Turbulence Ahead
Economic indicators and Fed insights to guide market trajectory
Quick summary:
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Last week saw dramatic shifts in the market, with early gains from a BoJ rate decision and META's earnings quickly erased by sharp declines in SPX and NASDAQ, falling 3% and 5% respectively.
Unemployment worries grew as rates ticked up from 4.1% to 4.3%, alongside a surge in market volatility, pushing the VIX from 16 to over 29.
This week, new data on the services sector and consumer credit will provide insights into the economy’s health, highlighting consumer spending and business conditions amid recent market fluctuations.
The competition
One month into our Q3 competition, a new leader has claimed the top spot, adding to the excitement. As the rankings shift, now is your chance to either strengthen your hold or make a bold advance!
Keep your strategies sharp and your eyes on the top!
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Last week’s performance
Last week's market turbulence wasn't stirred by usual Fed or Treasury moves but by the Mag4 earnings and an unsettling unemployment report on Friday. We saw MSFT punished for weak growth, yet a brief rally ensued, spurred by the BoJ's rate hike decision.
However, the SPX, which initially rose 0.7% early Thursday, quickly fell to -1.5% by day's end. Results from AMZN disappointed, dragging down AAPL's performance too. The job update showed unemployment rising from 4.1% to 4.3%, causing a 3% drop in the SPX and 5% in NASDAQ, with bond yields down over 100 points and the VIX jumping from 16 to 29.
Market signals point to a likely recession, with a 50bps rate cut expected in September and 150bps by December. This suggests the Fed is behind the curve again. Given these dynamics, extended downturns seem likely, especially around the August options expiry and the Jackson Hole meeting. Expect more market swings, and prepare accordingly. More updates to come in two weeks.
Looking ahead, this week will provide fresh insights into the economy's health through new data on the services sector PMIs and consumer credit. These indicators will help gauge consumer spending trends and business conditions, which are crucial amidst the ongoing market fluctuations. Additionally, upcoming speeches from Federal Reserve officials might shed light on potential shifts in monetary policy, influencing market expectations and strategies moving forward.
Thanks for reading.
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DISCLAIMER: Neither the survey nor any of the contents of this website can act as investment advice of any kind. The results of the survey need not correspond to actual market preferences or trends, so they should be interpreted with caution. Oraclum Capital, LLC (Henceforth ORCA) is a management company responsible for running the ORCA BASON Fund, LP, and for organizing a survey competition each week, where it invites the subscribers to its newsletter (this website) to participate in an ongoing prediction competition. The information presented on this website and through the survey competition should under no circumstances be used to solicit any investment advice, nor is it allowed to be of commercial use to any of its readers. The survey and this website contain no information that a user may use as financial or investment advice. All rights reserved. Oraclum Capital LLC.
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