The stock market is clearly in a somewhat vulnerable situation and has lost some upward momentum. This is a definite fact. Today, there were fluctuations in the market. In the morning, New York time, the ADP employment report was released, and the numbers were not very good. Employment increased by 99,000 compared to the previous day, which was far below the forecast of 144,000, and it also decreased compared to last month, recording the lowest level since January 2021. As you know, the ADP employment report is a kind of precursor that comes out before the U.S. Department of Labor's labor data. Sometimes it aligns with the official U.S. statistics, and other times it does not, but employment is currently a major concern, so it had an impact on the market. Additionally, the number of new unemployment claims, which is released weekly, shifted slightly. It came out at 227,000, a decrease of 5,000 from the previous week.

More than two weeks of unemployment benefit applications have been submitted, with the number of ongoing unemployment benefit claims dropping by 22,000 to 1,318,800. There was significant interest in the service sector PMI and the ISM service PMI, which were not reported positively. However, the results were still acceptable, coming in at 51.5, exceeding the forecast of 51.3 and the previous figure of 51.4. The service industry, which constitutes a large part of the U.S. economy, remains above the threshold of 50, indicating expansion, and there are currently no concerns about a recession. If we were to break it down, it would be a ratio of 2 to 1, with two positive outcomes and one negative. However, looking at today's stock market, the results were not particularly impressive. Tesla performed well, and Nvidia saw a slight rebound, which helped the Nasdaq close slightly up, but the Dow, S&P 500, and Russell 2000 all declined. During the trading session, there was a bit of fluctuation.

There was an upward movement, but it couldn't be maintained. Perhaps the market has become somewhat restrained while waiting for the upcoming U.S. unemployment rate and non-farm employment figures. This is something that didn't use to be very important in the past, but seeing the market being swayed by just one or two data points indicates that the stock market is definitely lacking in momentum and appears weak and precarious. The remaining tasks are roughly twofold. Anyway, since there is an election this year, the first question is how much more money will be injected into the economy, and the second is regarding the interest rate cut this month, which is certain, but how much will it be? The first question about how much more money will be injected is in the domain of Treasury Secretary Yellen. Today, Yellen delivered a speech in North Carolina, which is classified as a swing state, essentially intervening in the presidential election.

Wake Tech Community College has mentioned that there are people trying to abolish the Inflation Reduction Act, a key legislation of the Biden administration, particularly from the Republican side. However, if that happens, it would clearly be a historic mistake, as can be seen here in North Carolina. Secretary Yellen referred to the 90,000 households in North Carolina that received housing tax credits through this act, stating that these households received a total of $100 million in residential clean energy credits, plus an additional $60 million in housing energy efficiency credits. During her speech, she emphasized that if this act is repealed, the costs for working families will rise. She pointed out that prices are still not under control, and the burden will increase. Moreover, she stated that if this support legislation is repealed...

Many manufacturing jobs that do not require a college education will disappear. This statement was aimed at stirring the sentiments of low-income blue-collar voters living in North Carolina. On the other hand, Trump delivered a speech in New York, where he has now become close friends with Musk. He mentioned that if he were to enter the White House, he would establish a government efficiency committee led by Musk. He promised to reduce the corporate tax rate to 15% and stated that for every new regulation created, one regulation would be eliminated, pledging a strong deregulation drive. He also spoke about the Green New Deal, calling it part of the Green New Deal initiative, and labeled the Biden administration's key pledge, the Green New Deal, as the biggest scam in history, vowing to abolish it if he returns to office. The primary race is tight, with experts having differing opinions and public sentiment fluctuating.

The polls are showing a very close race, so it seems we should consider a 50-50 scenario. However, looking at the betting data from PredictIt, there has been an increase in bets on Trump recently. Ultimately, the Democrats must win Pennsylvania, a key battleground state, to have a chance at victory. This is crucial since there are 19 electoral votes at stake, and it is essential for the Democrats to secure this state. According to PredictIt, the probability of Trump winning Pennsylvania's electoral votes is increasing. As a result, the Democrats likely feel a responsibility to inject more money into the economy and stimulate growth to maintain favorable economic conditions leading up to the presidential election. Today, there was also a statement from Yellen reflecting this reality, where she mentioned that the pace of job creation has been...

