FintechZoom Stock Futures: An In-Depth Analysis

Economic

Summary:

Explore the comprehensive features, benefits, and strategies of FintechZoom stock futures trading. Learn how this fintech platform is revolutionizing the trading landscape with real-time data, advanced analytics, and user-friendly tools.

The financial markets are in a constant state of evolution, driven by innovation, technology, and shifting investor sentiments. One significant development in recent years is the rise of financial technology (fintech) platforms that are reshaping how we trade, invest, and manage our finances. Among these platforms, FintechZoom has emerged as a notable player, particularly in the realm of stock futures trading. This article delves into the world of FintechZoom stock futures, exploring their features, benefits, and implications for investors.

What are Stock Futures?

Stock futures are financial contracts obligating the buyer to purchase, or the seller to sell, a stock at a predetermined future date and price. Unlike options, which provide the right but not the obligation to buy or sell, futures contracts must be executed. These instruments are essential for hedging and speculation, offering opportunities to profit from price movements without owning the underlying assets.

The Role of Fintech in Stock Futures Trading

Fintech platforms like FintechZoom have revolutionized the trading landscape by providing sophisticated tools, real-time data, and enhanced accessibility. Traditional brokerage firms often come with high fees, cumbersome processes, and limited flexibility. FintechZoom, however, leverages technology to offer user-friendly interfaces, lower transaction costs, and advanced analytics, making stock futures trading more accessible to a broader audience.

Features of FintechZoom Stock Futures

User-Friendly Interface: FintechZoom's platform is designed with the user in mind. It offers intuitive navigation, comprehensive dashboards, and customizable settings, allowing traders to tailor their experience according to their needs.

Real-Time Data and Analytics: The platform provides real-time market data, news updates, and sophisticated analytical tools. Traders can access historical data, technical indicators, and charting tools to make informed decisions.

Educational Resources: FintechZoom understands the importance of education in trading. The platform offers a wealth of resources, including tutorials, webinars, and expert analysis, helping users enhance their trading skills and knowledge.

Security and Transparency: Security is paramount in financial trading. FintechZoom employs robust encryption, two-factor authentication, and transparent processes to ensure the safety and integrity of user data and transactions.

Benefits of Trading Stock Futures on FintechZoom

Leverage: Futures trading allows for significant leverage, meaning traders can control large positions with relatively small capital. This can amplify profits but also increases risk, making it essential for traders to use leverage wisely.

Liquidity: Stock futures markets are highly liquid, allowing for easy entry and exit from positions. This liquidity is crucial for executing trades quickly and at desired prices.

Diversification: Futures contracts are available for a wide range of stocks and indices, providing ample opportunities for diversification. Traders can spread their investments across different sectors and asset classes to mitigate risk.

Risk Management: Futures are excellent tools for hedging. Investors can use them to protect their portfolios against adverse price movements, ensuring stability in volatile markets.

The Impact of FastBull on FintechZoom Stock Futures

FastBull, another fintech platform, complements FintechZoom by offering additional insights and tools for traders. FastBull specializes in providing real-time market signals, in-depth analysis, and trading strategies that can be invaluable for futures traders on FintechZoom.

FastBull's Contribution to FintechZoom Users

Market Signals: FastBull delivers timely market signals based on comprehensive analysis. These signals can help FintechZoom traders identify potential trading opportunities and make more informed decisions.

In-Depth Analysis: FastBull offers detailed market reports and expert opinions, helping traders understand market trends and dynamics. This information is crucial for developing effective trading strategies.

Trading Strategies: FastBull provides various trading strategies tailored to different market conditions. Whether it's trend-following, mean-reversion, or breakout strategies, FastBull's insights can enhance a trader's toolkit on FintechZoom.

Integration and Synergy

The integration of FastBull's analytical prowess with FintechZoom's robust trading platform creates a synergistic effect. Traders can leverage FastBull's market intelligence to enhance their trading strategies on FintechZoom, maximizing their potential for success.

