No Country For Old Rates 📊

Did you know that in ancient Rome, banking practices included lending money and exchanging currencies?

Just as Romans adapted to financial necessities, so too do the market movers of today.

This edition covers the following key aspects of our current economic landscape:

• Signs Of Moderating Wages: First, job openings outnumber unemployed workers, hinting at wage inflation moderation. This balance suggests a positive outlook for inflation control and stock markets 💵

• China And The Mag-7: Next, the economic strains in China affect tech giants like Apple and Tesla, highlighting global market challenges and competition 🐉

• M&A On The Move: Finally, with potential interest rate cuts, the environment for mergers and acquisitions is heating up, possibly revitalizing Wall Street's investment sector 👀

Dive into these analyses for sharp insights into today's economic and investment landscape.

Signs Of Moderating Wages 💵

According to the latest JOLTS report, there are still plenty of job openings at 8.86 million, or 1.4 openings for every unemployed worker.

In addition, quits are falling, which should help to moderate wage inflation and boost productivity 📈

Wage inflation tends to be higher for job switchers than for job stayers.

Moderating wages should help to pull inflation down further—more good news for stocks 🤑

China And The Mag-7 🐉

Two of the Magnificent-7 are less magnificent, at least for now.

That's because China is in a recession and Chinese consumers are buying fewer of Apple's iPhones and Tesla's EVs 📉

These two companies are also facing more competition from Chinese producers.

So, they are down 11.6% and 27.3%, respectively, so far this year.

Also down by 5.0% ytd is Alphabet, which is deemed to be late to the AI party with the new technology threatening its search business.

The remaining four of the Mag-7 are up by more than the S&P 500 📈

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M&A On The Move? 👀

Mergers and acquisitions, usually an on-and-off game, may be heading back to a busy phase.

Back in 2021, corporate America was feeling the urge to merge after the economy and stock market thawed out from their brief Covid-induced freeze.

But the flurry of deals three years ago was followed by a slowdown as the Federal Reserve raised interest rates starting in early 2022 📈

The likelihood of interest rate cuts by the Fed at some point later this year remains high, even if Chair Jerome Powell and the market keep pushing the timeline of the first cut down the road.

Nevertheless, meaningful cuts over the next two years, from both the Fed and European Central Bank, will lower the cost to borrow money to finance deals.

An increase in deal making should give a boost to Wall Street’s investment banking stocks in the coming months 💵

Inner Circle Macro Update 🔍

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