The Cumberland Advisors Week in Review + Digest is a compendium of news, commentary, and opinion from or of interest to our team. These are not revised assessments, and circumstances may have changed in the market from the time of original publication. We may include older and/or guest commentaries that our editors have determined may be of interest to our audience. Your feedback is always welcome.
- Dispersion grows between Large-cap growth vs. other sizes & styles
- Added to SPEM (Emerging Markets) in our International Equity ETF strategy
- Watching for reasonable entries into Industrials & Basic Materials
Shaun Burgess & Bonds
- Treasury volatility continued with economic data moving yields lower
- Fed still waiting for clearer direction on inflation before starting to cut
- Muni bonds very quiet, with supply much lower due to holiday
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Q2 2024 Economic Review and Outlook
The key points you should know:
- The economy continued to grow, but there are signs that the pace has slowed.
- The job market remains solid, but perhaps less so.
- Inflation is still above the Fed’s longer-term goal, although it is easing again.
- The Federal Reserve expects to start easing later this year, but not yet and by less than it had previously expected.
- The soft landing appears to be here – but for how long?
A look back at the second quarter, slower growth but no recession (at least not yet):
Real GDP growth slowed substantially in the first quarter, down to a 1.4 percent annualized rate. This was the slowest pace since the second quarter of 2022 and is below most estimates of trend growth. With that diminutive growth, is the long-heralded recession finally about to appear? Probably not.
- “Core” growth (real final sales to private domestic purchasers) edged down only slightly to an annualized rate of 2.6 percent. This was a tad faster than the 4-quarter growth rate of 2.7 percent – a smoothed measure that removes many temporary gyrations in growth.
- The Atlanta Fed’s GDPNow estimate of second quarter real GDP growth is 2.2 percent – far from recessionary and above trend (a likely range of 1.5-2.0 percent).
But even if real GDP growth in the second quarter is stronger than in the first, there are good reasons to believe that the economy is slowing (and it is likely that core GDP growth will be less rapid).
Housing has been the sector that has most taken it on the chin. A lack of supply in the post-Covid period came from the large share of mortgages at or near record low interest rates, and they will be slow to transact. This lack of supply has led to record house prices – and when combined with higher mortgage rates this year, has caused home sales to drop.
Commentary continues: https://www.cumber.com/market-commentary/q2-2024-economic-review-and-outlook
- Special to the Herald-Tribune -
Cumberland Comment by David R. Kotok
Continue reading "Domestic politics, geopolitical issues cloud economic outlook" by David R. Kotok at the Herald Tribune website: https://www.heraldtribune.com/story/business/2024/07/01/david-r-kotok-domestic-politics-global-hotspots-create-uncertainty/74205423007/
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You're invited to join David R. Kotok for a recent a podcast interview with David's longtime friend and journalist, Kathleen Hays. There is also an edited transcript at link below. Please enjoy.
“Kotok Celebrates Half Century of Navigating Fed, Inflation and Markets,” Kathleen Hays Presents: Central Bank Central Podcast
https://kathleenhays.substack.com/p/kotok-celebrates-half-century-of
Transcript for “Kotok Celebrates Half Century of Navigating Fed, Inflation and Markets,”podcast: https://www.cumber.com/market-commentary/51-years
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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.