Markets with Megan

Are small businesses signaling a storm on the horizon? This episode unpacks the latest Small Business Optimism Index for August, which has plummeted to its lowest level since June 2022. You'll discover why uncertainty among small businesses is skyrocketing, reaching its highest point since 2020. We'll dissect the key areas of concern, including inventory planning, sales expectations, and credit conditions, giving you a comprehensive understanding of the economic landscape from a small business perspective.

We'll also explore how the Federal Reserve might respond to these worrying indicators and the potential ramifications of tomorrow's CPI report. Could it push the Fed towards a rate cut? Gain insights into how these events can sway market sentiments and what they mean for the economy at large. Don't miss out on this essential analysis—subscribe now and stay informed with our latest episodes at marketswithmegan.fm.

Well, it's called the Small Business Optimism Index, although what we saw this month is small businesses are not optimistic whatsoever. It is Tuesday, september 10th, and we got the report for August this morning and there's really not a whole lot of positive that I can find in this report. Let's dig into the details, because it breaks it down into a lot of different areas of small businesses and their opinions on the economy, on businesses, on earnings trend. First of all, the index itself. It did drop for the first time in five months Remember we had gotten a little bit of stabilization in this but it did drop for the first time in five months and it was the biggest monthly drop we've actually seen since June of 2022. One of the other components in this report is the uncertainty index so how uncertain are businesses about the future and that actually reached the highest level that we've seen since 2020. So, again, businesses are very concerned about what's going on from an economic standpoint, and some of this report may be election jitters. Let's just keep that in mind. We are getting close to the election. We're starting to get some of the policies from both parties. There may be some concerns and when we see this, we do tend to see small businesses pull back on not only hiring but also spending, and we saw that. We saw of the areas that declined those planning to increase inventory, those expecting a better economy, those expecting higher sales, the ease of credit conditions that still is weak. And then those expecting a positive earnings trend. So remember, earnings have been relatively good this year and it's been supporting the equity markets, but those expecting a positive earnings trend actually fell to the lowest level we've seen since March of 2010. So, again, not a great report for the economy.

The Fed's looking at this. We're still not thinking it's going to make any change to what they do. In September they're probably going to come in with a 25 basis point rate cut. Tomorrow we will get the CPI report and this will be important because if there's any big miss either way, this can either confuse market participants or it can solidify maybe the 25 or the 50 basis points at the upcoming meeting. That's all that we have today. If you like this podcast, please feel free to hit the subscribe button, hit that alarm bell. And if you'd like to see more podcasts the history of our podcasts please feel free to go to marketswithmegan. fm. Thank you.