and 1.1648 are providing support
by OANDA
XAUUSD potential movement and entry1) NEWS TO NOTE: THE FEDERAL RESERVE AND THE BANK OF ENGLAND INCREASED INTEREST RATES BY 0.75% EACH WHICH STRENGTHENED USD AND GBP WHICH IS BAD NEWS FOR GOLD. JEROME POWELL (CHAIRMAN OF FEDERAL RESERVE GAVE A VERY HAWKISH SPEECH A COUPLE DAYS AGO IN WHICH HE AFFIRMED THAT INTEREST RATES WILL BE RISING WHICH ALSO STRENGTHENED USD) TODAY (FRIDAY 4TH) US NONFARM PAYROLLS CAME OUT WITH BETTER THEN EXPECTED DATA ABOUT US EMPLOYMENT MORE EMPLOYMENT →MORE PEOPLE IN ECONOMY →MORE MONEY IN CIRCULATION →MORE INFLATION → MORE REASON FOR FED TO INCREASE INTEREST RATES → STRONGER USD → WEAKER XAUUSD 2) UPCOMING NEWS TO NOTE: THURSDAY 10TH NOVEMBER CPI (upcoming September US inflation report) →THIS WILL EFFECT GOLD BECAUSE IT EFFECTS USD Stubborn readings could translate into sustained elevation in Feds rate hike odds (sustained higher interest rates). While this would be good news for the US Dollar, it will likely be bad news for US stocks and gold prices. 3) TECHNICAL ANALYSIS I expect the price to have a short drawback towards the primary resistance line, however, the primary resistance line (top resistance line) is unlikely to be tested (touched by price) due to the bullish momentum of gold. Then I expect gold to continue on its uptrend. If the primary resistance line is tested, it would be an excellent entry with a risk to reward of 1:2. If it is not tested, i wouldn't advise a buy order, unless there is candle patterns and chart patterns which suggest a strong bullish momentum (for example a engulfing candle or a 3.82 candle or a close above candle. In the past couple of days there has been higher lows and higher highs however this is only intraday, and over a bigger time-frame gold is bearish. Notes: PlEASE GIVE ME FEEDBACK I WOULD APPRECIATE IT SO MUCH TRADE WITH CAUTION HAVE A GOOD DAY THANKS SNIPER
FXOPEN:XAUUSD
by haadimilli
2
Unemployment Rate vs SPXI'm just the messenger. SPX - orange Unemployment Rate - Blue Indicator - Moving Average out of Unemployment Rate This isn't a rule, as many sectors influence the market, but big crashes have been paired with a growing Unemployment rate. Here we can see that it bottomed and is consolidating - which proofs a strong economy and no need to crash - this suggests the ongoing decline was just a correction. To visualize this a bit more - I have coded a simple moving average to see when that curve will start heading up - and for now it isn't even turning up - this allows the market to push up before it starts turning. But when it will ... Hold on to your seats lads and ladies. It's gonna be a fast ride. Cheers!
FRED:UNRATE
by TheSecretsOfTrading
DXY Can the Dollar keep falling ahead of next week's Fed Rate?This 1M chart focuses on the U.S. Dollar Index (green trend-line), which is seeing its first serious and sustainable pull-back after a long time as since September 28 it has been trading on Lower Highs and Lower Lows (not seen on this monthly time-frame though). This week the low completed a -4.50% from its peak, which is the strongest pull-back since the January 05 2021 bottom! With the upcoming Fed Rate Decision next week, the question is, is it possible for the USD to continue falling without the Fed changing the narrative, i.e. without continue hiking (raising the rates)? A simple answer would be no. That is because in general terms since the mid 80s, the USD and the Fed Interest Rate (black trend-line) have been strongly correlated. It is no surprise that the USD's hyper strong rally this year started right when the Fed announced their hiking plan. Why they did that? In order to battle and bring down the raging inflation (blue trend-line) that came with the trillion dollar rescue packages during the COVID lockdowns. That is the key to our question before and provides a more detailed answer. It is also important to consider the low unemployment rate (red trend-line) in this equation. As you see the only times in the past +30 years that we've had the Inflation peaking and pulling-back while the unemployment was bottom low and with the USD reversing, was when the Fed cut the Interest Rates after at least a year of hiking. So in order to complete the pattern we are currently in and see the USD extend its pull-back is to see the Fed cut back or at least adopt a more accommodative/ less aggressive hike with a specific horizon to stop. And the key to that as mentioned would be for them to be convinced that the current 3 month drop straight on the Inflation Rate is sustainable, thus under control. Brace for a really really interesting week ahead. ------------------------------------------------------------------------------- ** Please LIKE 👍, SUBSCRIBE ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support me, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- You may also TELL ME 🙋‍♀️🙋‍♂️ in the comments section which symbol you want me to analyze next and on which time-frame. The one with the most posts will be published tomorrow! 👏🎁 ------------------------------------------------------------------------------- 👇 👇 👇 👇 👇 👇 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:DXY
