Large Amount of Capital Vanished
September 4, 2024
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–Treasuries bid on weakness in equities. SPX down 2.12%, Nasdaq Comp -3.26% and NVDA -9.5%. Crude oil (CLV4) plunged 3.21 to 70.34, and as of this note is sub-70 at 69.93. I’d wager that if we get a few more days like this in stocks, the Fed will cut 50, but for now the bias is still for just 25. FFV4 settled +2 at 9501.5; the dividing line for 25 or 50 is 9504.5.
–SFRZ4 settled +1.5 at 9576, but there was a large exit of 40k SFRZ4 9525/9575cs around 43 bps. Price of 9576 is 4.24% yield. We’ll get a new SEP at the September FOMC, but in June the Fed’s estimate of end-of-year FF was 5.1%. For end of 2025 it was 4.1%…the market has moved that timetable up by ONE YEAR! Well, not exactly, FFF5 settled 9570 or 4.30%.
–Today’s news includes Trade Balance and JOLTs, expected 8100k. Capital Goods orders and Shipments as well, along with Beige Book in the afternoon. In an interview on Thoughtful Money, Lacy Hunt mentioned Capital Goods Shipments (ex-defense and air) as a key economic component, and noted that July’s data had been revised lower, making the nominal value lower than it was in Q2. The softness in CapEx, even across tech shipments, is a negative development for forward growth. On the link below, 46:00 to 48:00 minute.
