The View from 5th Avenue – 1 September 2022

New month, who dis? Actually, it may be a new month, but this is same old market in the same old range. It did appear as though we would see a 5th down day in a row by the SPX for the first time since mid-July, but just as the index got close to its 3900 support level, it held and got a slight boost, closing in the green (though the CCMP closed down 40bps). Semis were a major drag ---The SOX (-1.9%) was weaker thanks to Nvidia (-7.7%), which was weighed down by concerns over restrictions on sales in China. Also, Energy (XLE) and Metals & Miners (XME) fell for another day – the latter has suffered the last 5 days running. It feels as though there are still plenty of storm clouds hanging over the markets, but there was no panic and thus, we remain in wait-and-see mode. There have been plenty of signs that indicate recession potential – 1) negative trend of Leading Indicators 2) 55% of US yield curves inverted 3) Monthly supply of new houses exceeded 9 months…Further, the Dollar was up another 90bps today, now +14.7% ytd, its third best year since Nixon took the dollar off the gold standard. Also, questions remain around inflation in concordance with mixed economic data. Today’s claims number was below estimates --the lowest since June, ISM data stayed the same m/m, while the PMI # was the lowest since July 2020, but remains above 50. To that end, tomorrow’s NFP feels critical. However, The Fed has advertised their hawkish narrative so thoroughly it’s hard to imagine much will come from the data. That said, September is historically the weakest month for equity returns and with the Fed hell bent on their play book, US investors will be begging for the long weekend ahead.