Conclusion

The rise of fintech platforms like FintechZoom and FastBull has democratized access to sophisticated trading tools and resources. By combining advanced technology with user-friendly interfaces and comprehensive educational materials, these platforms empower traders to navigate the complex world of stock futures with greater confidence and efficiency.

FintechZoom's stock futures offering, complemented by FastBull's real-time signals and analysis, provides a powerful ecosystem for traders. Whether you're a seasoned professional or a novice investor, these platforms offer the tools and insights needed to succeed in today's dynamic financial markets. As fintech continues to evolve, the opportunities for innovation and growth in stock futures trading are boundless, promising an exciting future for investors worldwide.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Owen Li

Energy

Combined electricity generation from solar and wind farms in the United States surpassed output from nuclear plants for the first time during the opening half of 2024, cementing renewable energy assets as the primary source of clean power in the country.

Electricity generation from utility-scale solar and wind assets during the first half of 2024 was a record 401.4 terawatt hours (TWh), compared to 390.5 TWh from nuclear reactors, data from energy think tank Ember shows.

US Renewables Electricity Output Overtaking Nuclear_1

That marked the first time over a half-year period that renewables electricity supplies exceeded nuclear-powered electricity output, and is a significant milestone in U.S. energy transition efforts.

With utilities building out solar and wind capacity at a faster pace than any other generation source, 2024 looks set to be the first full year when more U.S. electricity will come from renewables than from any other form of clean power.

Mounting Share

From 2015 through the end of 2023, combined monthly electricity generation from utility-run solar and wind farms only surpassed output from U.S. nuclear plants on three occasions: in April and May of 2022, and in April 2023, according to Ember data.

This year, solar plus wind output has surpassed nuclear output for the past four months running, and resulted in solar plus wind output exceeding nuclear output by nearly 3% during the opening half of the year.

During the same half-year period a year ago, nuclear-powered electricity output was more than 9% greater than electricity output from solar and wind sources, which underscores how rapid the growth has been in renewable energy output.

Fast Pace

During the first half of 2024, electricity generation from solar assets was 149.6 TWh and 251.7 TWh from wind farms.

Those totals are up 30% and 10% respectively from the same period in 2023, and were both records for the first half of the year.

Nuclear electricity generation during the first half was 3.4% above the same period in 2023, but down slightly from the latter half of 2023 and suggests U.S. nuclear generation may have limited scope for any substantial further gains over the near to medium term.

Capacity Trends

Installed capacity is the key driver of electricity generation potential across the U.S., and over the past five years renewables capacity has vastly outpaced capacity growth from all other power sources.

From 2018 to 2023, utility solar generation capacity leaped 168% to 139 gigawatts (GW) while wind capacity grew 56% to 148 GW, according to Ember.

That compares to a nearly 4% reduction in national nuclear generation capacity over that period, and a 40% rise in overall clean electricity generation capacity to roughly 483 GW.

Total fossil fuel generation capacity declined by 3.7% from 2018 to 2023 to around 775 GW, including a 23% drop in coal-fired generation capacity.

In 2024, developers plan to add a further 34 GW of solar capacity, while wind generation capacity is expected to remain largely flat, according to the U.S. Energy Information Administration (EIA).

If those plans are completed, that would mean solar capacity could surpass wind capacity for the first time, and would result in a further large rise in solar electricity generation.

And given U.S. nuclear generation is likely to remain flat for the near to medium term, that means combined solar and wind generation potential looks set to make further gains relative to other forms of clean power and to establish renewables as the primary source of clean electricity in the U.S.

Source: Reuters

Risk Warnings and Disclaimers

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Thomas

Energy

Japanese companies foreseeing a growing surplus in stocks of liquefied natural gas (LNG) as their demand for the fuel wanes in coming years, are scrambling to invest in regional markets to provide potential outlets to sell the gas.

