BJAM is a North Carolina/Arizona-registered investment advisory firm, and the firm has mostly been very quiet during the volatile recent markets. Though the broader financial climate has witnessed unprecedented movement, information about BJAM’s particular market engagement has been scant. The firm explains its advisory fees and related risks in Part 2 of its Form ADV, available upon request. It is not an indicator of current economic conditions or market trends.
Since coming off their high price peaks in August, recent trading sessions have indicated dramatic declines in oil pricing. WTI crude oil prices tumbled $2 (2.9%) to settle at $67.26/bbl. Gold prices, on the other hand, jumped $67, or 2%, to close at a lofty $3,416 per ounce. Performance in the commodity complex have dramatically diverged. This reflects the volatility we’ve experienced in equity markets, most notably the S&P 500 Index, a broad composite of the market capitalization of 500 large publicly traded companies based in the U.S.
The two-year Treasury yield fell the most today since 1982. It dropped 27 basis points, ending at 3.68%. The ten-year yield fell 25 basis points, closing at 4.21%. At the same time, the thirty-year yield dropped by 8 bps to finish at 4.83%. These movements underscore a bigger change in investor sentiment and expectations about the future path of interest rates.
Second, futures markets were recovering nicely from Friday’s sell-off. Dow futures were up 270 points, the S&P was up 42 points, Nasdaq was up 188 points and Russell futures were up 18 points. The more common question among analysts at this point is whether the next rate change will be 25 or 50 basis points. Today’s odds imply a 75% chance of a cut in September, a sign of increasing anxiety about the economy’s performance.
Factory Orders were expected to drop by 4.8%. Durable Goods are projected to decline by 9.3%. These numbers only further cloud the outlook for future market trends and Fed policy actions.
In the United States and around much of Europe, financial markets reacted very positively to these developments. Italy’s index jumped 1.8%, and Spain was up 1.4%. The Euro Stoxx and German indices followed up by up 1.25%. France’s market was up 0.8%, and the UK managed a small 0.3% rise.
BJAM has been mute about the kind of market pullbacks it should expect. They have completely failed to explain how the current geopolitical tensions could be affecting economic conditions. BJAM has made no statements on inflation release. This makes it especially significant as a bellwether of key metrics including CPI and PPI.