Soft Economic Data Falls Short of Threatening Soft Landing Expectations

Soft Landing Slowing Economic Growth

In his Daily Market Notes report to investors, Louis Navellier wrote: 

The 10-yr yield is back over 4%, and stock indexes are modestly lower early with the exception of the Dow.

Soft Landing Still

Economic data came in slightly softer than expected, though not enough to threaten the soft landing expectations. The JOLTs job openings was expected to be flat and was down incrementally, the lowest since Apr’21, though still close to 10M.  ISM manufacturing data was all modestly below forecast as well, with employment at a multi-year low, albeit new orders were better for the third month in a row though still below 50 for nearly a year.

Metals are lower today, with gold down $27, giving back yesterday’s gain and silver and copper down 2%. Crude oil is down a dollar but still above $80/bbl, while natural gas is down 3%, back near the $2.50/mcf where it has hovered for most of the year. The higher US Treasury yields are driving the US dollar index above 102, up 2.5% in two weeks. Both Investment grade corps and High Yield are down on the higher yields as well, giving up the last two weeks of gains. Bitcoin has broken below $29K for the first time since May.

Guarded Outlooks

While this morning only the industrial sector is in the green, for the month of July 71% of the S&P 500 names were higher, broadening out of the top 10% names which only contributed 34% of the 3.1% gain for the month. While earnings have been solid this quarter, the outlook ahead has been more guarded than hoped for. This is supposed to be the lowest quarter for earnings in the cycle, with Q2’24 forecasts currently 15% higher.

Growth Forecasts

The rest of the earnings season will be important in firming up the growth forecasts going forward, including any near-term momentum in AI gains, a theme which has driven up overall P/E multiples since March. 

Coffee Beans: Bear Up

A zoo in China has denied suggestions some of its bears might be people in costumes after photos of the animals standing like humans circulated online. Other Chinese zoos have been accused of trying to pass off dogs with their fur dyed and cut to look like wolves or African cats. Source: Sky News. See the full story here