As more nuclear plants restart and renewable energy gains momentum, Japan's LNG imports are at their lowest in over a decade, spurring companies to turn to Asia to unload supplies contracted during past market shocks, such as Russia's 2022 invasion of Ukraine. Japan Builds Gas Markets in Asia to Boost LNG Trading, Energy Security_1

Japan Builds Gas Markets in Asia to Boost LNG Trading, Energy Security_1

Energy flexibility and security concerns ensure that Japan wants to stay a big player in LNG, but it is looking for markets to sell its excess, in line with a government strategy to keep volumes at 100 million tonnes by building gas demand in Asia.

This year, Tokyo Gas announced a study for 1.5-gigawatt LNG-to-power project in Vietnam and bought a stake in an LNG regasification terminal in the Philippines, while trading houses Marubeni and Sojitz launched a 1.8 GW-big LNG-fired power plant in Indonesia.

Led by JERA, Tokyo Gas, Osaka Gas and Kansai Electric Power, Japan is a stakeholder, feedstock provider or participant in studies for more than 30 gas-related projects, data from the Institute for Energy Economic and Financial Analysis (IEEFA) and Reuters shows.

Whether operating or yet to be launched, these are located in Bangladesh, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

"Japanese LNG demand is uncertain, but the government wants to secure stable supply over the long term," said Yoko Nobuoka, senior analyst for Japan power research at LSEG.

"Developing its own trading capability and creating an Asia-wide gas market would help to increase energy security and hedge risks of LNG surplus," she said.

Japan stepped up imports of LNG after the Fukushima nuclear disaster of 2011 led to closure of all its nuclear power reactors, and Tokyo has increased participation in LNG projects globally to secure supply.

But the comeback of nuclear power and the roll-out of renewable energy have led resource-scarce Japan to cut LNG imports for its own needs, with shipments falling by 8% last year to the lowest since 2009.

In 2020, the industry ministry adopted a plan to hold LNG handling capacity, including trade, at 100 million tons a year by 2030, a key feature of which was building Asian gas markets.

"There are various pathways towards achieving carbon neutrality or net-zero emissions in Asia," METI said in emailed comments. "Gas and LNG, along with renewables and energy conservation, can play a role in the pathways."

Japan's shipments, both for domestic use and sent to third countries, were 102 million tons of LNG, in the year that ended in March 2023. Japan Builds Gas Markets in Asia to Boost LNG Trading, Energy Security_2

Japan Builds Gas Markets in Asia to Boost LNG Trading, Energy Security_2

Tokyo Gas, the country's top city gas supplier, has set a target of trading 5 million tons of LNG annually by 2030, up from about 3 million now.

"We have a chance to sell LNG to these projects and it will contribute to an increase in our LNG trading volume," Tokyo Gas officials told Reuters in emailed comments.

Since 2019, Japanese firms have invested in new LNG import terminals with combined capacity of 16.2 million tons in Bangladesh, Indonesia and the Philippines, according to Reuters calculations based on the International Gas Union data.

Another 13 million tons a year of LNG import capacity is to come in Vietnam and India with Japan's investment before 2030, taking the total such volume to 29.2 million tons - close to what Japan traded in the year ended in March 2023.

Japan's LNG sales to third countries doubled to 31.6 million tons in fiscal 2022 from fiscal 2018, boosted by participation in upstream projects globally and supply contracts, the Japan Organization for Metals and Energy Security (JOGMEC) says.

Of Japan's 102 million tons of LNG imports in fiscal 2022, domestic use accounted for 71 million tons.

With Japan's own LNG demand projected to fall another quarter by the end of the decade to some 50 million tons, top utilities JERA, Tokyo Gas, Osaka Gas and Kansai Electric could have 12 million tons of LNG oversupply, the IEEFA estimates.

Destination Clauses

Tokyo's growing LNG ambitions are reshaping its procurement strategy.

In fiscal 2021, 53% of gas bought by Japanese firms, or 45 million tons, was under contracts banning resale, a condition imposed by producers such as Qatar, according to JOGMEC.

That share fell to 42% last fiscal year, its survey showed, partly also because Tokyo clinched more deals with more flexible producers, such as the United States and Australia.

