Market Musings 6/19/2024

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

Have you ever wondered why the stock market rises on unemployment?

Well, it’s all about #RateCuts

The Fed uses interest rates to slow the economy to fight inflation.

A consequence of this is weakening #LaborMarkets-slowing hiring and increasing unemployment.

Despite sharply increasing rates since March 2022, jobs have remained very resilient with unemployment only ticking up from 3.6% to 4% last month.

This has allowed the Fed to hold rates #HigherForLonger.

Weaker jobs could give the Fed more confidence inflation progress is sustainable and potentially accelerate #RateCuts.

However, as we get more confident inflation is slowing, markets will likely start to look for the opposite.

Investors are hoping for the so-called “just right” #Goldilocks soft landing-where the economy cools off just enough to lower inflation, but without tanking jobs and growth to avoid a recession.

With inflation progress back on track, investors will want jobs to start stabilizing.

Otherwise, markets may start to fall on recession fears…

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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.

Original Photo by Pixabay.