CNBC Daily Open: Vaguely reassuring Fedspeak

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Markets regain forward momentum
U.S. markets rose Monday, with the S&P 500 and Dow Jones Industrial Average notching fresh closing highs. The pan-European Stoxx 600 index rose 0.4%. Shares of German bank Commerzbank slid around 5.7% after German Chancellor Olaf Scholz criticized UniCredit’s accumulation of Commerzbank shares as “hostile.” 

Slow and deliberate
Minneapolis Federal Reserve President Neel Kashkari thinks the central bank will be more deliberate in loosening monetary policy after last week’s supersized rate cut. “I think after 50 basis points, we’re still in a net tight position,” Kashkari told CNBC. “So I was comfortable taking a larger first step, and then as we go forward, I expect, on balance, we will probably take smaller steps unless the data changes materially.”

New offer for Boeing workers
Amid a strike by Boeing workers, the company revised its contract offer, raising wages by 30% over four years, up from 25% it proposed earlier. Boeing reinstated annual bonuses and doubled a contract ratification bonus to $6,000 from $3,000. The labor union said Monday it is reviewing the offer.

Lackluster demand for lux
European luxury stocks tumbled Monday as Chinese consumers cut purchases of luxury goods, joining their American, European and Japanese counterparts. Luxury consumers globally are “all shopped out,” said BofA Securities analysts. Shares of Prada dropped 4.74%, Kering fell 1.5% and Burberry lost 0.89%.

[PRO] Value stocks back in vogue?
Famed investor Bill Nygren said the S&P 500 isn’t as diversified as it used to be because the Big Tech trade is getting too crowded. To counter that, Nygren, who’s been a portfolio manager at Oakmark Funds for 40 years, is paying attention to value stocks, such as this cheap financial company.

In an interview with CNBC, Minneapolis Fed President Neel Kashkari said, “We still have a strong, healthy labor market. But I want to keep it a strong, healthy labor market.” Kashkari’s emphasis on the strength of the jobs market suggests the Fed wants to reinforce the narrative that the economy’s not staring at a recession.

Atlanta Fed President Raphael Bostic was more circumspect. “Progress on inflation and the cooling of the labor market have emerged much more quickly than I imagined at the beginning of the summer,” he said at a separate event.

That Bostic was possibly surprised by the increase in the unemployment rate is an indication some Fed officials are indeed worried the jobs market isn’t as strong as it should be.

Last, in remarks to the National Association of State Treasurers, Chicago Fed President Austan Goolsbee said that “it’s appropriate to increase our focus on the other side of the Fed’s mandate — to think about risks to employment, too, not just inflation.”  

Goolsbee sees “many more rate cuts over the next year” because the state of employment is a “through line on economic conditions.” That suggests economic conditions need the support of many more rate cuts.

Still, yesterday’s Fedspeak was sufficiently vague and didn’t seem to cause alarm.

Major U.S. indexes ticked up. The S&P rose 0.28%, the Dow advanced 0.15% and the Nasdaq Composite climbed 0.14%. While those increases appear small, they pushed the S&P and Dow to new closing highs.

The narrative the central bank has been on top of its game to ensure a soft landing, then, is very much intact.

– CNBC’s Jeff Cox, Brian Evans and Alex Harring contributed to this story.