"However, by 2030, 60% of contracts will not have destination restrictions, meaning that Japan's ability to trade LNG is likely to increase this decade," said Christopher Doleman, an LNG specialist at IEEFA.

Trading competition with China, which surpassed Japan as the biggest LNG buyer last year and is expanding into global trade, also plays a role.

China's LNG imports are forecast to grow by up to 12% this year, to 80 million tons, PetroChina says, and Beijing is reselling some LNG to third countries.

"In the medium term to 2030, trading competition could become fierce, as the next bearish cycle begins with a wave of new supply," LSEG's Nobuoka said, referring to new LNG projects set to go onstream in coming years that need buyers.

Transition Pushback

Climate activists increasingly say Japan, with a quarter of its power generated by non-nuclear renewable energy, should bypass gas, which the industry considers a "transition" fuel, and help other countries to decarbonise by moving straight to renewables from coal.

Australian Market Forces, a climate activist group that holds shares in Chubu Electric Power and Tokyo Electric Power, co-owners of top utility JERA, has urged it to rethink plans for Asia and sharpen focus on renewables instead.

"One of the greatest threats to climate action globally is the proposed build out of LNG-to-power infrastructure in emerging Asia," said Will van de Pol, chief executive of Market Forces.

As a transitional fuel, LNG is 'indispensable for achieving decarbonisation,' JERA, which has both gas and renewable energy projects in Asia, told Reuters by email.

Source: Reuters

Risk Warnings and Disclaimers

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Devin

Economic

The UK economy grew by 0.4 per cent in May, double the expected figure, driven by continued expansion in the services sector and a rebound in housebuilding.

The month-on-month rise followed zero growth in April, the Office for National Statistics said on Thursday, and exceeded a 0.2 per cent forecast for May by economists polled by Reuters.

Sterling rose 0.7 per cent against the dollar to $1.2941, its highest in almost a year, boosted by the UK GDP numbers and then lower than expected US inflation data.

The strong growth in May suggests the quarterly expansion might exceed the Bank of England's forecasts, potentially complicating its decision on whether to start cutting interest rates in August from their 16-year high of 5.25 per cent.

Traders in swaps markets remained evenly split on the chances of the BoE keeping rates on hold and cutting them at its August meeting.

The economic data brings the UK's annual GDP growth to 1.4 per cent, higher than the 1.2 per cent economists had forecast.

"Stronger services consumption raises the risk that service CPI inflation will remain too strong for the Bank of England to cut [interest rates]," said Tomasz Wieladek, chief European economist at T Rowe Price. "The data today makes a cut in August less likely. It is becoming more probable that the bank only cuts once this year."

Although recorded under the previous Conservative government, the data comes as a boost to Labour, which has declared growth its "national mission".

Chancellor Rachel Reeves said: "This week I have already taken the urgent action necessary to fix the foundations of our economy to rebuild Britain and make every part of Britain better off. A decade of national renewal has begun, and we are just getting started."

Ashley Webb, economist at Capital Economics, said: "The improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate."

Webb said the rise in GDP in May was the fourth increase in the past five months, "which supports the idea that the dual drags on activity from higher interest rates and higher inflation are starting to fade".

Although recorded under the previous Conservative government, the data comes as a boost to Labour, which has declared growth its "national mission".

Ashley Webb, economist at Capital Economics, said: "The improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate."

The economy has largely stagnated over the past two years, reflecting the hit from the cost of living crisis. In the first quarter, GDP a head was still 1 per cent below the fourth quarter of 2019.

However, the economy has bounced back from last year's technical recession. Strong growth of 0.7 per cent in the first quarter was the fastest expansion in the G7 group of advanced economies.

Growth in May was driven by the services sector, which expanded 0.3 per cent in May and registered the fastest growth over three months since December 2021, when Covid-19 restrictions were still in place.

Manufacturing production was up 0.4 per cent in May and construction rebounded 1.9 per cent following a sharp contraction in April, when wet weather hit activity.

