Monday Market Open

Hello Boys,

Well, if you took anything out of last week, it was an extensive lesson on volatility. Things can change as fast as the snap of your fingers.

The jury is still out on whether this was a blip or the start of a bigger downturn. There were quite a few catalysts behind the sudden increase in volatility and to further understand it or just get slightly more clued in to whats going on. You have come to no better place.

LETS GO.

Market Indices & Commodities

News
The Recap

In case you missed it, forgot, overslept, drank too much, were traveling, or whatever the case may be…

• Google loses landmark US antitrust case over search dominance ⚖

• Palantir stock pops with Microsoft AI arms deal for U.S. military ⚔

• Trump Media loses $16 million in Q2 📉

• Temu’s founder is now richest person in China 🇨🇳 

• Amazon announce partnership that will let TicTok users buy items from Amazon without leaving TicTok app 📱

• Best and worst day for S&P 500 since 2022 all occurred last week 🤯

Graph of the Day
ZYN SANITY, $443 MILLION CANS SOLD IN LAST 12 MONTHS 📈

News
This week

Another big week of news, economic data, events, the whole 9 yards. Get the scoop on what is important to know for this week.🎯

• Monday - Treasury Budget, Donald Trump is set to do an interview with Elon Musk.

• Tuesday - Producer Price Index (PPI), UK Unemployment data will be released. Economists are expecting unemployment to remain at 4.4% 🇬🇧 

• Wednesday - Consumer Price Index (CPI), EIA Crude Oil Inventories, MBA Mortgage Applications Index. The US consumer inflation rate is expected to fall from 3% to 2.9%. UK CPI (July): prices forecast to rise 1.9% year-over-year

• Thursday - US retail sales (July), initial jobless claims: sales expected to have fallen 0.1%. 🇯🇵 Japan’s second-quarter GDP growth estimate is forecast to be 2.1% compared to -2% in the first quarter.

• Friday - Aug. Preliminary University of Michigan Index of Consumer Sentiment: 67.5 vs. 66.4 in July. US building permits will be published. Economists expect to see 1.44m new permits, up from 1.14m.

⭐ US and UK consumer price index (CPI) dominate the week, with the former particularly important given the expectation that the Federal Reserve bank (Fed) will cut rates in September.

Now You Know 
The Return Of The R Word 

Alright,

Not to be all doom and gloom around here, but in the aftermath of the past couple of weeks. I’ve seen the R word thrown around here and there. So, I thought we ought to have a look into it.

The market fell last week for a number of reasons. One being the unemployment rate rising from 4.1% to 4.3% in July, which was unexpected. In addition, the ADP employment and non-farm payroll reports showed fewer new jobs being created than economists had forecast.

The higher unemployment rate then triggered the Sahm Rule recession indicator. You may be thinking: “The what?”

This indicator compares the 3-month average unemployment rate to the 12-month low point. It triggers when the difference exceeds 0.5%, and suggests a recession has begun or is imminent. It differs from the yield curve inversion indicator, which suggests a recession is on the horizon rather than imminent.

The Sahm Rule has a very good track record, but there are some caveats to note:

• Claudia Sahm, who developed the indicator, pointed out that its historical accuracy doesn't mean it will never be wrong. She also said she doesn’t think a recession has begun - but the odds are rising.

• Recessions don’t typically begin with unemployment rates as low as they are now. That’s not to say there isn’t evidence where they can. 

• The current cycle is far from typical. Usually, an overheated economy causes inflation, which leads to rate hikes. This cycle started with rising inflation due to inflated money supply, a constrained supply chain, and Russia’s invasion of Ukraine. GDP growth has improved in spite of higher interest rates.

Officially, the expected recession hasn’t occurred yet. But there have actually been a series of sector-specific recessions. The tech and real estate sectors both experienced recessions. There have also been rolling recessions in most other economies around the world. Meaning it may be close. So, keep your wits about you and be careful.

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That’s all Folks

Hey, thank you for checking out Monday Market Open. I hope you enjoyed it, learned something new, and are feeling ready to attack the week. Keep an eye on your inbox for more Alpha coming your way this week.

Cheers,