QVML - The S&P 500 Casually Heads Higher

• The first week of August 2022 lacked any real fireworks for the S&P 500 (SPX). The index rose 14.90 points (+0.4%) from the previous week to close the week at 4,145.19.
• The actual trajectory of the index however remained within the range that is consistent with investors focusing most of their attention on 2023-Q1 in setting current-day stock prices.
• In the meantime, we have a split focus situation. What happens next will hinge on where investors set their future time horizon.

The first week of August 2022 lacked any real fireworks for the S&P 500 ( SPX ). The index rose 14.90 points (+0.4%) from the previous week to close the week at 4,145.19 .

But when tracked against the latest update to the dividend futures-based model 's alternative futures chart, we see that investors casually shifted a portion of their forward-looking attention back toward the nearer-term future.

The actual trajectory of the index however remained within the range that is consistent with investors focusing most of their attention on 2023-Q1 in setting current-day stock prices. Should investors decide to be less casual and more definitively shift their attention to the nearer-term future, we would see that change as a significant decline in stock prices. On the plus side, if they shift their attention more fully toward 2023-Q1, stock prices will rise.

In the meantime, we have a split focus situation. What happens next will hinge on where investors set their future time horizon. And that will be driven by the random onset of new information. Speaking of which, here are the market-moving headlines we found in the news streams during the first week of August 2022.

Monday, 1 August 2022

• Signs and portents for the U.S. economy:
  • U.S. construction spending dives in June on single-family housing weakness
  • Factories squeezed by higher prices, weak demand
  • Number of Americans employed and hours worked falls in July, data show
  • Inflation begins to strain finances of young, low-income Americans
  • Oil sinks about 4% after weak factory data sparks demand concerns
• Bigger trouble developing in China:
  • China July home prices, sales volume fall as sentiment wilts - survey
    • China's economic wobbles worsen as factory, property woes mount
    • China’s securities regulator head says stabilising market is top priority
• Bigger trouble developing in the Eurozone:
  • Euro zone factory activity contracted in July as recession fears grow
    • Polish manufacturing slump deepens as output plunges -PMI
    • Spanish July factory activity contracts most since 2020 lockdown-PMI
    • Italy manufacturing sector contracts in July -PMI
    • French manufacturing contracted in July by more than first thought-PMI
    • German manufacturing sector contracts as new orders slump - PMI
  • German retail sales post biggest year-on-year slump since 1994
• Wall Street ends down after biggest month since 2020

Tuesday, 2 August 2022

• Signs and portents for the U.S. economy:
  • Analysis: U.S. banks face trillion-dollar reverse repo headache
  • U.S. job openings fall to nine-month low; labor market holds tight
• Fed minions trying hard to convince people recessionary economy won't stop them from hiking rates:
  • Fed officials stay resolute on need to make policy more restrictive
    • Fed's Daly: More to do on inflation; 2023 rate cuts not her 'modal' outlook
• Bigger trouble developing in Canada:
  • Canadian factory activity grows at slowest pace in two years
• Other central bank minions also hiking rates:
  • Australia's central bank hikes rates, says policy not on pre-set path
  • Philippine central bank to continue supporting economic recovery despite rate hikes
• S&P 500 ends see-saw session lower as Pelosi visits Taiwan

Wednesday, 3 August 2022

• Signs and portents for the U.S. economy:
  • OPEC+ set to approve minuscule oil output rise in rebuff to Biden
  • U.S. factory orders rise solidly in June, beat expectations
  • U.S. services sector surprises with momentum; supply, price pressures easing
• Fed minions pledge to be tougher than they've ever been:
  • Fed officials beat inflation drum; 50-basis-point rate hike 'reasonable' next month
    • Fed's Bullard: We're going to be tough to get inflation back to 2%
    • Fed's Daly says 50-basis-point rate hike next month is 'reasonable'
    • Fed committed to getting inflation to 2% target, Barkin says
    • Very unlikely Fed will cut interest rates next year - Kashkari
• China sees gains from lifting its zero-COVID lockdowns:
  • China July services activity expands at quickest pace in 15 months - Caixin PMI
• Bigger trouble developing in the Eurozone:
  • Euro zone business activity contracted in July as customers stayed home
    • Slowdown beckons as euro zone retail sales drop more than expected
  • Inflation, gas supply concerns end German services sector rebound -PMI
    • German exports surge to record level in June, outlook still gloomy
• Wall Street rallies on economic data, crude falls as stockpiles jump
  • Nasdaq ends at three-month high as PayPal fuels optimism

Thursday, 4 August 2022

• Signs and portents for the U.S. economy:
  • Oil prices slump to lowest since before Ukraine invasion as recession fears weigh
  • U.S. weekly jobless claims increase, but labor market remains tight
  • U.S. trade deficit narrows sharply; exports at record high
• Fed minion says the sky is the limit for rate hiking plans:
  • Fed's Mester sees policy rate above 4%, hikes through mid-2023
    • Fed's Mester says she needs to see 'several months' of inflation easing
• Bigger trouble developing in the Eurozone:
  • Euro zone consumers brace for recession and high inflation - ECB survey
• Japan finance minister starting to prep for end of BOJ minions' never-ending stimulus:
  • Japan must prepare for eventual end to BOJ's yield cap, says MOF executive
• Bank of England minions hike rates, warn of recession:
  • Bank of England raises rates by most since 1995 even as long recession looms
• Wall Street struggles for direction as slowdown worries weigh

Friday, 5 August 2022

• Signs and portents for the U.S. economy:
  • U.S. labor market defies recession fears as job growth surges in July
    • Instant View: US July payrolls rise more than expected
    • Unusually large U.S. jobs number stokes case for 'unusually large' rate hike
• Bigger trouble developing in Canada:
  • Canada sheds jobs for second month in a row, central bank seen hiking rates
    • Instant View: Canada loses 30,600 jobs in July, jobless rate remains at record low 4.9%
    • Canada's Ivey PMI shows activity contracting in July
• Global central bank minions hiking rates:
  • India cenbank raises key rate 50 bps as inflation seen staying elevated
• S&P 500 ends down as jobs data rekindles rate hike fear

The unexpectedly strong July 2022 jobs report reshaped the CME Group's FedWatch Tool projection for September 2022 (2022-Q3), now anticipating a three quarter-point rate hike instead of the half-point hike investors expected beforehand. After that, the FedWatch tool foresees two quarter-point rate hikes in November and December (2022-Q4), with the Federal Funds Rate topping out in a target range between 3.25% and 3.50%. In 2023, the tool now anticipates the Fed will be forced to begin cutting rates beginning in July (2023-Q3).

Meanwhile, the Atlanta Fed's GDPNow tool 's scaled back its forecast for real GDP growth in 2022-Q3 down to 1.4% from last week's projection of 2.1%.

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