investors they're sifting through a number of reports today that the latest reading on second quarter GDP showing a slowing growth in key areas across the U.S economy the print was revised lower to 2.1 percent on the heels of declining business investment and U.S job growth also pulling back in August private employers adding 177 000 jobs less than half of what was added in July all of this ahead of tomorrow's pce report the feds preferred inflation gauge now despite the sluggish readings that we did get on the economy stocks though like Akiko is saying are up so as bad news actually good news for the market we want to bring in Tom Hayes great Hill Capital chairman and managing member Tom it's good to see you so certainly we've heard fetcher J Powell the FED waiting for the economy waiting for some of these data points to weaken just a little bit because we know what that means for fed policy it seems like investors are a little bit encouraged by the disappointing reports yeah I think we finally have a Goldilocks scenario where the slowing is starting to kick in the lagged effect is starting to kick in and more than anything what that means for the FED is it gives them cover to actually pause in September which is kind of priced into the markets right now and then we have till November which everyone thinks there's going to be a hike in November but we're going to get a lot of inflation data between now and then we're going to get a few jobs reports between now and then and looking at the ADP data today we're going to see the jobs report on Friday if those numbers continue to come in a little bit softer the FED may be done in terms of hiking not done with tightening because they'll keep rates elevated for a little while and that creates this perfect scenario for stocks uh moving forward you know a lot of people are very nervous about August and September seasonality right now but there's a caveat to that since 1905 when in the years that the s p is up 15 to 20 percent by July the remainder of the year on average is up nine percent so with all this fear I think people are underestimating the amount of cash that's still on the sidelines that has to play catch-up for underperformance in the first half of a year and Tom we'll talk a bit about you know how you can play with that cache but on fed policy specifically there's been a lot of talk about the lag Factor uh and and how much room you know we have to run essentially on this data what is the data today tell you about to what extent the FED policy the monetary policy has started to take hold uh it's certainly starting to kick in but actually when we look at earnings just in the past week earnings have been revised up for 2024 uh from 246 to 247 so the economy's holding in there we obviously know the Atlanta GDP now is pointing to positive things for Q3 so it's kind of this perfect balance operating margins are up one percent from last year no one expect that from 10.9 percent to 11.9 percent so I think if we have a little softness in the labor market which we're seeing the quit rates are starting to decline the job openings as we saw with the jolts yesterday are starting to soften that creates an environment where you're not going to have the wage price by viral where you're not going to see this accelerating wage inflation and that's going to give a lot of comfort to the fed that's going to keep their pedal off the metal let them keep rates elevated like we saw in the late 90s and have this kind of perfect situation where the economy is slowing a little bit but the uh the FED is done tightening and then companies can start to perform and uh and I think there'll be a lot of rotation under the surface so for those Expecting The Magnificent Seven to have a monster second half like they had the first half I think they're going to be a little surprised
