Last week, all three major indexes soared, buoyed by economic data that eased recession fears. The consumer price index and retail sales reports were particularly reassuring. This rally followed a global market slump earlier in the month, triggered by a surprising uptick in the U.S. unemployment rate for July. Goldman Sachs has now lowered the probability of a U.S. recession in the next 12 months to 20% from 25%, thanks to encouraging jobless claims and retail sales data.

The Federal Reserve’s minutes from their last policy meeting are due on Wednesday, but the real showstopper is Powell’s speech on Friday. Traders are now betting there’s a 73% chance of a 25 basis point rate cut in September, according to the CME FedWatch Tool.

The major bearish agitation that began in mid-July has been replaced by a major bullish agitation on the stock markets. Rising volatility is an excellent breeding ground for short-termist reactions. Unless short-termist reactions are the cause of the volatility. Just when everything seemed to be going swimmingly, things went haywire. To the point where investors were contemplating all manner of cataclysms. Even mainstream institutions seemed to lose their nerve, as if trying to counter their blissful optimism of the previous months. And then, abracadabra, everything went back to normal. Almost by magic. The stats that had everyone clutching their pearls suddenly looked... fine. Corporate results that were once the stuff of nightmares? Not so bad after all. The stock markets have bounced back like a rubber ball.

The broad S&P500 index has rallied 4% in a week and 6.7% in seven consecutive sessions. It needs just 2% more to beat the record high of 5,669 points set on 16 July. Over in Japan, after a dramatic flop on August 5, the market rebounded 8% in the past week. Investors are back to their old habits, snapping up high-tech semiconductor stocks, with Nvidia leading the charge.

Everyone’s now buzzing about the expected interest rate cut in the U.S. come September. This will be the first cut after the current high of 5.33%. The hope is that this will be the start of a series of cuts to keep the economy humming along. The term du jour is ‘soft landing,’ which is finance-speak for hoping the economy doesn’t crash and burn as interest rates drop. This is the same playbook being used in the eurozone and the UK.

All eyes are now on the Jackson Hole Symposium, where central bankers gather in Wyoming to discuss monetary policy and maybe do a little fly fishing. Fed boss Jerome Powell will be giving a speech on August 23, and Wall Street is expecting him to announce a 25-basis point rate cut in September, with two more cuts by year’s end. Goldman Sachs has lowered the probability of a U.S. recession over the next year from 25% to 20%. If August’s employment report is strong, they might even drop it to 15%.

Oil prices are having a rough time, falling for the fourth time in five sessions. Despite tensions in the Middle East and Ukraine, fears about China’s economic slowdown are weighing heavily. Gold, on the other hand, is having a moment, setting a record above $2,500 an ounce. The dollar is down, and the prospect of a U.S. rate cut is making gold shine brighter. Iron ore? Not so lucky. Prices are struggling due to China’s steel industry crisis, which is using fewer raw materials. In a move that screams "nothing to see here," Chinese stock market operators will stop publishing daily data on foreign fund flows. This is seen as Beijing’s attempt to sweep the bad news under the rug. Good luck with that.

This week’s non-Jackson Hole highlights include flash PMI indicators for August on Thursday and the minutes of the Fed’s latest meeting on Wednesday. Corporate results are trickling in, with names like Lowe’s, Medtronic, Analog Devices, and Intuit in the U.S., and Alcon, Coloplast, Antofagasta, and Swiss Re in Europe. In the Asia-Pacific region, Japan and South Korea are down just over 1%, taking a breather after last week’s gains. India and Australia are hovering around equilibrium, while China is looking perkier, especially in Hong Kong, where the Hang Seng is up nearly 1% thanks to tech stocks. European markets are bullish, and Wall Street futures are slightly up.

Today's economic highlights:

In the United States, the Conference Board's index of leading indicators is the main indicator today. The full agenda is here https://www.marketscreener.com/stock-exchange/calendar/economic/

The dollar is worth EUR 0.9060 and GBP 0.7723. The ounce of gold remains firm at USD 2,491. Oil is slightly down, with North Sea Brent at USD 79.18 a barrel and US light crude WTI at USD 75.14. The yield on 10-year US debt is down to 3.87%. Bitcoin is trading at USD 58,500.

In corporate news:

  • AMD announced on Monday its intention to acquire server manufacturer ZT Systems for $4.9 billion.
  • Estee Lauder reported weaker-than-expected fourth-quarter results on Monday, while announcing that its chief executive officer would retire by the end of fiscal 2025.
  • Liquidia falls 17% before the opening after the FDA refuses to give final approval to the group's blood pressure drug.

Analyst recommendations:

  • Caci International Inc: Baptista Research downgrades to hold from underperform with a price target raised from USD 445 to USD 505.90.
  • Dutch Bros Inc.: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 41 to USD 36.
  • Gates Industrial Corporation Plc: RBC Capital upgrades to outperform from sector perform with a target price raised from USD 20 to USD 22.
  • Hp Inc.: Morgan Stanley downgrades to equal weight from overweight with a target price of USD 37.
  • Hubspot, Inc.: Baptista Research upgrades to outperform from hold with a price target reduced from USD 687.30 to USD 608.20.
  • Monster Beverage Corporation: Baptista Research downgrades to outperform from hold with a price target reduced from USD 61.90 to USD 54.50.
  • Onto Innovation Inc.: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Warner Bros. Discovery, Inc.: Baptista Research downgrades to outperform from buy with a price target reduced from USD 11.40 to USD 8.90.
  • Globe Life Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 66 to USD 83.
  • Lineage, Inc.: Wells Fargo initiates an equalweight recommendation with a target price of USD 86.
  • Snowflake Inc.: Barclays maintains its equalweight recommendation and reduces the target price from 191 to USD 146.
  • Realty Income Corporation: Wedbush initiates a neutral recommendation with a target price of USD 64.
  • Osb Group Plc: Peel Hunt downgrades to hold from add with a target price reduced from GBX 420 to GBX 395.
  • Travis Perkins Plc: Peel Hunt upgrades to add from hold with a price target raised from GBX 840 to GBX 980.