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.

After a roaring rally from mid-March until late July, U.S. equity markets have entered a correction phase. So far, the correction has been shallow and healthy, not exhibiting signs of the bends, or a sharp correction after a powerful rally.

As we pass the halfway point of the second quarter U.S. equity earnings season, this week we are providing our assessment of the current earnings environment, evaluating the expectations for earnings in 2024, and examining if more fundamentally driven equity performance is possible, which we believe will be key if markets are to build on gains generated in the first half of the year.

Try as they might, the Federal Reserve has done little to slow the beat of U.S. economic growth.

It has been just under a year since Chairman Powell gave his curt “pain” speech at Jackson Hole, warning of the economic costs that would need to be endured in order to get inflation under control.

A year on, there is little evidence of that pain.