The Big Picture Is Never Perfect
It’s why we value resilience.
“Mixed” is the word we use when different asset prices move in different directions on the same day. It’s also one we use when economic data are ambiguous.It’s fair to say Tuesday’s mixed markets broadly reflect mixed feelings about an economy probably still in more flux than is usual.
This price action tells a compelling and generally consistent story, though, one Mish Schneider continues to articulate in her Weekly Market Outlook.
The Nasdaq Composite crossed the psychologically significant 17,000 threshold and rallied into the close, up 0.59 percent. The S&P 500 enjoyed a similar last-15-minutes bounce to close up 0.02 percent.
The Dow Jones Industrial Average did not flip green late and shed 0.55 percent. The small-cap-focused Russell 2000 was down 0.17 percent, the S&P/TSX Composite 0.48 percent.
Tech exposure is the difference in equity markets, with Nvidia $NVDA rallying another 7.13 percent on the continuing proliferation of AI.
Crude oil and gold made notable moves, rising 3.14 percent and 1.06 percent, respectively, on flaring tension in the Middle East and safe-haven seeking.
That NVDA is rallying alongside commodities makes a lot of sense right now, as Mish explains in this week’s Outlook.
On the issue of sentiment, the Conference Board’s measure of consumer confidence was up in May for the first time in four months, printing at 102 versus 97.5 in April and beating every economist estimate collected by Bloomberg.
But the number of consumers who expect a recession within the next 12 months was up, too, for the second straight month. And consumers’ average expected inflation rate was up to its highest level so far in 2024.
No kidding: There’s an inflation element in the broader commodities-NVDA tale too, as Mish also explains in her current commentary.
Those inflation expectations are at least one reason why Neel Kashkari said Tuesday he doesn’t think “anybody has totally taken rate increases off the table.”
By “anybody” Kashkari is of course referring strictly to his colleagues at the Federal Reserve. The CME FedWatch Tool is pretty clear on this.
The president of the Federal Reserve Bank of Minneapolis rotated off the eight-member voting panel of the 12-member Federal Open Market Committee this year and won’t return until 2026.
Kashkari later told CNBC that he wants to see “many more months of data” before he’ll be comfortably certain that inflation is trending toward the Fed’s 2 percent target.
He characterized the present policy as “restrictive,” noting that the Fed can afford to be patient given the strength of the US labor market and the broader economy.
The odds of the Fed raising rates “are quite low,” Kashkari said.
As mixed as that message seems, his statements are consistent with a position that the Fed’s next policy move will be based on a preponderance of incoming data.
And that’s what he and his colleagues have been saying for months.
Perhaps April Personal Consumption Expenditure Price Index data will provide a little more clarity.
We’ll see that on Friday at 8:30 a.m. ET.