,
Ironman at Political Calculations
Summary
- The S&P 500 lost a half percent of its value from its previous week's close during the Memorial Day holiday-shortened week.
- The trajectory of the index has aligned with the dividend futures-based model projection of where the index would be, provided investors shifted their forward-looking focus toward 2024-Q4.
- The shift in focus comes as expectations of a September 2024 rate cut by the Federal Reserve solidified somewhat following the latest inflation data.
The S&P 500 (SPX) lost a half percent of its value from its previous week's close during the Memorial Day holiday-shortened week. The index ended an exciting day of trading on Friday, 31 May 2024 at 5,277.51.
In doing so, the trajectory of the index has aligned with the dividend futures-based model projection of where the index would be, provided investors shifted their forward-looking focus toward 2024-Q4. The shift in focus comes as expectations of a September 2024 rate cut by the Federal Reserve solidified somewhat following the latest inflation data.
Should that expectation hold, this rate cut would be announced on 18 September 2024, just two days before the effective end of 2024-Q3 with the expiration of the dividend futures contract for that quarter. 2024-Q4 effectively begins on Saturday, 21 September 2024.
At least, that's our initial assessment from examining the latest update of the alternative futures chart. Here's what that chart looks like:
Here's how the market moving news headlines of the week played out.
Tuesday, 28 May 2024
- Signs and portents for the U.S. economy:
- Fed officials thinking they should say more and wait more:
- Bigger stimulus developing in China:
- BOJ officials seeing mixed inflation numbers:
- Nasdaq closes above 17,000; S&P 500 slightly higher, Dow down
- Stocks end mixed, yields up after weak note auctions; Nasdaq scales 17K for the first time
Wednesday, 29 May 2024
- Signs and portents for the U.S. economy:
- BOJ officials thinking about fixing falling yen with rate hike:
- Bigger trouble developing in Eurozone, but ECB officials expected to deliver on rate cuts:
Thursday, 30 May 2024
- Signs and portents for the U.S. economy:
- Fed officials see inflation falling, signal no rush to cut rates
- Weak growth signs developing in China:
- BOJ officials starting to think they may need to really fix problems:
- Nasdaq falls 1%; Salesforce shares weigh on tech
Friday, 31 May 2024
- Signs and portents for the U.S. economy:
- Fed officials expected to cut rates in September, may soon have more problems:
- Bigger trouble developing in China:
- BOJ officials starting to think they may need to do something about inflation in Japan:
- ECB officials thinking about how much to cut interest rates in face of Eurozone inflation:
The CME Group's FedWatch Tool continued holding steady in anticipating the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 18 September (2024-Q3). The tool anticipates the Fed will start a series of 0.25% rate cuts on that date that will proceed into 2025 at 18-week intervals.
The Atlanta Fed's GDPNow tool's forecast of annualized real GDP growth rate during 2024-Q2 dropped to +2.7% from the +3.5% growth projected a week earlier. Meanwhile, the BEA's estimate of annualized real GDP growth in the first quarter of 2024 was revised down from +1.6% to +1.3%. The BEA will revise its official estimate for 2024-Q1 real GDP growth again on 27 June 2024.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Ironman at Political Calculations
Ironman is the alias of the blogger at Political Calculations, a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics. We should acknowledge that Ironman is either formerly or currently, and quite possibly, simultaneously employed as some kind of engineer, researcher, analyst, rocket scientist, editor and perhaps as a teacher of some kind or another. The scary thing is that's not even close to being a full list of Ironman's professions and we should potentially acknowledge that Ironman may or may not be one person. We'll leave it to our readers to sort out which Ironman might behind any of the posts that do appear here or comments that appear elsewhere on the web!