When markets open to digest this morning’s non-farm payroll report, the data will not matter. The Labor Department already posted weak job opening data. Furthermore, the Challenger Report indicated 75,891 job cuts in August. This is almost three-fold higher than the 25,885 cuts reported in July.
JPMorgan (JPM) economist Michael Feroli thinks the Federal Reserve should cut rates by 50 bps instead of 25 bps. The economists also believe the Central Bank should not wait until inflation is back to 2%.
The economy is not in freefall, so the Fed may decide to wait for the job market to weaken further. Fed Chair Jerome Powell may still want inflation rates to fall. The bank benefited from oil prices falling below $70.00 per barrel.
Energy investors may want to bet that the economy will strengthen after the slower summer period. Exxon Mobil (XOM) closed at $113.17, below its summer peak of $120. Devon Energy (DVN) closed at $42.08, just 4.76% above its 52-week low.
Occidental Petroleum (OXY), one of Warren Buffett’s biggest positions, closed at a new 52-week low on Thursday.
Bank stocks are about to re-visit their 52-week high. Citigroup (C), Bank of America (BAC), Morgan Stanley (MS), and JPMorgan stock are all pricing lower rates. Markets expect bank stocks to thrive as rate cuts stimulate economic activity.
