us economy dead

What was THAT all about?

Meta, Microsoft, and plenty of others absolutely beasted their earnings…

Then the jobs report came in weak, stocks sold off, Trump fired the nerd BLS Chief responsible, a Fed governor resigned, and academics tell us the US is now a banana republic.

What’s really going on?

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Friday’s jobs report was a wake-up call.

Nonfarm payrolls for July came in at just 73,000, missing expectations by a wide margin and triggering a 1.7% drop in S&P futures with even sharper losses for small caps.

Sharp downward revisions to May and June shaved a further 258,000 jobs from the record, a pace of revisions rarely seen outside recessionary periods (Goldman)

The broad market mood has clearly shifted to risk-off, with growth-sensitive sectors leading the decline.

Macro View – Recession Chatter Returns, Policy in Focus

The accuracy of US jobs data is in the spotlight after the Labour Department chief was sacked over the revisions, prompting accusations of politicisation and a noisy media response.

Problem is, those same academics were slamming the quality of US data just over a week ago, insisting that something had to be done.

As per, Trump’s ‘unique’ methods of doing those things have distracted from the underlying problem.

The real issue remains data quality & decreasing public confidence in economic numbers. Banana republic takes are way off base.

Markets now anticipate a stronger case for a September rate cut on the back of the weak jobs data…

And softer consumption & construction trends raise concerns over the underlying strength of the US economy…

The “growth scare” narrative is back, particularly with consumption stagnating for six months and housing data rolling over.

The cure for both is likely to be rate cuts…

Flows & Sector Moves – Breadth Narrows, Quality Sought

Market breadth decayed further last week with just 25% of stocks above their 20-day moving averages by close.

Leadership in semiconductors and tech faded, and small caps gave back recent gains.

Defensive sectors held up better, but no area offered real shelter.

At the index level, this could be THE pullback, but a greedy BTD’er could be forgiven for hoping the market dips further and finds support at prior highs just beyond the 50-day average, but for now conviction is low across flows.

Earnings Recap – High Bar, Low Tolerance

Earnings season continues, with lots of beats, but positive surprises are only being rewarded modestly overall.

Disappointing reports are punished heavily, with the average drop on a miss double the five-year norm…

The sandbagging effect is visible: many companies lowered guidance heading into the quarter (tariffs), making wide “beats” less meaningful for price.

Among the key names on deck this week are Palantir, Super Micro & Disney, plus a load of the hot themes like alternative energy (SMR, VST, ET) & Robotics (SYM) too.

Investors are likely to want not just beats, but strength in outlooks to justify re-risking.

Strategy Notes – Chop Ahead, Don’t Rush the Dip

After months of “easy mode,” trend-followers are no longer in control.

Recent economic weakness and lingering policy risk (especially on tariffs) suggest more choppy, rangebound trading.

A sharp growth scare could see a further correction, but lower rates could support a recovery if confidence firms.

For now, patience is key. Sitting out chop is a perfectly valid strategy when signal is elusive.

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