SCOREBOARD

MARKET RECAP

• Markets were on fire, US stocks +3.9%, NASDAQ +5.3%, VXUS +3.51%, and bonds +0.51%.
• Fears of a recession were declining this week. Goldman Sachs cuts recession risk in the next year to 20% from 25%. Retail sales were up a strong 1%, jobless claims were falling, and economic data such as restaurant bookings, hotel occupancy, and air travel appeared fine.
• But homebuilders started on fewer projects than what was projected.
• Inflation news was good; wholesale prices were lower than expected, and the CPI, up 2.9%, showed inflation is slowing.

SCOREBOARD

MARKET RECAP

• US stocks ended up flat on the week, an incredible achievement considering the Monday scare.
• On Monday, the Japanese Topix fell by 12.2%, its biggest loss since October of 1987. Nasdaq fell by 3.4%, the S&P 500 -3.0%. The unwinding of the carry trade and scares of a hard landing propelled the selloff.
• The VIX got as high as the mid 60s and was at its highest level since the 2020 Covid bear market.
• There were economic fears that the Fed was way behind the curve. But the Institute of Supply Management’s service index offered some encouragement, rising to 51.4 from 48.8 in June. More positive news later in the week: Initial jobless claims came in at 233,000, a decline of 17,000 and lower than the estimate, helped calm the market.

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MARKET RECAP

• US stocks were down by 2.52% for the week, international stocks by 2.72%, bonds had a monster rally, up by 2.36%.. The Russell 2000 was down by 6.7%. The Dow fell 600 points on Friday. The NASDAQ is now down just over 10% from its  July 10th high and is in correction territory. The 10-year yield fell more this week than any time since March of 2020.
• There was a sharp slowdown in jobs in July, up by 114,000, falling short of the expectations of 170,000. The unemployment rate increased to 4.3%, a three-year high. Average hourly earnings were up by 3.6% yearly, the lowest gain since May of 2021.
• The VIX closed at its highest level of the year.
• The Sahm Rule was triggered, an early recessionary indicator.
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• But hard economic data still points to more of a soft landing than a hard one. According to Torsten Slok, Chief Economist at Apollo, “There are no signs of a slowdown in restaurant bookings, TSA air travel data, tax withholdings, retail sales, hotel demand, bank lending, Broadway show attendance, and weekly box office grosses. Combined with GDP in the second quarter coming in at 2.8%, the bottom line is that the current state of the economy can be described as slowing, but still a soft landing.”

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