Happy Friday!
Will a weakening manufacturing sector and slowing jobs growth cause the Federal Reserve to cut rates 0.50% at the September meeting? Will the Presidential election provide a boost for stocks? Viral TikTok free money video causes problems for unsuspecting viewers. The NFL kicks off its 10th season! Tiny Pudu Fawn was born at NY Queen’s Zoo.
Now that summer has passed, we are bringing back the Friday 5...so from now until Memorial Day there will be five stories per week for your reading enjoyment!
#1 – Weekly Market Recap
The shortened holiday week was challenging for investors.
The S&P 500, Nasdaq, and Dow Jones Industrial Average struggled as investor concern grew over softening economic and jobs data, with the S&P 500 on-pace for it’s worst week since April.
Tuesday’s report that US manufacturing slowed for the fifth consecutive month and the 21st time in the last 22 months resulting in a cautious tone for investors to start the week. The New Orders index, which is used as a gauge for future economic growth, fell 2.8% in August to 44.6. The Prices Index, which is viewed as a reading on inflation, rose 1.1% to 54, up from 52.9% in July. Combined, the manufacturing data was softer than expected and painted a picture of slowing growth and higher prices for the manufacturing portion of the economy.
This morning’s jobs report revealed that the economy added fewer jobs than expected in August with 142,000 nonfarm jobs added, lower than the 165,000 expected by economists. However, the unemployment rate ticked down to 4.2% from July’s 4.3% reading.
Overall, the softening economic and jobs data provided a weak backdrop for investors in the first week of September. Combined, the softer than expected manufacturing and jobs data could lead the Federal Reserve to take a more aggressive stance at the September meeting and reduce interest rates by 0.50% rather than 0.25%.
At DSG Capital Advisors, we interpret the data as indicating that the current Federal Reserve interest rate policy is too restrictive. We would encourage the Federal Reserve to be more aggressive at its September meeting and cut rates by 0.50%.
As we wrote during the beginning of the pandemic, we thought the Federal Reserve held interest rates too low for too long and overstimulated the economy. We now think they are doing the opposite and are holding rates too high for too long amid clear signs that the economy is slowing and inflation is falling to acceptable levels.
#2 – Post Election Boost for Stocks?
With the 2024 U.S. Presidential election just two months away, investors are focusing on the potential stock market reactions to the election outcome. The next milestone in the race for President will be the debate scheduled for September 10th.
As shown in the chart below from Goldman Sachs, the final months leading into a Presidential election are historically both volatile and negative. The chart below illustrates that September and October are typically weaker-than-average months for the stock markets during Presidential election years.
However, the stock market has historically performed very well after the Presidential election. Of course, each election outcome may vary from the past, but with history as a guide it may benefit investors to be patient leading into the Presidential election.
Source: Goldman Sachs (9/4/2024)
#3 – No Free Lunch
A viral TikTok video misled some gullible viewers into believing there was a way to get “free” cash from Chase ATMs. The videos depicted users depositing checks for inflated amounts and quickly withdrawing funds before the checks could bounce.
What viewers believed to be a “glitch” in the banking system was simply too good to be true. Chase bank addressed the situation, emphasizing that what seemed to be a banking loophole was check fraud.
Viewers' excitement quickly turned to despair, as many users who attempted the scheme ended up with massive negative account balances when Chase corrected the transactions and recovered the funds.
Financial educator Jim Wang explained, “Bank errors in your favor are almost never in your favor. In the case of this ‘glitch,’ it was just check fraud… It’s not your money, and when they figure it out, they will want it back.”
If something seems to be too good to be true, it probably is...especially when the source is a TikTok video.
#4 – NFL Kicks Off 105th Season
The NFL kicks off its 105th season this week featuring high-stakes matchups and a historic first for South America.
Last night the Kansas City Chiefs, led by Patrick Mahomes and Travis Kelce, defeated the Baltimore Ravens 27-20 in a clash of Super Bowl favorites. The Chiefs, with the top odds to win the Super Bowl at 5-to-1, and the Ravens, third at 10-to-1, aimed to start the season off with a win. This victory marks an important step for the Chiefs as they seek to become the first team in history to win three consecutive Super Bowls.
Tonight, the Green Bay Packers and Philadelphia Eagles will face off in the NFL's first-ever South American game at Arena Corinthians in São Paulo, Brazil. The stadium, a key venue for the 2014 World Cup, seats 50,000 and promises a vibrant atmosphere for this landmark event.
The hometown favorite Minnesota Vikings will be on the road Sunday at MetLife stadium to play the New York Giants, with the kickoff set for noon central. Despite slight favor from Vegas in week 1, the Vikings are viewed as longshots for the playoffs at just a 20% chance and 80-to-1 Super Bowl odds.
With the departure of Kirk Cousins and injury to rookie quarterback JJ McCarthy, the Vikings’ season hinges on whether Justin Jefferson and head coach Kevin O’Connell can revitalize former top pick Sam Darnold’s career. Along with skepticism about the Vikings offense, fans are wondering if defensive coordinator, Brian Flores, can build on last year’s defensive progress.
Whether the 2024 season brings surprise victories or further disappointment for Vikings fans will start to be revealed Sunday!
Source: Draft Kings
#5 – Pudu Fawn
A tiny southern pudu fawn, a species native to Chile and Argentina, has been born at the Queens Zoo in New York City.
Born on June 21, 2024, the fawn weighed just 2 pounds at birth and is expected to grow to 15 to 20 pounds in adulthood.
The southern pudu, one of the smallest deer species in the world, is classified as near threatened by the International Union for Conservation of Nature. Its population is in decline due to factors such as habitat development and the impact of invasive species.
The Wildlife Conservation Society, which oversees the Queens Zoo, is working to maintain a genetically diverse population of southern pudus through breeding programs in collaboration with other zoos. Since 2005, eight pudu fawns have been born at the Queens Zoo.
The newborn fawn will reside with its parents in the zoo's habitat, while two additional pudus are housed at the society's Prospect Park Zoo in Brooklyn.
Have a great weekend!
Denver and the DSG Capital Advisors Team