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In terms of purely economic reports — not single-quarter earnings results from one particular company — this morning’s Personal Consumption Expenditures (PCE) is the most important of the week. PCE numbers are most readily referred-to by Fed Chair Jerome Powell and others at the Fed in terms of monetary policy on interest rates.
Currently, the game is: based on strength (or weakness) in select economic prints like PCE, odds increase for either a 25 basis-point (bps) cut or a 50 bps cut. The more corrosive to the general market, the closer we get to a deeper cut (to a range of 4.75-5.00%) at the September 18th meeting.
Personal Consumption on Even Keel
Those looking for that deep 50-bps cut are not likely to find it from this morning’s July PCE data. The PCE Index month over month on headline reached +0.2% — warmer than the +0.1% posted for June — was in-line with expectations. Core (ex-food and fuel costs) PCE month over month was also a steady, boring +0.2%.
Year-over-year PCE on headline came in at +2.5% — as expected, matching both the previous month’s tally and multi-year lows going back to February of 2021. Core year-over-year PCE was also in-line with June’s read: +2.6%, down 10 bps from estimates.
Income and Spending Balance in Friday’s PCE
July Personal Income (on a nominal basis, a snapshot) did tick slightly higher, to +0.3% from the +0.2% expected and reported for June. Personal Spending, also nominal, wound up in-line at +0.5%, up from the +0.3% reported a month ago but still below the +0.7% we saw in March of 2024.
Real Personal Spending (adjusted for inflation) was the hottest print of them all: +0.4%, above the +0.2% from June, and the highest since late last year. Even still, we don’t expect consumer appetites to bust through the 5%+ interest rates at these levels. It appears from this vista that inflation remains under control.
Pre-Market Reaction to July PCE
Pre-market futures were already nicely in the green ahead of the PCE report’s release this morning. We’re still up now, but less so than from before the report. The Dow was +114 points and is now +62. The S&P 500 has pulled back 5 points from earlier, to +22 in early trading, while the Nasdaq went from +169 points to +145. More tacit understanding that a “soft landing” will require a 25 bps cut from here.
Q2 Earnings Roundup: JKS
Chinese alt-energy major JinkoSolar (JKS - Free Report) posted Q2 results wide of the mark — in either direction — from Zacks consensus estimates. While earnings per share of 97 cents trounced the expected $0.05 per share, a positive surprise of +1840%, revenues of $3.31 billion in the quarter was well shy of the expected $3.85 billion, and -21.6% year over year. Yet the company did see +34% growth in module shipments year over year, and shares are currently battling the zero-balance: JKS had been +3.8% on the news, but -1.2% at this minute.
Image: Bigstock
PCE Numbers Keep "Soft Landing" Narrative Aloft
Friday, August 30th, 2024
In terms of purely economic reports — not single-quarter earnings results from one particular company — this morning’s Personal Consumption Expenditures (PCE) is the most important of the week. PCE numbers are most readily referred-to by Fed Chair Jerome Powell and others at the Fed in terms of monetary policy on interest rates.
Currently, the game is: based on strength (or weakness) in select economic prints like PCE, odds increase for either a 25 basis-point (bps) cut or a 50 bps cut. The more corrosive to the general market, the closer we get to a deeper cut (to a range of 4.75-5.00%) at the September 18th meeting.
Personal Consumption on Even Keel
Those looking for that deep 50-bps cut are not likely to find it from this morning’s July PCE data. The PCE Index month over month on headline reached +0.2% — warmer than the +0.1% posted for June — was in-line with expectations. Core (ex-food and fuel costs) PCE month over month was also a steady, boring +0.2%.
Year-over-year PCE on headline came in at +2.5% — as expected, matching both the previous month’s tally and multi-year lows going back to February of 2021. Core year-over-year PCE was also in-line with June’s read: +2.6%, down 10 bps from estimates.
Income and Spending Balance in Friday’s PCE
July Personal Income (on a nominal basis, a snapshot) did tick slightly higher, to +0.3% from the +0.2% expected and reported for June. Personal Spending, also nominal, wound up in-line at +0.5%, up from the +0.3% reported a month ago but still below the +0.7% we saw in March of 2024.
Real Personal Spending (adjusted for inflation) was the hottest print of them all: +0.4%, above the +0.2% from June, and the highest since late last year. Even still, we don’t expect consumer appetites to bust through the 5%+ interest rates at these levels. It appears from this vista that inflation remains under control.
Pre-Market Reaction to July PCE
Pre-market futures were already nicely in the green ahead of the PCE report’s release this morning. We’re still up now, but less so than from before the report. The Dow was +114 points and is now +62. The S&P 500 has pulled back 5 points from earlier, to +22 in early trading, while the Nasdaq went from +169 points to +145. More tacit understanding that a “soft landing” will require a 25 bps cut from here.
Q2 Earnings Roundup: JKS
Chinese alt-energy major JinkoSolar (JKS - Free Report) posted Q2 results wide of the mark — in either direction — from Zacks consensus estimates. While earnings per share of 97 cents trounced the expected $0.05 per share, a positive surprise of +1840%, revenues of $3.31 billion in the quarter was well shy of the expected $3.85 billion, and -21.6% year over year. Yet the company did see +34% growth in module shipments year over year, and shares are currently battling the zero-balance: JKS had been +3.8% on the news, but -1.2% at this minute.
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