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.

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.