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Here's the Deal
Weekly Market and Economic Report - September 14, 2024
Nick Tomas
September 14, 2024 • Estimated Reading Time: 10 minutes
Economy: In Slowdown
Market Cycle: Bullish
Week 37 of 52 for 2024: 71.1% of the way through 2024
Weekly Note:
In what was a fairly quiet week for economic news, we got more signs that the period of high inflation is mostly behind us for now. The Consumer Price Index (CPI) and Producer Price Index (PPI) data came in either right at or just below expectations. However, the month-over-month "Core CPI" and "Core PPI" (which exclude food and energy) were slightly higher than expected. While this could signal the start of a new trend, it's too early to say for sure. For now, it’s best to treat this as a one-off event, but keep an eye on next month’s data to see if it continues.
The 30-year mortgage rate has dropped significantly—from a high of 7.8% in October 2023 to its current rate of 6.2%. This decline has already led to an increase in refinancing activity, and I’d expect existing home sales to follow suit soon. It looks like the 2.5-year recession in the housing industry (not including homebuilders) may be coming to an end. If that’s the case, it could provide a nice boost to the economy heading into 2025.
One noticeable trend has been the difference in performance between companies serving higher-end shoppers and those targeting more budget-conscious consumers. This kind of split is common in the early stages of an economic slowdown. However, it seems like this large disparity is beginning to come to an end.
The upcoming week could be an important one. We’ll get a better sense of how strong consumer spending was last month with the retail sales report. We’ll also see if lower mortgage rates have boosted existing home sales. And don’t forget—it’s also Fed Week, so we’ll see if it is a cut of .25 or .5. How the markets will perceive the decision will also be telling.
Top Economic Stories of the Week:
Pro Tip: The publications used below typically have their best annual sale during the weekend of Black Friday. The savings are insane, like 80-90% off insane. I’d suggest going month-to-month until then if you want to read along if you don’t already have a subscription. I’ll post the deals when they happen.
***Another article will be posted in the comments section.
Most Important Data Drops from the Past Week:
Actual | Expected | Previous | |
|---|---|---|---|
CPI | 2.5% 0.2% | 2.6% 0.2% | 2.9% 0.2% |
Core CPI | 3.2% 0.3% | 3.2% 0.2% | 3.2% 0.2% |
PPI | 1.7% 0.2% | 1.8% 0.2% | 2.2% 0.1% |
Core PPI | 2.4% 0.3% | 2.5% 0.2% | 2.4% 0.0% |
This Week in Markets
“Keep in mind that Economic Slowdowns are typically when you see the most shenanigans in the market. Meanwhile, September is also one of the months that experiences the most shenanigans. So it’s a good idea for you to expect to see more shenanigans in the near term.”
That’s how last week’s “This Week in Markets” section ended. Mind you that was after an epic Bull Trap from the close on Friday Aug 30th that led to markets falling pretty much all last week.
And this week??? The exact opposite after an epic Bear Trap last Friday, Sept 6th which saw a gap up on Monday morning, Sept 9th and then proceeded to go up almost all week. I say almost because just to prove how tough this time of year can be, on Wednesday SPY dropped -1.59% in the first hour and 15 minutes of trading only to pivot and then gain 2.67% from the low to the close, ending 1.03% higher than the close the day prior. From which point they headed higher into Fridays close. Ending near the highs of the week.
The price action since mid-July has been wild, as evidenced by the big price ranges and elevated volatility. However as I’ve been saying, this is more than likely just setting up the real move in a few weeks or so.
Keep an eye on small caps here, if markets are going to continue higher in the coming months, then more small caps are going to join party. This would be spurred upon by falling interest rates as smaller companies are more susceptible to interest rate fluctuations. More importantly, a number of the stronger ones have already been moving higher and hitting new 52-week highs. Some of the chart setups are, to blend an 80s term with a more current one, Choice AF.
Ultimately, it looks as though SPY is heading for $600ish. In all honesty, with this type of action I wouldn’t be surprised if the markets closed next week close to $535 or just shy of $600. At the end of the day though, bulls are firmly in control and there is no indication that is coming to an end any time soon.
Looking a few weeks out, there is an old saying in markets; “Sell Rosh Hashanah. Buy Yom Kippur.” This year it just so happens they are much later than usual as both observances are taking place in October rather than one or both in September. If you throw that adage into the mix, maybe we hit $600 heading into Rosh Hashanah, retest the current highs of $560ish around Yom Kippur, where markets are then bought for the move into the end of the year. Seasonality also tells us that a retracement is likely after the election, so keep that in mind as well.
With that being said, “Keep in mind that Economic Slowdowns are typically when you see the most shenanigans in the market. Meanwhile, September is also one of the months that experiences the most shenanigans. So it’s a good idea for you to expect to see more shenanigans in the near term.”
The Week Ahead
Economic Data:
Date and Time | Expected | Previous | |
|---|---|---|---|
Core Retail Sales (MoM) | Tues, Sept 17 @ 8:30a EST | 0.2% | 0.4% |
Retail Sales (MoM) | Tues, Sept 17 @ 8:30a EST | -0.2% | 1.0% |
Fed Interest Rate Decision | Wed, Sept 18 @ 1:00p EST | 5.25% | 5.50% |
Existing Home Sales | Thur, Sept 19 @ 10:00a EST | 3.89M | 3.95M |
News stories to keep an eye on.
Earnings to watch:
Tues, Sept 17th before the open. | Wed, Sept 18th before the open. | Thur, Sept 19th before the open. | Thur, Sept 19th after the close. |
|---|---|---|---|
Ferguson (FERG) | General Mills (GIS) | Darden Restaurants (DRI) | FedEx (FDX) |
Lennar (LEN) |
WTF of the Week
When someone complains about how the current economy doesn’t work for most people, ask them how much they spend every month on Only Fans and online sports betting.
Quote of the Week
“Thinking is difficult, that’s why most people judge”
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