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

This week’s agenda is packed with central bank decisions, U.S. housing data, and the first look at September’s global PMI surveys. Wednesday’s FOMC meeting will be at the forefront. Despite an uptick in August’s U.S. inflation readings released last week, the Fed is widely expected to hold interest rates steady. This meeting includes an update to the Summary of Economic Projections, and some policymakers may continue to predict one more rate hike before year-end to tame inflation. Fed funds futures currently imply a 30% chance of a quarter-point hike in November.
Across the pond, the Bank of England is slated to raise rates by 25bps on Thursday, and Wednesday’s CPI release is expected to be above the prior month’s reading.

Japanese yen traders will be on alert for any further signaling from the Bank of Japan at their policy meeting late Thursday on the heels of Governor Ueda’s hawkish comments last week. Back in the U.S., the
monthly housing data dump begins with the NAHB sentiment index today, followed by housing starts and building permits on Tuesday and existing home sales on Thursday. The latest inflation
numbers are likely to keep interest rates high along with mortgage rates, continuing to crimp housing supply while new buyers struggle with high prices. Global flash PMIs wrap up the week, where investors will keep an eye on the prices paid category and whether the composite readings move into contraction territory. [1]

Recapping Last Week

U.S. equity indexes finished the week slightly lower as surging energy prices threatened to resuscitate inflationary pressures. The S&P500, Nasdaq Composite, and Russell 2000 Indexes all fell 0.4% or less. Eight of 11 S&P500 sectors did end positive; however, led by utilities, consumer discretionary, and financials. Crude oil futures jumped 4.5%, topping $90 per barrel for the first time since November 2022 after OPEC reaffirmed robust demand forecasts and the International Energy Agency said that production cuts could produce a “substantial market deficit” through year-end. U.S. Treasury yields lifted across the curve after August CPI rose 0.6% MoM, largely due to a pop in gasoline prices. Food inflation eased, but begrudgingly, shelter costs are not decelerating as much. Headline U.S. producer prices gained more than expected but were inline excluding energy. Higher gas prices also contributed to a 0.6% rise in August’s retail sales, but
online purchases were flat as shoppers scaled back. U.S. consumer sentiment dipped slightly in September, while one-year inflation expectations fell to 3.1%, the lowest since March 2021.
Manufacturing activity in the New York Fed region rebounded sharply in September as new orders jumped, and U.S. industrial production for August exceeded expectations. However, a simultaneous strike at the big three U.S. auto factories may substantially dent industrial output going forward.

Internationally, the European Central Bank implemented a 10th consecutive interest rate hike. However, the euro fell sharply versus the U.S. dollar after officials hinted further action was off the table for now. The European Commission forecasted a prolonged recession for Germany this year and a general slowdown across the region. Britain’s economy contracted by 0.5% in July, with the unemployment rate rising to 4.3% along with a contraction of 207K jobs. In Asia, the Japanese yen initially spiked higher before fading after BOJ Governor Ueda fueled hopes of moving away from negative rates. Last, data from China revealed modest improvement.

Consumer prices rose 0.1% in August, while Chinese banks issued more new loans than forecast.
Retail sales and industrial production showed better-than-expected growth, but fixed asset investment was hampered by the ongoing real estate slump. [2]

Chart of the Week:

The S&P500 (SPX) has been a bit sloppy the last few months, going essentially nowhere since June. But that doesn’t mean it hasn’t been telling a story. From an Elliott Wave Theory perspective there have been two main potential wave counts that have been glaring for nearly a year, which may finally resolve sometime in October. Elliott Wave Theory counts five impulse waves with numbers and three corrective waves with letters, so in this case think of the numbers as bullish moves and the letters bearish. The larger degree waves are the main question here, but the smaller ones are painting that picture. The three waves up from the October 2022 low are labeled i-ii-iii, with wave iv currently developing. In this case the current corrective sequence should find technical support within the next month and kick wave five to new highs. The other potential is that the bull market from the 2009 lows ended in 2021, with the October 2022 low being the A wave down, and the past year a B wave. That would suggest a C wave is still to come, pointing to much lower prices. Once the smaller degree wave iv completes, potential support lies near $4,270, but if that level doesn’t hold, pay attention.   Click here to view chart. [3]

Sources: [1] [2] [3] data provided by Charles Schwab & Co. Inc., (“Schwab”) schwabadvisorservices@schwab.com; Any performance data reported by Asset Guidance Group, LLC has been grouped and reported by kwanti.com, imported from Schwab Institutional/Schwab Advisor Center, 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 (Schwab);

*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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