Latest / Markets with Megan: A Quick Financial Markets Update / Insights on Recessionary Signals and Market Optimism | Episode 079 | 12-01-2023

Transcript

Insights on Recessionary Signals and Market Optimism | Episode 079 | 12-01-2023 · Markets with Megan: A Quick Financial Markets Update

• 0:03
  Speaker 0: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:07
  Speaker 0: We're coming to you today with our regular segment of Markets.
• 0:10
  Speaker 0: With Megan, we're going to talk about a couple things that have unfolded today.
• 0:14
  Speaker 0: The first thing is the ISM Manufacturing Index.
• 0:17
  Speaker 0: This is a gauge of the manufacturing sector in the United States.
• 0:20
  Speaker 0: This has been in contraction territory all year.
• 0:23
  Speaker 0: We're still in contraction territory and that means it's a level below 50, typically signals that we're in some recessionary conditions in the manufacturing arena.
• 0:35
  Speaker 0: Just looking at some of the details in this report, all of the components are in contraction territory, except inventories.
• 0:43
  Speaker 0: That's basically sitting at that 50 level Again.
• 0:47
  Speaker 0: Bad news from an economic standpoint.
• 0:50
  Speaker 0: But the markets are rallying today because we got comments out of Federal Reserve Chairman Jerome Powell.
• 0:55
  Speaker 0: He made it very clear that rate cuts are not anywhere in their discussion or on the horizon, but his comment about their risk of overtightening or under-tightening becoming more balanced has markets expecting that the Fed is getting much more dovish, that there will be rate cuts in 2024.
• 1:15
  Speaker 0: We've seen quite a nice rally in the equity markets and we've also seen pretty big drop in interest rates as well.
• 1:22
  Speaker 0: The short-term interest rates of the two-year yield is down more than 10 basis points just today alone.
• 1:27
  Speaker 0: Again, I think that the market's over-reading his comments and getting a little too optimistic about what can happen in 2024.
• 1:35
  Speaker 0: We still have an inflation issue.
• 1:36
  Speaker 0: It's going in the right direction, but that still is an issue, and they're making it clear that they can't risk reigniting inflation or unraveling everything that they've done thus far.
• 1:47
  Speaker 0: That's all we have today.
• 1:48
  Speaker 0: Join us next week.
• 1:49
  Speaker 0: We'll have some more economic data coming out.
• 1:52
  Speaker 0: It's a big week with ISM services and then finishing out the week with the monthly payroll report.
• 1:58
  Speaker 0: That's all we have.
• 1:59
  Speaker 0: If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com.
• 2:02
  Speaker 0: Thank you.