Don't get why the Fed is cutting rates to address labor market weakness: Brean Capital's John Ryding

Core Insights - The current economic indicators suggest a complex relationship between inflation and employment, with inflation remaining elevated while employment levels appear flat [5][10][11] Economic Indicators - The prices paid index increased to 49.2% from 46.8%, indicating rising costs, but the six-month business outlook has improved, suggesting a potential recovery in sentiment [2] - Employment levels are reported as flat across various surveys, while prices remain generally elevated, though not as high as during the pandemic [6][10] Federal Reserve's Focus - The Federal Reserve is facing a dilemma between its price stability and employment mandates, with inflation currently around 3% and unemployment slightly above full employment levels [10][11] - There is skepticism regarding the Fed's focus on cutting rates to address labor market weaknesses, especially given the persistent inflationary pressures [13][20] Market Reactions - The market appears optimistic about potential rate cuts, despite concerns about inflation being overlooked [20] - The relationship between interest rate cuts and investment incentives is highlighted, with lower rates intended to stimulate capital investment [17][20]