The first half of the year is almost done.

This is the last trading day of the first half of 2024, another year speeding by. In the past six months, economic growth around the globe has modestly exceeded expectations, and inflation rates have fallen slightly further than anticipated at the start of the year. US stocks continue to be primarily driven by the desire for technology stocks. According to a Bloomberg report, the market breadth has been as narrow as it has been since the mid-60s. The consensus view appears to be that whilst the US economy is slowing down relative to the start of the year, they will avoid an economic recession, and inflation rates are falling; soon enough, slowly but surely, US interest rates will come down. As a result, the S&P 500 is trading on north of 20x its price to earnings.

The US yield curve has remained deeply inverted for the most extended period in history, I believe, as the bond market continues to predict a recession for the US economy. It has not been much of a year for incumbent political leaders, as many voters appear disillusioned with their current choice. If the polls are to be believed, Rishi Sunak is about to get the chance to spend more time with his family; there is a wind of change in Europe, and apparently, Joe Biden did little for his cause last night at the first of the Presidential debates.

Sentiment-wise, stocks feel a little stretched as we start the third quarter. The holiday season is about to start, meaning liquidity will dry up. There are further indications of a weakening US economy. Retail sentiment is weakening; Loreal stated yesterday that demand for cosmetics is slowing, Nike results were disappointing, and Walgreens Boots stock fell sharply after the release of its earnings. The housing market data is weak, and yesterday’s jobless claims report recorded another rise. Purchasing Manager surveys suggest an expanding economy, and the estimate for growth in the first quarter of 2024 was revised modestly yesterday. Later today, we will get the monthly Personal Consumption and Expenditure index, as we are constantly reminded of the Fed’s preferred inflation metric. We also get the Michigan consumer sentiment expectations for the US economy and the latest estimate for growth in the UK economy.

Last night, England was comprehensively beaten by India in the semi-final of the  World T20; on Sunday, it’s the under-fire football team’s turn as they look to progress to the last 8 of the tournament.