QVML - The S&P 500 Registers Small Dip On Gloomier Economic Outlook

• The S&P 500 mostly drifted sideways during the third week of August 2022, before dipping on Friday, 19 August 2022 to close the week at 4,228.48.
• The dividend futures-based model indicates investors' main quarter of interest continues to be 2023-Q1.
• Whatever news comes out of Jackson Hole in the upcoming week will present investors with an opportunity to shift their focus to the much nearer-term time horizon without greatly affecting the level of stock prices.

The S&P 500 (Index: SPX ) mostly drifted sideways during the third week of August 2022, before dipping on Friday, 19 August 2022 to close the week at 4,228.48.

Here's how that change looks on the latest update to the dividend futures-based model 's alternative futures forecast chart:

The week held little in the way of market-moving news, with the next big event that might move the market's coming when the members of the Federal Reserve meet at their annual retreat in Jackson Hole, Wyoming. The dividend futures-based model indicates investors' main quarter of interest continues to be 2023-Q1. However, we can't help but note that whatever news comes out of Jackson Hole in the upcoming week will present investors with an opportunity to shift their focus to the much nearer-term time horizon without greatly affecting the level of stock prices.

As for the week that was, the small dip in the index level was associated with "recession jitters" in the week's market-moving headlines from Friday, 19 August 2022:

Monday, 15 August 2022

• Signs and portents for the U.S. economy:
  • U.S. home builder sentiment, New York state factory activity drop
  • Oil settles lower on weak economic Chinese economic data
• Bigger trouble developing in China:
  • Marketmind: Fasten your seat belts
    • China new bank loans tumble more than expected amid property jitters
    • China new home prices in July unchanged from June, down 0.9% y/y
    • China unexpectedly cuts 2 key rates, withdraws cash from banking system
    • China to lift Aug fuel exports but 2022 shipments to drop to 7-year lows
    • Chinese developers in 'survival mode' slash property investment
• Bigger stimulus developing in China:
  • China unexpectedly cuts 2 key rates, withdraws cash from banking system
• Bank of England expected to deliver more rate hikes:
  • BoE to deliver another bumper 50 bps lift in Sept as prices soar: Reuters poll
• Wall Street climbs, adding to recent gains as megacaps rise

Tuesday, 16 August 2022

• Signs and portents for the U.S. economy:
  • U.S. housing starts tumble in July; building permits fall
  • Oil falls to 6-mth low on economic data, awaits news of Iran nuclear deal
    • Analysis-Oil prices turn more volatile as investors exit the market
  • U.S. manufacturing production accelerates in July
• Bigger trouble developing in China:
  • The disappointing economic backdrop to China's policy dilemma
• Bigger stimulus developing in China:
  • China will step up policy support for economy, premier tells state media
    • China to boost economic demand, speed up infrastructure - state planner
  • China supports several private developers with bond guarantee -sources
• Dow, S&P 500 climb as upbeat results from Walmart, others boost optimism

Wednesday, 17 August 2022

• Signs and portents for the U.S. economy:
  • U.S. retail sales flat on gasoline price drop; consumer spending resilient
  • Oil edges off low as strong export demand drains U.S. crude stocks
  • Pricey pencils, paper: U.S. teachers get schooled in inflation
• Fed minions see inflation, think they're about to start losing money, say more women will go to work:
  • Fed minutes show more rate hikes in the pipeline, but pace could slow
    • Instant View: Fed officials saw persistent inflation in July, cagey on next hikes
  • Fed staff sees bond portfolio income turning negative in coming months
  • Fed's Bowman sees strong U.S. labor market bringing more women back to work
• Bigger trouble, stimulus developing in China:
  • China's fiscal revenue growth slows slightly amid sluggish economic recovery
  • Chinese vice premier urges greater effort to boost consumption
• Bigger trouble developing in the U.K.:
  • UK inflation hits double digits for first time since 1982
• More central banks ramping up more rate hikes:
  • NZ central bank signals aggressive tightening pace after 50-bps hike
• ECB minions focusing on regulating cryptocurrency:
  • ECB steps in as banks dip toes in crypto pool
• Wall Street ends down, but indexes briefly cut losses after Fed minutes

Thursday, 18 August 2022

• Signs and portents for the U.S. economy:
  • Oil up 3% on robust U.S. fuel consumption, tight supply outlook
    • OPEC chief says blame policymakers, lawmakers for oil price rises
  • U.S. labor market resilient despite rate hikes; housing market wilting
• Fed minions on a mission to hike rates, only question is by how much:
  • Fed united on need for higher rates, divided over how high
    • Fed must get inflation down urgently, Kashkari says
    • Fed's George says pace, endpoint of rate hikes still matter of debate
  • Fed's Powell to speak on Aug. 26 at Jackson Hole conference
• Bigger trouble developing in China:
  • China central bank, under pressure to ease, is hemmed-in by inflation, Fed jitters
  • Exclusive-China regulator launches new probe into banks' property loan exposure - sources
• Bigger trouble developing in the Eurozone:
  • Euro zone July inflation confirmed at 8.9% y/y, core measure sharply up
• ECB minions notice Eurozone inflation hasn't improved:
  • As ECB mulls another big hike, Schnabel says inflation outlook hasn't improved
• Wall St ends higher, Cisco Systems jumps after forecast

Friday, 19 August 2022

• Signs and portents for the U.S. economy:
  • Oil prices down 1.5% for the week on recession jitters
• Fed minions trying to play coy about plan for more rate hikes:
  • Fed has 'a lot of time' before next rate decision needs to be made, Barkin says
• Bigger trouble developing in Japan:
  • Japan's inflation holds above BOJ target, price pressures broaden
• Bigger trouble developing in the Eurozone:
  • German dependence on China growing 'at tremendous pace', research shows
  • Record jump in German producer prices adds to gloomy outlook
• Bigger stimulus developing in China:
  • China set to lower lending benchmarks to revive wobbly economy
  • China to boost targeted policy support for economy -state media citing cabinet
• ECB minions starting to think they'll need to keep hiking rates:
  • ECB must keep raising rates as inflation will stay too high: Nagel
• Wall Street ends down as yields rise; indexes post weekly losses
  • Meme stocks in reverse as Bed Bath & Beyond slump spooks investors

There was little change in the CME Group's FedWatch Tool 's projections of the Fed's future interest rate hikes to follow last week's action. Investors still expect half-point rate hikes in September 2022 (2022-Q3) and November (2022-Q4), followed by a quarter-point rate hike in December (2022-Q4), with rates topping out in a target range of 3.50-3.75%. The probability of a rate cut is elevated from June 2023 onward but is below 50%.

The Atlanta Fed's GDPNow tool 's forecast for real GDP growth in 2022-Q3 dropped to 1.6%, down from last week's projection of 2.5% growth.

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