Latest / Markets with Megan: A Quick Financial Markets Update / Tech Rally or Mirage? Unpacking the Market Rebound | Episode 163 | 08-21-24

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Tech Rally or Mirage? Unpacking the Market Rebound | Episode 163 | 08-21-24 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: It's been an impressive comeback.
• 0:02
  Megan Horneman: Guys, this is Megan Hornman and you're listening to Markets with Megan.
• 0:05
  Megan Horneman: Thanks for being patient.
• 0:07
  Megan Horneman: I was out last week so I know there's a lot that's been going on, but I wanted to address today why we've been seeing the big rebound in stocks over the past two weeks.
• 0:15
  Megan Horneman: Remember it was just August 5th that we had seen a pretty big pullback in the market and we have rebounded almost all the way back.
• 0:24
  Megan Horneman: There's a couple of reasons driving this market up.
• 0:26
  Megan Horneman: First of all, it is highly concentrated back into that growth and technology space, so we're seeing that basically drive this market higher.
• 0:34
  Megan Horneman: Secondly, we've gotten some earnings, some of the retailer earnings, but specifically those discount retailers your Walmart, your Target.
• 0:42
  Megan Horneman: These came in a little bit better than expected, and so there's this optimism around the consumer.
• 0:48
  Megan Horneman: This coincided with a better than expected retail sales report and all of a sudden, everybody thinks the consumer is in fantastic shape.
• 0:55
  Megan Horneman: Let's just step back there for a sec.
• 0:57
  Megan Horneman: Let's be careful in saying that the consumer is in fantastic shape and it's going to help lead this soft landing in the economy, because consumers right now feel like we're in a recession, inflation in the areas where it's most important and most needed to spend money.
• 1:12
  Megan Horneman: These are still running much higher than wages are, and when you look at some of the recent New York Fed surveys, these don't show a pretty picture for the consumer.
• 1:22
  Megan Horneman: You've got the most amount of people that have credit card balances that think they're going to miss a debt payment.
• 1:28
  Megan Horneman: This is the most amount of people in this survey that we've seen since April of 2020.
• 1:32
  Megan Horneman: You also have the most amount of people who think they're going to be unemployed soon the highest level since 2014.
• 1:39
  Megan Horneman: This doesn't really make sense.
• 1:41
  Megan Horneman: A lot with that retail sales report.
• 1:41
  Megan Horneman: This doesn't really make sense.
• 1:42
  Megan Horneman: A lot with that retail sales report.
• 1:43
  Megan Horneman: Also, keep in mind that some of the retailers Amazon Prime Day July 15th, that it was followed by Best Buy, target, walmart also putting big sales in July.
• 1:57
  Megan Horneman: This drove consumers to maybe pull forward some of that back-to-school spending into July as opposed to August.
• 2:02
  Megan Horneman: We'll see if we get that back in August.
• 2:06
  Megan Horneman: The last thing is the optimism now because the inflation is coming down towards the Fed's target.
• 2:13
  Megan Horneman: The employment market is starting to show signs of cracking that.
• 2:16
  Megan Horneman: The Fed will come in with aggressive rate hikes for the rest of this year.
• 2:20
  Megan Horneman: The market's pricing in the chance we might see 50 basis points in September.
• 2:23
  Megan Horneman: We think that's way too aggressive, but the market's also pricing in the chance we might see 50 basis points in September.
• 2:25
  Megan Horneman: We think that's way too aggressive, but the market's also pricing in that they'll follow with additional rate cuts in their next two meetings for the rest of this year.
• 2:32
  Megan Horneman: Again, way too early to bank on this, but the market surely is.
• 2:36
  Megan Horneman: So we're seeing valuations back to where they were before we had that pullback in early August.
• 2:42
  Megan Horneman: We're seeing the drivers of this market back to being those same tech names as well.
• 2:47
  Megan Horneman: This just isn't a market that we think is necessarily steady.
• 2:50
  Megan Horneman: We'll get Nvidia earnings next week that can make or break this tech rebound, and then we'll get the Fed Reserve Chairman, jerome Powell.
• 2:58
  Megan Horneman: He will come out on Friday in the annual Jackson Hole Symposium, which has in the past, led to some volatility in the markets.
• 3:06
  Megan Horneman: So there's a lot to look forward to here that can disrupt this rally or fuel this rally.
• 3:11
  Megan Horneman: The other big report that we'll look at before the next Fed meeting will be the employment report for the month of August, and we'll get that in the first week of September.
• 3:20
  Megan Horneman: So we had a lot more stuff to get back to you with.
• 3:23
  Megan Horneman: We'll be back with the minutes from the last FOMC meeting to see if they gave us any more indication on what the Fed's path will be.
• 3:32
  Megan Horneman: Thank you very much, and if you like this, please don't forget to like this, subscribe, hit that alarm bell and if you'd like to hear additional podcasts, you can find the rest of our podcasts at marketswithmegan.
• 3:42
  Megan Horneman: fm.
• 3:44
  Megan Horneman: Thank you so much.