by TradingShot
4
Will GDP shake up GBP/USD?GBP/USD is trading quietly for a second straight day. In the North European session, GBP/USD is trading at 1.1035, down 0.18%. The pound has not posted a winning day since October 12th and has lost 400 points during that time. GBP/USD dropped below the symbolic 1.10 line earlier today, and a break below 1.10 will likely increase talk of the pound following the euro and dropping to parity with the dollar. The UK labour market is one of the few bright spots in the economy, and today's employment report reaffirmed that the job market remains tight. Unemployment in the three months to August dipped to 3.5%, down from 3.6%, while average earnings jumped to 6.0%, up from 5.5% and ahead of the consensus of 5.9%. These rosy numbers are dampened by an inflation rate of 9.9%, which has badly hurt real UK incomes. The strong job market bolsters the likelihood of the Bank of England will deliver some tough medicine at its November meeting, perhaps a super-size rate hike of 1.0%. The BoE was forced to intervene on an emergency basis after the mini-budget almost caused a bond market crash, and investors have circled October 14th, which is the expiry date of the BoE's gilt-buying intervention. There are concerns that if the BoE does not renew its bond-buying, the result could be another exodus from UK government bonds. On Wednesday, the UK releases GDP for August, which is expected at 0% MoM, down from 0.2% in July. In the US, inflation will be in focus this week, with PPI data on Wednesday and CPI a day later. Headline inflation is expected to fall to 8.1% in September, down from 8.3% in August, but core CPI is expected to rise to 6.5%, up from 6.3%. Unless inflation surprises sharply to the downside, the release will not cause the Fed to rethink its hawkish policy. GBP/USD faces resistance at 1.1085 and 1.1214 There is resistance at 1.0935 and 1.0776
by OANDA
S&P 500 Outlook - Non Farm Payrolls, Unemployment, Fed.How long will the rally continue? What to watch to answer this question. 7 October Fed Critical Datapoints Non Farm Payrolls and Unemployment Numbers If more people are finding jobs and and unemployment is going down it will indicate a strong economy, which will lead to the Fed continuing rate hikes, which will put downward pressure on the S&P 500. If more people are struggling to find jobs and unemployment rises we can assume that the economy is slower and the Fed might likely pivot and ease rate hikes, which will put upward pressure on the S&P 500 and cause a further upward rally. Mid October. (Earnings Season) Earnings are set to release, middle October, my prediction is earning will be weaker than expected and might lead to a continuation of the Bear Market we are in. If earning are flat or higher than expected, then we can see a further upward rally in the S&P500. Goodluck. Follow me for more.
SP:SPX
by SmartMoneyTV
1
ADP Unemployment Broader MarketsIf I take a look at the chart of ADP, along with the development of the broader markets (those charts not captured), I'd be on the hook to look at the Unemployment Rate being at the consensus of 3.7%; however, it it comes in at 3.5% as it did in August (where it referenced July), then you could see some buying pressure -- nevertheless, I'd be looking at shorting opportunities into any bullish movements (that is just me). U.S. Dollar continues to be strong with Energy and Treasury Rates, while Financials remain weak. All-in-all, the thought of the markets 'skyrocketing' are just not in the cards for me. I think we're setting up for an October 4th retest of those lows. 2022-08-05 Reference Jul Actual 3.5% Previous 3.6% Consensus 3.6% 2022-09-02 Reference Aug Actual 3.7% Previous 3.5% Consensus 3.5% 2022-10-07 Reference Sep Actual (TBD) Previous 3.7% Consensus 3.7%
NASDAQ:ADPShort
by bsdvs23
Unemployment is inevitable according to market history.Graph of the inflation rate with unemployment rate laid over top. EVERY TIME that inflation has peaked and rolled over, unemployment has spiked shortly after. If you wonder why Powell says things like "The labor market is unsustainable." it's because he and every central banker in the world (more or less) are trying to kill inflation. Inflation dies, it takes out employment. So the next time someone points to labor statistics as a sign of economic health, you can tell them that employment is transitory.
