In the last meeting, the Fed decided to lower interest rates for the first time in four years. Everyone was expecting a 0.25% decrease, but Powell surprised the market with a more aggressive 0.50% cut. Initially, the bulls thought, This is it, we'll start getting easy money to buy risk assets. However, analysts soon began speculating that something might be wrong. They suggested that Powell's aggressive stance could signal his belief that a recession is on the horizon.
This week two very significant reports came out the first is about the US GDP Growth rate and the second is the Initial Jobless Claims
GDP
The US economy is absolutely on fire! According to the latest report, the economy grew at an annualized rate of 3% in the second quarter of 2024. What does this mean? It means the economy is performing better than expected, with growth nearly double that of the first quarter, which was 1.6%. These numbers suggest that things are looking very strong for the US economy.
The personal expenses increased by 2.8%
The available income increased by 2.4%
Savings reached the magical 5.2% better than the initial estimations of 3.3%
Those three shows us that citizens spending more , earning more and they are trusting their economy to save more.
And despite all those increases in spending and income the Inflation is going down better that what everyone was expecting
Initial Jobless Claims
Of course the Unemployment rate is more significant but the Initial Jobless Claims going down it means that the Unemployment is also going down or at least slowing down.
The number is 218.000 better than the previous number of 222.000 and the chart also shows a downtrend meaning that the Unemployment is decreasing.
Less Unemployment means more money that means more spending that also means higher GDP.
These numbers show that the US economy is performing exceptionally well, making a recession seem unlikely. If a recession isn't on the horizon and the Fed is also lowering interest rates, the market for risk assets like stocks and crypto could be poised for a strong rally.
P.S Don't forget that China just announced a stimulus program of $284.43 billion that means that all those money will hit the markets soon
Posted Using InLeo Alpha
