The Weekly Edge

The When We Were Young Festival is this weekend, and though no NewEdge Wealth team members are joining the angsty youth in attendance, we can’t help but think that the emo music from this festival matches the mood of today’s market.

If an economic recession were to materialize in 2024 or after, renewed earnings weakness could be expected, challenging the current consensus forecasts of strong growth next year and the year after.

2023’s string of stronger-than-expected economic data, continued with this week’s jobs data, has reminded us of the iconic 1967 scene in You Only Live Twice where a pronounced-dead Bond emerges from the depths of the ocean alive, well, and immaculately dressed.

The major shifts in markets over the course of 3Q23 had us thinking about one of the greatest (true) stories in rock and roll history.

Liam Gallagher of Oasis began life having no interest in music, wholly uninterested in his brother Noel’s passion and prowess for songwriting.

Let’s do the “Dance of the Clairvoyants” and see what messages the equity market leaders and laggers could be sending us about the future path for the economy and broad equity indices.

After falling for most of 2023 as inflation moderated, the Misery Index has ticked up meaningfully for the first time this year, capturing the pinch that consumers could feel if inflation readings continue to reaccelerate.

September is widely known to have the worst seasonal headwinds for the U.S. equity market, meaning returns in September have been the weakest on average of any month in the year. We expect U.S. large cap equities to continue to churn sideways, stuck in a range in the short-term of 4,300-4,600.

In honor of Labor Day weekend, we will look at the state of the U.S. labor market (quickly and with charts at the end, so that you can get back to your beach reading). The summary is that the U.S. labor market remains resilient and historically tight.

From the policy pivot in late 2018 to calm markets, to the cutting of interest rates in 2019 when unemployment was at a 50-year low, to the unprecedented extent of policy support conducted during the COVID shock, to maintaining aggressive easing post-COVID, despite signs of strong growth and high inflation, Powell has overseen a stretch of ultra-dovish policy actions.

August has been a cruel month for equity and bond investors. After a relatively bright and calm start to summer, with generally rising risk asset prices and low volatility, this month has been more challenging and tumultuous.