Rainfall in April was 155 per cent of the long-term average for the month while May was the warmest since records began in 1884, according to the Met Office.

Source: FT

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Cohen

Economic

Investors are looking at UK markets as a potential haven as political uncertainty rises in the U.S. and elsewhere in Europe, in what could mark a stunning turnaround for a country that appeared to have lost its traditional appeal to global capital.

A landslide election victory for Britain's centre-left Labour government last week offers the prospect of predictable policy and improved trade with the European Union to reboot an economy that has struggled since the 2016 Brexit vote.

Meanwhile, parliamentary gridlock in debt-laden France has stirred memories of previous euro zone crises, and investors are scrambling to guess what former U.S. President Donald Trump regaining the White House might mean for markets.

Britain's economy is picking up, and some bankers expect a revival for UK stock markets shrivelled by relentless selling during years of turbulence under successive Conservative governments.

BlackRock Investment Institute, a research arm of the world's largest asset manager, said on Tuesday it was bullish on UK stocks, potentially heralding a mood shift among major global institutions that have cooled on Britain since 2016.

But even those moving funds into the UK warned that its haven appeal may be short lived unless new Prime Minister Keir Starmer pulls off a bold plan to boost living standards without straining the nation's stressed finances further.

"The (UK) election improves things at the margin and the uncertainty on Europe driven by France means there could be a honeymoon period for Britain for a bit," said Pictet Wealth Management chief investment officer César Pérez Ruiz.

"The market is going to be asking for more detail on fiscal spending and (Starmer) hasn't given us a lot of information."

Pérez Ruiz said he sold some European corporate debt because of French political risk and bought UK equivalents instead, but may not hold the position beyond six months. Shunned UK Markets Emerge as Haven from Global Storms_1

Shunned UK Markets Emerge as Haven from Global Storms_1

Green shoots?

Investors have kept pulling money out of UK equity funds and stock market trackers since the July 4 election, daily data from information provider Lipper showed.

Yet there are also some positive signs.

After a dearth of London listings, potential large offerings are on the horizon from the likes of Shein and De Beers, with some bankers predicting the UK market will revive more broadly next year. On Thursday, the UK market regulator fast-tracked a swathe of listing rule changes in a bid to encourage more IPOs.

London's share of European IPO volumes dwindled to just 1% in the year to mid-May, down from 28% in the same period in 2021 when the market boomed.

"There's a couple of reasons to be positive and certainly relatively more positive about the UK than other regions," said Peel Hunt equity capital markets head Brian Hanratty.

"I don't want to say it is like a dam breaking."

He had observed companies holding early stage investor meetings and more discussions with accountants about IPOs, he added.

Some big investors are turning more optimistic too.

"We see a virtuous cycle taking hold," Fidelity International head of multi-asset Salman Ahmed said, if Labour rebuilds EU trade links and revives business spending. Fidelity has a neutral view on Britain although some funds are increasing exposure.

Matt Evans, portfolio manager at NinetyOne, said UK companies he meets with were readying investment projects that they had delayed under the Conservatives.

Debt Jitters

Weak UK public finances remain a source of concern, as state borrowing approaches 100% of economic output, and the 2022 market chaos unleashed by Conservative Prime Minister Liz Truss' under-funded mini-Budget remains fresh in memories.

Labour wants to attract private investment into infrastructure and housing, potentially boosting 2024 growth beyond the 0.7% economists polled by Reuters expect.

Gilts had short-term support from expected Bank of England rate cuts but the UK was not a debt market haven unless Labour could prove an untested commitment to budgetary caution, said James Athey, fixed income manager at London investment group Marlborough.

Shunned UK Markets Emerge as Haven from Global Storms_3

While off highs hit in 2023, Britain's 10-year bond yield has still risen 60 basis points this year to 4.15%, underperforming U.S. and German peers.

BlueBay Asset Management chief investment officer Mark Dowding said he would not increase UK exposure while inflationary pressures remained.

In another sign of some caution, London's FTSE-100 index, valued on a price-to-earnings ratio almost 50% below that of U.S. stocks, has underperformed global benchmarks so far this month.

