Here’s The Asset Guidance Group Outlook for the Week Ahead… 

As the dog days of summer wrap up, the global macro engine rolls on with a slew of toptier data to parse in the week’s first half. Late tonight, China will release its industrial production and retail sales numbers for July on the heels of last week’s disappointing trade and inflation reports. Japan’s preliminary Q2 GDP and Australia’s wage price index and central bank meeting minutes also land today. On Tuesday, U.S. retail sales are expected to accelerate from the prior month, and earnings reports from giants Walmart, Target, and Home Depot may add more color to how consumers are holding up. Whether or not the Bank of England will raise rates in September may hinge on Wednesday’s UK CPI release, along with the unemployment, average earnings, and retail sales figures arriving throughout the week. Also on Wednesday, the minutes from the July FOMC meeting may shed light on what appears to be a growing split between committee members on further tightening versus pausing, based on recent public appearances. Other U.S. events include industrial production, regional manufacturing surveys from New York and Philadelphia, and housing starts and building permits.

Overseas, Europe will feature economic sentiment assessments, Q2 GDP updates, and final CPI readings for July. [1]

Recapping Last Week

U.S. equity indexes fell for a second straight week amid mixed inflation reports and
concerns of a major economic slowdown in China. The  Nasdaq Composite and Russell
2000 Indexes slid 1.5-2%, while the S&P500 edged lower by 0.3%. Eight of 11 S&P500
sectors managed to gain ground, led by a 3.3% surge in energy as crude oil prices
continued to advance. U.S. Treasury yields lifted as bond prices remained under pressure from the prior week’s surprise downgrade. Last Thursday’s 30-year bond auction came in “soft”, following the prior day’s “good to fair” sale of 10-year notes. U.S. consumer prices rose 0.2% MoM in July, in line with expectations, while core CPI climbed 4.7% YoY, the smallest increase since October 2021. But producer prices gained more than forecast, which is likely to keep the Fed in a hawkish bias. U.S. credit card balances surpassed $1T for the first time ever according to the New York Fed, reflecting robust consumer spending and higher prices, but the research noted little evidence of widespread distress. Consumer sentiment fell slightly in August but stayed well above levels from a year ago, while short-term inflation expectations ticked down to 3.3% from 3.4%. In other news,
the U.S. trade deficit shrank in June, indicating more  moderate demand, while small
business confidence reached an eight-month high in July as inflation concerns eased.
Unemployment claims jumped to a five-week high but not enough to raise any red flags.
Lastly, ratings agency Moody’s lowered its outlook for 11 U.S. banks, citing risks of the
ongoing high interest rate environment. Internationally, the Chinese economy is facing
the prospect of deflation with demand tumbling. July CPI declined by 0.3% YoY, while
exports fell 14.5% and imports sank 12.4%. New loans cratered by 89% MoM, even after policymakers cut interest rates and pledged more stimulus. Additionally, one of the country’s biggest property developers warned it could post a loss of up to $7.6B for the first six months of the year. The UK economy beat expectations with 0.2% growth in Q2 after a strong June, raising the specter of further rate hikes. Finally, Germany’s industrial production fell more than forecast in June, exacerbating the downturn in Europe’s largest economy. [2]

Chart of the Week:

RBOB Gasoline Futures (/RB) have been trending higher since the low last December,
but have picked up steam through the summer travel season that generally shows
increased demand, gaining 25% in just seven weeks. This year, prices at the pump have
been driven higher by OPEC’s policy to limit oil production, thereby tightening the global supply. The price of oil is the single largest factor in pricing of gasoline. A heat wave in large parts of the U.S., limiting refineries’ capacity to run at full tilt, and a global economy
that refuses to fall off as so many expected have added more fuel to the rally. From a seasonal perspective, the end of summer peak is near, but OPEC’s policies could keep upward pressure on prices. Lastly, hurricane season is most active now through mid-October, which tends to push gas prices up if the Atlantic coast gets hit hard.  Click here to view chart. [3]

Sources: [1] [2] [3] tdainstitutional.com tdainstitutional.com; Any performance data reported by Asset Guidance Group, LLC has been grouped and reported by kwanti.com, imported from TDAmeritrade Institutional, Risk categories as scored by Grable-Lytton test and grouped by like risk tolerance levels; NOTE: individual account performance grouped solely by model classification type in terms of risk tolerance. Individual portfolios include equivalent equities exposures via like models, but many may hold additional investments like structured notes, fixed income investments such as CDs, bonds, and other individually preferred securities. 1-Week risk score denotes overall performance of all AGG client portfolios grouped together by like-risk tolerance scores not by identical investment allocations; [4] [5] Macro Monday (tdainstitutional.com);

*All other Asset Guidance Group analysis, www.stockcharts.com; All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat,0020Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Chart from Indeed’s Hiring Lab.

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