ECONOMICS:USIRYY
by stockpreacherman
1
Inflation / Unemployment / Stocks2022 is most comparable to 1978 in terms of the current jobs & inflation situation. Seven decades of history concerning the 3, shows that the current drop in stocks is more likely a correction and not the start of a true bear market. 1972-73 scenario is 1 against 6 odds (and that's after demoting 1978 to equal the others). It also usually takes a long time for unemployment to carve a bottom. Even if we assume that right now it's doing so, we're still too early.
FRED:UNEMPLOY
by Indotermes
New Zealand dollar slides after RBNZ hikeThe New Zealand dollar has taken a tumble today. In the European session, NZD/USD has declined by 0.88% and is trading at 0.6289. We continue to see plenty of volatility from the New Zealand dollar. Last week, the currency rose 3.33%, but has pared those gains this week and is down 2.47%. The RBNZ dutifully raised interest rates by 0.50%, for a fourth straight time. This brings the cash rate to an even 3.00%. However, the New Zealand dollar has responded with sharp losses, as the central bank's inflation and unemployment forecasts have been revised upwards. In its monetary statement, the RBNZ said it expected inflation to start to drop from the current level of 7.3%, but said that inflation will not fall below 3% until June 2024. As well, unemployment is expected to rise to 5% in 2025. In May, the central bank projected inflation would drop under 3% in September 2023 and inflation would rise to 4.7% in 2025. The central bank holds its next meeting in October. Governor Orr flatly ruled out any predetermination as to what the RBNZ would do. Still, short of a spectacular turnaround in inflation, odds are that the Bank will deliver another 0.50% hike, as its primary focus is to ensure that inflation does not become entrenched. There is the danger that the sharp rate tightening could cause a recession, but that is a price the RBNZ is willing to pay. The Federal Reserve is doing its best to convey the message that inflation is far from beaten and additional rate hikes are coming. Since the surprising inflation report which showed a decline in CPI, the markets have been holding onto the idea that the Fed will reverse directions next year, which has sent the US dollar sharply lower. The Fed minutes will be released later today, and I expect the Fed to continue to drum out its hawkish stance. Will investors finally buy into the Fed's hawkish message or ignore what they don't want to hear? Stay tuned - the dollar could show some volatility after the release of the minutes. NZD/USD is testing support at 0.6300. Below, there is support at 0.6227 There is resistance at 0.6385 and 0.6495
by OANDA
Pound recovers losses after jobs reportThe British pound remains under pressure. In the North American session, GBP/USD is trading at 1.2055, unchanged the day. The pound fell as low as 1.2007 in the Asian session, just above the symbolic 1.20 line. The economic outlook in the UK is grim and today's employment report didn't bring any cheer. Unemployment claims continue to fall and the labour market remains strong, but wage growth indicates trouble. Wages dropped to 5.1% in June, down from 6.4% in May. However, real wages (adjusted for inflation) actually fell by 3% in Q2 on an annualized basis, a new record. The cost of living is thus increasing at an even faster rate and is far outpacing wage growth. The headline wage growth reading of 5.1%, which is not adjusted for inflation, may have fallen, but still remains high and will likely force the BoE to continue hiking aggressively. The BoE has forecast that inflation will hit a staggering 13% this year, and the last thing it needs to contend with is a wage-price spiral, which could entrench inflation. The markets won't have much time to dwell on the employment numbers, with the inflation report being released on Wednesday. Headline CPI is expected to accelerate to 9.8% in July, up from 9.4% in June. If inflation pushes higher than the estimate, it could be a nasty day for the pound.  The Federal Reserve continues to send out the message that its rate hikes are far from over as the battle against inflation will continue for some time yet. The markets expect the Fed to raise rates to a peak in a range of 3.50% - 3.75%, well above the current benchmark rate of 2.50%. Despite this hawkish stance, the financial markets don't seem to be listening. US equity markets have been rising, while the US dollar, which should be benefitting from a hawkish Fed, is struggling. The lower-than-expected July inflation report of 8.5% raised risk sentiment and sent the dollar tumbling. If inflation resumes its upward trend in August, risk appetite could evaporate and the dollar might have the last laugh. GBP/USD is testing support at 1.2030. Below, there is support at 1.1925 There is resistance at 1.2153 and 1.2258 
by OANDA
