TRG Fast Facts

By TRG Advisors on August 29, 2024

Weekly data-driven insights on the markets and economy

1. Dow Jumps Higher Thanks to Powell

The Dow hit a fresh new high Monday, continuing on last week’s gains due to dovish words from Fed Chair Jerome Powell last week in Jackson Hole, WY. Traders are unanimous in their outlook of a 25 basis points cut at the September 17-18 policy meeting, pushing equity markets higher. Tuesday had some listlessness, with light trading for each of the indices with the S&P losing .3%, Dow down .1% and the Nasdaq Composite slightly in positive territory.[i]

2. Fed Concern Focused on Jobs Versus Inflation

The Fed has stated: “We do not seek or welcome further cooling in labor-market conditions,” and doubled-down with “We will do everything we can to support a strong labor market,” in language fresh out of Jackson Hole. This is the clearest sign yet that the Fed has made a pivot from inflation readings to concerns for the job market. In Fed Chair Jerome Powell’s widely anticipated speech as inflation heads towards the Fed’s 2% annual goal, he mentioned risks to the labor market outweigh upside risk to inflation.[ii]

3. Markets Await Earning from AI Darling Nvidia

Tearing up the tape with year to date 163% returns, Nvidia will report earnings after the bell on Wednesday. The company is expected to report revenue of a whopping $28.7 billion in the quarter alone, more than double the $13.5 billion in the same period a year ago. AI, a big piece of its data center business, is looking to bring in $24 billion in revenue alone. Wall Street is expecting the company to not only beat Q2 expectations, but to raise guidance.[iii]

4. Big Apple Shines in Latest Home Price Records

Home prices jumped nationally to a new record, with an increase of 5.4% since June 2023. New York led all cities in the index with a burning 9% clip. The report from the S&P Case-Shiller Index also broke out home values by price tier, dividing each city’s market into three. Interestingly, New York’s low tier has the largest five-year outperformance, whereas San Diego has seen the largest appreciation in higher-tier homes. Portland, Oregon, lagged all cities with just a 0.8% annual increase.[iv]

5. Private Equity Looks for Game in Football Stakes

Select private equity firms like Ares Management, Blackstone, Carlyle Group and others are looking to commit $12 billion for the opportunity to take up to a 10% ownership in National League Football teams. The NFL is the last of major sports to allow private equity, which can purchase ownership of up to 30% of teams in the NBA, NHL and Major League Baseball. Realizing that unless you’re the wealthiest of wealthy individuals, NFL team stakes were getting out of reach and fresh capital will allow for new stadiums and related projects. The NFL voted in favor this change Tuesday night.[v]

6. Panama Canal Flows Back to Normal Daily Shipping Numbers

The Panama Canal, which under normal circumstances moves 46% of the containers from Northeast Asia to the US East Coast, is finally normalizing after a severe drought. Restrictions were causing a global shipping bottleneck that only allowed 30-32 vessels through a day, and down to as low as 24 vessels at the height of the drought. About 36 vessels are passing through the canal now, and rainfall is expected to lift Lake Gatun’s water levels and provide further relief from last year’s El Niño. The Panama Canal Authority is also looking to other solutions to avoid future bottlenecks.[vi]

[i] Evans, Brian and Lisa Kailai Han, “S&P 500 ticks higher as Nvidia rises ahead of earnings: Live updates,” CNBC, August 27, 2024, https://www.cnbc.com/2024/08/26/stock-market-today-live-updates.html. Accessed August 27, 2024.

[ii] Bartash, Jeffry, “Unemployment is the Fed’s biggest enemy now, Powell says. Not inflation,” MarketWatch, August 25, 2024, https://www.marketwatch.com/story/unemployment-is-the-feds-biggest-enemy-now-powell-says-not-inflation-cd0a5b1b?mod=the-fed. Accessed August 27, 2024.

[iii] Howley, Daniel, “Nvidia to report Q2 earnings Wednesday in major test for AI trade,” Yahoo!Finance, August 27, 2024, https://finance.yahoo.com/news/nvidia-to-report-q2-earnings-wednesday-in-major-test-for-ai-trade-171923693.html. Accessed August 27, 2024.

[iv] Olick, Diana, Home prices hit record high in Jun on S&P Case-Shiller Index,” CNBC, August 27, 2024, https://www.cnbc.com/2024/08/27/home-prices-hit-record-high-in-june-on-sp-case-shiller-index.html. Accessed August 27, 2024.

[v] Golden, Jessica and Ozanian, Michael, “NFL expected to vote in favor of private equity ownership; select firms to commit $12 billion,” CNBC, August 27, 2024, https://www.cnbc.com/2024/08/27/nfl-private-equity-ownership-vote.html. Accessed August 27, 2024.

[vi] McDonald, Michael, “Panama Canal Eases Limits That Caused Global Shipping Bottleneck,” Yahoo!Finance, August 27, 2024, https://finance.yahoo.com/news/panama-canal-eases-limits-caused-143059958.html. Accessed August 27, 2024.