Goldman Sachs' David Mericle: Latest batch of data suggest 'stakes are not high' for rate cuts
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3 reasons the Fed hasn't cut rates yet this year
Wall Street has priced in a 94.2% probability of the Federal Reserve cutting interest rates in September. JPMorgan Asset Management's fixed income portfolio manager, Kelsey Berro, joins Yahoo Finance Senior Reporter Allie Canal on Market Domination to explain the three reasons the Fed still hasn't cut rates this year despite macro conditions being comparable to last year's. To watch more expert insights and analysis on the latest market action, check out more Market Domination. Wall Street is pricing in a 94% chance of a 25 basis point rate cut in September after July CPI came in better than expected, albeit with an increase to the core reading. My next guest agrees with that assessment and says the Fed is likely more worried about a slowdown in the labor market versus an optic and inflation. Joining me now is Kelsey Barro, JP Morgan Asset Management fixed income portfolio manager. So Kelsey, like we just said, you're in that camp of 25 basis point cuts and you say it's a similar environment to one we saw one year ago. Maybe's a little bit different. So set the scene for us. What's similar, what's different, and what are the lessons learned? Right. So if we compare ourselves to September of last year, the Fed was right about to cut 50 basis points and to cut 100 basis points by the end of the year. That brought us from five and 3/8s to four and 3/8s today on the Fed funds rate. Now, where are we? Well, if you just look at the deceleration in payrolls growth in the last three months, it would suggest that the Fed should absolutely be cutting rates again. So the three-month moving average on payroll's growth is at 35,000. The six-month moving average is at 80,000. That's about the same if not weaker than it was when the Fed was looking at cutting 50 basis points. But it is not the same world as it was a year ago. So what is different now? Well, one, the Fed funds rate is 100 basis points lower. So we're already at a less restrictive spot to start with. Second of all, the unemployment rate isn't moving higher. And that's the thing that Chair Powell has been emphasizing, which is that if labor demand is falling, but labor supply is also falling and the unemployment rate stays the same, it's not necessarily going to set off the same alarm bells as it did last year when the unemployment rate was rising from 3.5% to around where we are today, which is 4.2%. And then of course, the other big difference is that while there are mixed signals about how much tariff inflation the US economy is going to have to withstand and consumers are going to have to withstand, how much is going to be passed through, we do know that in the short term, we're not likely to see a lot of further progress towards the Fed's inflation goal of 2%, at least in the short term. And that's the reason why I don't think that a 50 basis point rate cut is on the table, but we do think that the Fed is sensitive to downside risks to growth and inflation is going to deliver that cut in September. Related Videos Retail trading trends: Top names investors are buying How Trump's pressure on Fed Chair Powell could backfire Stocks close mixed, the Dow ends the week higher Berro and Jones on Consumer Sentiment, Labor Market, Rate Cuts Sign in to access your portfolio
Yahoo
an hour ago
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Joby Aviation (JOBY) Achieves Historic eVTOL Flight Between Public Airports in FAA-Controlled Airspace
Joby Aviation recently marked a landmark moment with its successful piloted eVTOL flight between two U.S. airports, reinforcing its readiness for commercial operations. This achievement, alongside its progress in preparing for FAA certification and strategic partnerships, has likely influenced the company's 125% share price rise over the past quarter. Despite Joby's ongoing financial losses reported in its latest earnings, the broader market trend of investor optimism and anticipation of future Federal Reserve actions, along with the Dow Jones hitting all-time highs, may have also played into the increased investor interest and confidence in Joby's potential growth trajectory. We've identified 4 weaknesses for Joby Aviation (1 shouldn't be ignored) that you should be aware of. We've found 19 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. Over the past year, Joby Aviation's total shareholder return was 222.91%, reflecting a substantial gain against the backdrop of its ongoing developments and strategic ventures. This impressive performance has significantly outpaced the US Airlines industry return of 70.8% and the broader US market return of 17.1% over the same period. Such momentum underscores the growing investor confidence in Joby's future prospects despite its current financial challenges. The recent advancements, including the successful eVTOL flight, have likely contributed to positive revenue and earnings expectations. However, the company remains unprofitable and is forecast to continue incurring losses in the near term. The current share price of US$16.63 surpasses the consensus analyst price target of US$10.83, indicating potential market exuberance or confidence beyond what analysts currently project. Explore Joby Aviation's analyst forecasts in our growth report. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include JOBY. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
Yahoo
an hour ago
- Yahoo
Ubiquiti (UI) Sees 5% Decline Over Past Month
Amidst the buoyant broader markets, where the Dow reached an all-time high and major indices like the S&P 500 and Nasdaq faced slight dips, Ubiquiti experienced a price movement of a 4.54% decline over the past month. This movement contrasts somewhat with market trends which posted overall gains. The company's share performance during this period might have been influenced by various factors, although specific events were not detailed to pinpoint a definite cause. While overall market optimism was influenced by prospects of Federal Reserve rate adjustments, broader economic forces and external market developments could have also weighed on Ubiquiti's stock. Be aware that Ubiquiti is showing 1 possible red flag in our investment analysis. We've found 19 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. Over the past year, Ubiquiti's shares have delivered a total return including dividends of 128.53%, which is impressive. This performance stands out especially when compared to the broader US market's return of 17.4% and the US Communications industry's return of 43.8% during the same one-year timeframe. Ubiquiti's ability to outpace both the market and industry suggests strong investor confidence, driven by significant earnings growth and an effective business strategy. The company's recent earnings announcements have shown marked improvements, with third-quarter net income rising to US$180.44 million from US$76.29 million year-over-year. These figures bolster Ubiquiti's earnings forecasts, even as revenue growth projections of 5.8% annually fall behind the market's 9.3%. Despite these earnings achievements, Ubiquiti's current share price of US$402.80 remains above the consensus analyst price target of US$343.50, indicating a substantial premium that some investors might view with caution. The recent dip in Ubiquiti's share price amidst broader market gains might reflect these valuation concerns and potential adjustments in market expectations. Click here to discover the nuances of Ubiquiti with our detailed analytical financial health report. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include UI. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