Euro edges higher despite soft confidence dataThe euro has started the week in positive territory. In the North American session, EUR/USD is trading at 1.0217, up 0.36% on the day. The week wrapped up with a superb nonfarm payroll report, which sent the US dollar broadly higher. However, the gains proved to be short-lived, as the euro has recovered most of Friday's losses. The July nonfarm payroll report posted a blowout gain of 528 thousand, crushing the estimate of 250 thousand, and improving on the solid June release of 398 thousand. Unemployment ticked down to 3.5% from 3.6%, and wage growth remained unchanged at 5.2%, ahead of the forecast of 4.9%. The nonfarm payroll release was certainly impressive, but the Federal Reserve may be less than enthusiastic. Why? Since the data points to a tight labor market, especially the sharp gain in wages, as firms continue to experience labor shortages and must sweeten their compensation in order to attract employees. At 5.2%, wage growth is far higher than the Fed's inflation target of 2%, and Fed policy makers are concerned about a wage-price spiral which could increase inflationary pressures and force the Fed to remain hawkish. Fed officials were already pushing back against the idea that the rate-hike cycle was almost over, and with the latest employment numbers, the Fed may feel the need to remain aggressive and respond with another supersize 0.75% increase at the next policy meeting in September. Fed Chair Powell has said that the Fed will be data-dependent as it considers its next move, which means that upcoming inflation and employment reports will be crucial and carefully monitored by the markets and Fed officials. The eurozone could well face a recession, as Germany, the bellwether of the bloc, has posted weak data which is raising concerns. With a possible energy shortage this winter due if Russia decides to turn off the tap, the economic outlook is troubling. Unsurprisingly, German and eurozone confidence indicators have been pointing downwards, a reflection of uncertainty and pessimism. Earlier today, Eurozone Sentix Investor Confidence for August came in at -25.2, a bit better than the July reading of -26.4 but shy of the estimate of -24.7. This indicator has been mired in negative territory for a sixth straight month, pointing to prolonged pessimism amongst financial experts. EUR/USD is testing resistance at 1.0199. Above, there is resistance at 1.0274 There is support at 1.0103 and 1.0028
by OANDA
Market comments #1Hello everyone. I tried to put out regular market updates in the past, but I failed to do so for different reasons. This time, my idea is to gather the best tweets, articles, charts, etc., and add some brief comments. I will post these out regularly as long as I have decent material. 1. Sentiment is still very bearish, which means more upside is still possible. twitter.com 2. Soft landing team seems to be doing well so far... Until it eventually won't be doing so. I believe a scenario like 1989 is possible for markets, though I am slightly less optimistic than Jared. www.bloomberg.com twitter.com 3. Valuations can get out of hand as multiple market forces drive stocks. Stocks could trade higher and higher despite bad earnings. twitter.com twitter.com 4. The US has low unemployment, but its labor market is nowhere near as strong as it was before Covid or before the 2008 GFC twitter.com twitter.com 5. Jobs are a lagging indicator; however, as the Fed is working with lagging data, they could hike more than they should. Good news now = bad news later; therefore, the market suffers now on good news, as it 'sees' the future. twitter.com twitter.com twitter.com 6. The yield curve inverting doesn't mean we will have a crash. A recession is guaranteed at this point, but remember that the recession comes many months after the inversion. twitter.com 7. So far, this is a worse situation than 2012, 2015, and 2018; however it is nowhere near as bad as 2008 or 2020. Could it get that bad? I doubt it for now. Of course, with new data, I am ready to change my mind if I have to. twitter.com 8. Some interesting comments by Jared Dillian with whom I agree: twitter.com twitter.com 9. My main worry is what happens between the US and China in the next few months, especially in October, as I think it would be tough to avoid an invasion. Heightened tensions alone can create a lot of problems... twitter.com 10. The Turkish Lira is heading yet for another collapse. No idea what could stop the Turkish economy from falling off a cliff in the next few years. www.zerohedge.com
by BitcoinMacro
This recession identifies as an apache helicopterChart displays the US inflation rate and US unemployment rate. Red zones mark recessions (from stlouisfed.org). 6/8 of the past recessions are lead by inflation rates surpassing 5%. Only the dotcom recession had an inflation rate below 5%, and the other was COVID, which we are experiencing the resulting inflation currently. so, every time the inflation rate jumps, unemployment follows on a lag. we can see that the ends of recessions are usually marked by a declining inflation rate and peaking unemployment rate. but remember, this is not a recession and our country is in great hands. ECONOMICS:USIRYY FRED:UNRATE
ECONOMICS:USIRYYShort
by Feech37
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