The week’s economic releases showed continued signs of deterioration. The job market is falling behind expectations while the significant GDP miss confirmed that the U.S. recovery is slowing, as expected from the recent Goldman Sachs forecast on slowing growth into year end and beyond. Short interest continued to increase during this week’s volatile swings and that is a trend we expect to see continue.
August will kick off with an important week of economic releases and end with the critical Fed Jackson Hole Symposium. The ISM manufacturing PMI will be out Monday, the ADP payrolls number and the ISM services will follow into the middle of the week. Thursday’s job cuts estimates will then be released ahead of Friday’s jobs report.
We are also watching the spread of the Delta COVID variant for its ramifications on U.S. stocks in addition to the tech selling occurring in China. The looming congressional showdown over the US debt ceiling and US credit rating downgrades also remain near term headline risks for major indexes.