"The (UK) risk-reward is pretty favourable," BNP Paribas head of equity strategy Dennis Jose said.

But as for capital coming back? "Not yet. It will take a little more time."

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Westpac

Economic

Central Bank

The 'two wolves' inside monetary policy are demand shocks and supply shocks. It is important to know which is which.

There is a story in Native American folklore that inside each of us are two wolves, one evil, one good. The one that wins – the one you become – goes the saying, is the one you feed.

So too for monetary policy. In that case, though, the two wolves are demand shocks and supply shocks. The demand shocks are well known and well understood. Policymakers know how to respond to these. When demand is strong, tighten policy to keep inflation in check. When it is weak, ease policy to support demand.

In contrast, supply shocks create a trade-off between keeping inflation at target and stabilising output or employment. It is an easy trade-off to stomach when the supply shocks are benign and inflation is showing a tendency to undershoot your target. Adverse supply shocks are less comfortable, with higher prices and lower output.

We can see this conflict of narratives in the Reserve Bank's own analysis of the economy, as well as in some of the discourse from other quarters. Some observers frame the situation as demand-driven. They focus on fiscal and monetary support during the pandemic and argue that this has resulted in an economy where demand is simply too strong for the economy's supply capacity to meet it. No wonder we see repeated stories worrying about every extra dollar going into households' pockets, afraid that this will boost inflation. Perhaps this is right, but there are a lot of assumptions going into that argument.

A demand-led narrative is also more comfortable for the economics profession. Most of the models we learned at university primarily capture demand-side relationships. Supply capacity is usually treated as given or driven by unpredictable (and transitory) 'productivity shocks'.

Don't assume, test

We should grant that advanced economy governments and central banks provided massive stimulus during the peak of the pandemic. In Australia and a handful of other economies, fiscal support managed to overfill the income hole created by lockdowns – an understandable outcome given the many uncertainties at the time. We should recognise the possibility that some of the resulting strength in demand might not have unwound fully. But we should test this proposition, not assume it.

Recognising and understanding the supply shocks – much like making the virtuous choices involved in feeding the good wolf – can be hard. Hitting the strong demand 'nail' with the policy hammer is so much more straightforward. Even when supply shocks are recognised, it is sometimes assumed that the response still needs to be to hammer down demand to fit supply. We see some flavour of this view in the June 2024 RBA Minutes, which said, 'The case to raise the cash rate could be further strengthened if members judged that aggregate supply was likely to be more constrained than had been assumed.'

Again, there are some unstated assumptions here: that the supply constraint is persistent, or fading so slowly that demand-based policy still needs to respond to keep inflation in check. It would be a mistake to assume that a particular supply constraint lasts forever; better to understand what is driving it before reaching that conclusion.

Curves, shifts and other fruit

We must bear a few things in mind when assessing whether something is a supply constraint and how it might play out.

Firstly, and as we have said before, simultaneous increases in prices and volumes for some goods and services are not necessarily evidence of strong overall demand. We could be dealing with an 'other fruit' problem, where supply shocks affecting some goods and services displace demand elsewhere.

Another thing to be aware of is that some economic relationships are nonlinear and others can shift. The RBA knows this: it has long recognised that the Phillips Curve is indeed a curve, not a straight line. It has also, commendably, recognised that the unemployment rate consistent with the full employment concept in its mandate can shift.

There are other labour market phenomena that we should recognise are nonlinear, or shifting, or some combination of the two. As discussed in a recent note, Fed Governor Waller and others at the Federal Reserve have argued that theory would suggest that when job vacancies are high enough, they can fall back to more usual levels without unemployment rising much. The relationship between the two variables is nonlinear.

Subsequent events, including in other countries, have supported Waller's thesis. For some countries, like the Netherlands, the high vacancy rate was in line with the normal nonlinear relationship, and it could reverse without unemployment rising by much. For others, like the United States, United Kingdom – and possibly Australia – there was a bit more going on. But that 'bit more' was a pandemic-related shock to labour supply. As the shock faded and participation recovered, the historical relationship re-asserted itself.