Although it has slowed down, the United States still maintains a healthy labor market, and while the unemployment rate has recently risen to 4.3, it is still very low by historical standards. Currently, it is a normal and appropriate level for absorbing new entrants into the labor market. Data has emerged indicating growth in consumption and investment, as seen with the 3.0 GDP in the second quarter. The U.S. economy and labor market are in a healthy state. This can be interpreted as a message that the aim is to present the U.S. economy and labor market as healthy until the elections. There are various opinions on whether the Federal Reserve will lower rates by 50 basis points or 25 basis points, and it seems there are some subtle differences in stance on this matter. However, it appears that Wall Street definitely hopes for a 50 basis point cut to provide stimulus. There seems to be an underlying sentiment in that regard. Today, I have two interviews to share, and the first one...

Michael Ferrell is being interviewed by JP Morgan's economist. He suggests that we should aim for a 50 basis point hike. He argues that it is better to return to a neutral interest rate as quickly as possible. Currently, the neutral rate is estimated to be around 4%, which is about 150 basis points lower than now. He states that there is no reason to keep interest rates set above this level for an extended period.

The host asks, But this morning, the services PMI doesn't seem that bad, and the number of new unemployment claims isn't that bad either. Isn't it a bit too much to say that the economy is definitely slowing down? Could this be an overreaction? He responds, However, if you wait until the economy collapses, you may be too late. I believe it's wise to act before the situation deteriorates further. The host then continues with another question.

I ask, if possible, how can we frame it in a way that minimizes market panic? To interpret, it means that market participants believe the economy isn't that bad. However, if we suddenly lower it by 50, it could signal that there is a significant problem. Based on specific data, if the economy is perceived to be so poor that it warrants a decrease, the market might misjudge the situation and panic. This is what we are concerned about. 

So, this economist has explained well how Chair Powell has rapidly changed interest rate policies in recent years. Even when he shifted to a very hawkish stance, he communicated it effectively. In hindsight, it has been confirmed that those drastic changes were indeed the right decisions. Now, we find ourselves in a situation where we need to make the opposite decision. Since Powell has already communicated effectively when raising rates, he should also explain this effectively to the public and the market when lowering them.

They say that this is the case. On the other hand, George Nagari, the chief economist at a global accounting firm, argues that the interests of Wall Street may differ. He opposes a 50 basis point cut, stating that such a move could send a wrong message about the urgency of the situation and potentially cause issues in the market and the economy. He emphasizes that unless there is a compelling reason, a cut of this magnitude could be very risky. Looking at the current data, he points out that there is no clear evidence suggesting the U.S. is heading into a recession. Interest rates are declining, inflation is decreasing, and furthermore, given that the Chinese economy is not performing well, it is essentially exporting global deflation. This is beneficial for American consumers because the U.S. economy largely relies on consumption. He mentions that people are trying to find recession indicators in quantitative measures like the three rules, but even the creator of these measures says this time it's not the case.

So, I think this is not a recession right now. If there were a significant slowdown in the service sector, meaning a tremendous decline in consumer spending, it would be serious, but I haven't seen any signs of that yet. This is what I am saying. Then, analyzing point two, the unemployment rate itself is not the only economic indicator. Historically, the market has reacted broadly to various indicators. The market dropped sharply on August 2nd, reflecting the narrative of a recession, and after that, the Nikkei fell by 12%. However, nothing significant happened after that; ten days later and twenty days later, the stock market was still moving. In fact, interpretations of these movements often come later. From a data perspective, in this employment report, I do not expect strong figures such as a very low unemployment rate or a drastic change in non-farm payroll numbers. There is a possibility that somewhat weak figures may come out.

However, despite that, it is still not likely that we will head into a recession. Please keep this in mind. Now, I will conclude this brief video prepared for today, and I also ask for your subscriptions and likes. Thank you.

[홍장원의 불앤베어] 도박판이 점점 트럼프에 베팅한다. 급해진 민주당, 옐런에게 기댈까

월가에서 월급받는 부자되는 비법을 전수합니다!

[홍장원의 불앤베어] 도박판이 점점 트럼프에 베팅한다. 급해진 민주당, 옐런에게 기댈까

[홍장원의 불앤베어] 도박판이 점점 트럼프에 베팅한다. 급해진 민주당, 옐런에게 기댈까

스크립트