Remy is joined by James Knightley, Chief International Economist at ING, who provides valuable insights into the economic landscape. They explore the recent ADP report, which indicates a concerning trend of job losses in the private sector, with an average of over 11,000 jobs lost weekly in the four weeks leading up to October 25th. James emphasizes the importance of the upcoming official jobs report, which is expected to provide more clarity on the labor market.
As they approach the final Federal Reserve meeting of 2025, Remy and James discuss the potential for interest rate cuts and the divisions within the Fed regarding the timing of these cuts. James highlights the critical role of the 10-year Treasury yield, which affects mortgage rates and corporate borrowing costs. While lower rates can support growth, there is a delicate balance to maintain, especially with upcoming fiscal data that could influence the long end of the yield curve.
The conversation also touches on the limitations of monetary policy in addressing inflation, particularly in sectors like education, healthcare, and insurance. James points out that while tariffs have not been as impactful as initially feared, disinflationary forces are emerging, including falling energy prices and weaker wage growth, which could help alleviate inflationary pressures.
As they look toward year-end, Remy and James examine the bifurcation in the economy, where the top 20% of households are thriving, particularly in tech investments, while non-tech sectors face challenges. This K-shaped recovery presents different opportunities for investors, especially those focused on high-end consumers and technology.