There is a deeper question about why labour supply took a long time to come back in those countries, but not others, even after social distancing restrictions were removed. Indeed, in the United Kingdom it is going in the wrong direction again. In Australia, at least, the constraint was more about the borders than about participation. This means that we can reasonably conclude that this supply shock, to the extent it was relevant, has been fading of its own accord.

Of course, there might still be other supply constraints at play in Australia. Some supply shocks might persist, while others unwind without help from monetary policy. However, policymakers might not recognise that the shock will not persist. And even if they do, policymakers might still conclude – rightly or wrongly – that demand needs to be reduced to meet it.

It would be good to know what the RBA is assuming about supply constraints, their causes, and their likely persistence. Newish Deputy Governor Hauser mentioned the need to do more work on supply issues during the Q&A to his recent speech. Hopefully the post-Review changes will direct more resources into such activity than was previously available.

Which wolf should we feed? More importantly, which wolf is the RBA feeding?

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Alex

Economic

The biggest danger facing the American economy for years has been inflation.

Now, another problem is emerging as a credible threat on the horizon: Unemployment.

Just as inflation continues to cool, yellow lights are flashing in the still-strong jobs market. The Federal Reserve must now confront the risk that it's making a mistake by keeping interest rates too high for too long.

That's why some economists are pleading with the Fed to ease up its inflation fight—before high interest rates, which it's used to tame surging prices, grind the US economy into a recession.

"It's time to cut rates," said Joe Brusuelas, chief economist at RSM. "Inflation is fading as the primary focus of concern. The balance of risks is slowly tipping towards higher unemployment."

Mark Zandi, chief economist at Moody's Analytics, said the labor market is straining under the weight of high borrowing costs.

"The biggest danger is a policy mistake: The Fed keeps rates too high for too long," Zandi told CNN in a phone interview. "Right now, the Fed is signaling a September cut. I think that's okay, but if they wait any longer than that, I fear they are going to overdo it."

Even Fed Chair Jerome Powell is acknowledging a significant shift in the risk calculus.

"Elevated inflation is not the only risk we face," Powell told lawmakers on Tuesday, pointing to easing inflation and "cooling" in the labor market.

'The labor market may be turning'

To be clear, the jobs market is by no means imploding.

Jobs are still being created at a healthy pace — faster than many thought possible just a year ago.

Yet just beneath the surface, cracks have begun to emerge.

The unemployment rate remains historically low, but it has noticeably crept higher three months in a row — "a sign the labor market may be turning," according to economists at KPMG.

Hiring has slowed in leisure and hospitality, a key sector that is powered by consumer spending. The pace of workers quitting their jobs has dropped significantly. So has the rate of workers getting hired.

Powell highlighted these changes, telling lawmakers that recent indicators "send a pretty clear signal that labor market conditions have cooled considerably" from two years.

"This is no longer an overheated economy," Powell said.

Of course, that's exactly what the Fed wanted to accomplish when it began its historic rate hiking campaign.

The fear in 2022 was that the jobs market was so hot that it would add fuel to white-hot inflation growth and keep prices dangerously high, forcing the Fed to start a recession just to put the inflation fire out.

Overheated inflation and a historically over-abundant job market are no longer viewed as major concerns.

Waiting too long?

The current risk is that the Fed is injecting inflation-fighting medicine into an economy that no longer needs it. And that could turn a cooling job market into one that's frozen—leading to job losses.

The job market added 206,000 positions in June, according to the latest government figures released Friday. In other words, it's not too hot, and not too cold—it's "balanced," the Fed Chair said on Tuesday.

"A balanced labor market with too restrictive rates from the Fed will not remain balanced for long," Brusuelas said. "That means higher unemployment."

Brusuelas clarified that doesn't necessarily mean "skyrocketing" unemployment is on the horizon, but a premature recession may be, nonetheless, if the Fed waits too long to cut rates.