David Blitzer
David Blitzer
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The employment data showed a lot of weakness. Before that, I was on the fence about whether the Fed would cut 25 (basis) points or 50, but I got off in a hurry when I saw that.
data employment
The employment data showed a lot of weakness,
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The equal-weighted index will give you more exposure to smaller stocks. If you believe that small caps outperform large caps, and most data suggests they do, then the equal-weight should give you a small edge over long periods.
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The stock market suggests that there is fantastic bullish sentiment -- everybody feels good, looks good, thinks wonderfully of this economy, and indeed it is very difficult to say anything wrong about this economy,
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The stock market reaction, if they cut a quarter point, probably will be as much a yawn as anything else. If the Fed would go for half a point, which is within the realm of possibility, I think it would get a positive reaction.
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The second quarter was clearly a soft quarter, there was a lot of weakness in manufacturing. I think we'll see a rebound but it won't show up until the August numbers. Getting GM back to work will be a big plus in getting things going again.
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There's not a lot of pricing flexibility, there is a little more upward pressure on wages, and when you add that all together it can be very difficult to raise profit margins.
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there's nothing here that really points to any near-term inflationary dangers.
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From their point of view, there's no inflation danger. The main risk is to slow growth, and they should keep cutting rates.
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People will stockpile food, home heating oil if they can buy it.
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The problem is that instead of having one way to calculate corporate earnings that everybody understands, we have two or three methods. And the one that most people use, there is virtually no agreement at all about what it means.
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The bet is that this will not be repeated next month.
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A change of 7% or 8% in estimated earnings for the S&P 500 is significant, especially if investors are not fully aware of what caused the change.
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It's just a lack of consistency. Companies change the definition quarter to quarter, whichever looks best - that's not a reasonable way to do business.