Inside Markets — Catalysts and Stimulus

Catalysts: The September Jobs Report on Friday 10/4 is the next major scheduled macro catalyst for markets. The lack of large catalysts before next Friday would normally deliver trend continuation (skewed higher) but a potential East/Gulf coasts dock workers (Longshoreman) strike on 10/1 is a bearish interim catalyst that’s now being priced into markets. Apparently, the Biden administration is intending not to intervene by invoking the Taft-Hartley Act. It’s politics as usual in an election year with an estimated daily economic impact of $5B. History has also shown that it takes ~6 days to clear one day of backlog.

Stimulus: Yesterday’s announced stimulus package is the largest since 2015 but there is no shortage of skepticism about how powerful the package will ultimately be. Yesterday’s stimulus measures basically confirmed what had been speculated upon in recent weeks and the policies don’t directly address China’s two biggest issues being massive property inventories and slow household consumption. The announcements were enough to cause a short-squeeze that should last another few days, but more stimulus is likely required to get the country’s growth trajectory above target. Rebooting China’s economy would be a strong positive for global growth in ’25 but it would also remove a major source of US goods disinflation and complicate Fed activity.