Some things going on

I agree with the case for the Fed to cut rates tomorrow, a tweak as I've referred to it but understanding they will most likely go in September instead. I was ok with Alan Blinder's argument in yesterday's WSJ for most of his piece but then he lost me when he said if the Fed cut Wednesday, "I believe the markets would stand up and cheer." He revealed the Fed's unspoken 3rd mandate of trying to please the markets. The last time they did that we ended up with 9% inflation (and would have been in the double digits if home prices instead of rents were used). 

Interestingly, in the same WSJ, ex Fed Governor Kevin Warsh wrote a piece mostly focused on the Fed's balance sheet and said "Much of Wall Street applauds the Fed's big balance sheet and monetary dominance in Washington. Households and businesses on Main Street have far less reason for enthusiasm" and that is because of the inflation the former has stoked. I would welcome Warsh as the next Fed chair if he was given the opportunity.

The July Philly manufacturing index remains the outlier as yesterday the Dallas regional survey joined NY, Richmond and KC in reporting a contraction. Its index came in at -17.5 vs -15.1 and it was last above zero in April 2022. The bright spot though was hopes for improvement from here as the 6 month business activity outlook rose to 21.6 from 12.9 and that was the highest since November 2021. Thursday's ISM manufacturing index is forecasted at 48.8, thus remaining in recession.

Dallas Mfr'g 6 month Business Outlook

Here were some comments, and I won't include ones that talk about the hurricane or politics:

"Activity has slowed down, but we anticipate an uptick soon." - Paper Manufacturing

"Customer demand is the overriding concern. Decreased credit availability and affordability for the markets we sell into have all but stopped demand. I estimate we are operating at 30-40% capacity." - Fabricated Metal Product Mfr'g

"Business activity is horrible, and we are seeing no signs of improvement." - Machinery Mfr'g

"Inquiries and orders activity has seemingly halted. The brakes are on. This is pretty common in presidential election years, but this comes at a time when things were already volatile due to price pressures and massive inflationary pressures." - Machinery Mfr'g

"Many customers are holding off on expenditures as well as allowing for cost-of-living adjustments to prices. The market continues to be soft, and with uncertainty in the election year, even our federal business is a bit stagnant." - Computer & Electronic Product Mfr'g

"We need lower interest rates, so end customers resume buying capital equipment again." - Computer & Electronic Product Mfr'g

"We are expecting to see stronger signs of a cyclical recovery in industrial and automotive markets, which have not materialized yet. This is leading to higher uncertainty that the recovery may be delayed or muted." - Computer & Electronic Product Mfr'g

"While we still have a large order backlog, new orders are significantly below where we forecasted them to be this year. This will shorten lead times and should allow us to pick up additional orders next year." - Transportation Equipment Mfr'g

​​​On to some notable earnings comments.