AFMC - Wall Street Exclusive: Q3 Outlook

2024-07-06 01:12:43 ET

Summary

• On a MACRO level, this economic scene remains one with a wide dispersion between the potential outcomes.
• Election volatility - History shows that the S&P 500 moves higher regardless of who wins the presidential election.
• Analysts scramble to raise forecasts - twelve of the thirteen tracked strategists have raised their price targets since publishing them in late 2023.
• Excessive illegal immigration and population growth are a double-edged sword. In the short run, it can briefly support economic activity, but the associated costs will eventually be a drag.

“Our whole constitutional heritage rebels at the thought of giving government the power to control men's minds.” - Thurgood Marshall

Q3 Outlook

Several factors suggest that the path of least resistance for equities in the quarter ahead is likely upward. Among these are decent growth, driven by an attempted recovery in globally leveraged manufacturing amid partial cooling in consumer-linked services activity, along with inflation that’s no longer reaccelerating and fiscal investment that remains a tailwind.

Incoming economic data has been trendless with a slight lean to disappointing. That makes for equal odds of a “hard-landing” outcome featuring concerns around the mid-to-low-end consumer who has exhausted savings versus a “no-landing” scenario paced by spending on generative artificial intelligence, data centers, energy grid infrastructure, and deglobalized supply chains....

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