In the last episode of the “Bloomberg Surveillance” program, BlackRock Portfolio Manager Jeffrey Rosenberg shared his views on the July employment report and evaluated the report as disappointing.
This report raised questions about the FED's next steps, which have significant impacts on bond and stock markets.
Rosenberg emphasized that the weak figures in the July employment report were unexpected and said, “This is a disappointingly weak number.” He added that markets generally respond to data according to expectations, and the lack of a significant impact from recent hurricanes further underlines the disappointing numbers.
The most important issue right now is whether the FED will cut interest rates by 50 basis points in September, as priced in the bond market. “A 50 basis point cut in September is priced into the bond market,” Rosenberg said. Rosenberg said the upcoming Jackson Hole speech, where the Fed's stance relative to bond market expectations will be closely examined, is important.
Rosenberg also noted the significant market reaction in the stock market, particularly where the Russell 2000 index led the decline. He suggested that this move reflected concerns about growth and earnings and showed a shift away from small-cap stocks due to growth fears.
As discussions continued, Rosenberg acknowledged the possibility of overreaction but emphasized the importance of understanding the Fed's calibration cuts. Anticipating that the FED may oppose a 50 basis point cut, Rosenberg emphasized the important role of Jackson Hole in conveying this message.
Jackson Hole Economic Policy Symposium will be held between August 22-24.
*This is not investment advice.