The State of Markets: “Sector Churn”
Sector churn was a key theme throughout this past week as ‘healthcare’ took up leadership of the market (+4.1% WTD, at time of writing). Last week, staples had been the top performing US sector (+3.6% on the week). This week, though, staples was the laggard (-0.8% WTD by Thursday’s close).
Healthcare stocks benefitted as it was reported that Warren Buffett “stun(ned) Wall Street as he snaps up stake in struggling UnitedHealth”. The sector also likely benefitted because it’s cheap relative to all other sectors (as per our valuation heatmap – see below) and has also recently been an oversold area of the market (as per the Longview RSI heatmap). Furthermore the sector tends to outperform when the (non-defensive) main part of the market struggles (or even SELLs off). Elsewhere, the debate continued about how much and when the Fed will cut rates this year and who might be the next Fed Chair (with several more names thrown into the mix – although, in most instances, the new names are not considered serious contenders by the Street).
Next week Jerome Powell speaks at the annual Jackson Hole Economic Symposium. The theme of the two day event is "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy". It runs from Thursday evening (dinner) through to Saturday morning (all US time). Powell speaks on Friday at 3pm. His speech will be watched closely and is a key opportunity for him to reset his (& the Fed’s views) about the direction of inflation, the economy and interest rates (if he so chooses).
Other events next week include central bank policy decisions by the Chinese PBOC, the RBNZ and Sweden’s Riksbank (all Wednesday); consumer price inflation data out of the UK (Wed, 7am) and Japan (overnight into Friday morning). US macro data has a housing theme with various data out during the week including: NAHB homebuilders’ survey (Mon); housing starts and permits (Tues); & existing home sales (Wed). Flash PMIs from across the globe, on Thursday, will also be watched closely.
For full details, by key region, please see below.
Key chart: S&P500 US sector PER Heatmap*
Upcoming important data/events this week:
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Events: |
Chinese policy decision (Wed, 2am); RBNZ policy decision (Wed, 3am); Sweden’s Riksbank policy decision (Wed, 8am); Jerome Powell to speak from Jackson Hole (Fri, 3pm). NB The Jackson Hole (Kansas City Fed) ‘Economic Policy Symposium’ runs from Thursday through to Saturday. Title of symposium - "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy". |
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Monday: |
NAHB homebuilders index (August, 3pm). |
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Tuesday: |
US housing starts & building permits (July, 1:30pm). |
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Wednesday: |
UK headline & core CPI, RPI & PPI (July, 7am). |
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Thursday: |
US Conference Board leading index (July, 3pm); Manufacturing & service sector PMIs for Australia (12am), Japan (1:30am), France (8:15am), Germany (8:30am), Eurozone (9am), UK (9:30am) & US (2:45pm) – all July first estimates; Eurozone consumer confidence (August first estimate, 3pm). |
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Friday: |
UK retail sales (July, 7am); Japanese headline & core CPI (July, 12:30am). |
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Key earnings: |
Home Depot (Tues); Target (Wed); Walmart (Thurs). |
Key Research
The SHORTVIEW (& market positioning), 12th August 2025:
“Gold or Bonds: Which Is It?"
There has been much confusion about the drivers of the gold price in recent years (especially since COVID). Of late, the traditional TIPS, policy rate expectations and the dollar drivers haven’t had their normally tight (collective) correlation with the gold price.
Indeed since the Ukrainian war, there’s a view in markets (which is likely, at least, partially correct) that central bank buying has become a key influence on the price. That is, by launching the Ukrainian war, Russia changed the global geopolitical equilibrium, and created a bi-polar (or even multi-polar) world. As a result of that (and subsequent sanctions), trust in the international financial system broke down with certain parties (i.e. BRIC countries, various global South-South countries and so on) looking for alternative ‘reserve assets’ (i.e. stores of value). Often that has been gold.
Key North American macro data & events:
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Events: |
Speeches by the Fed’s Waller at Wyoming Blockchain Symposium (Wed, 4pm), Bostic in moderated conversation on economic outlook (Wed, 8pm), Jerome Powell to speak from Jackson Hole (Fri, 3pm); Fed minutes from July meeting (Wed, 7pm). |
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Monday: |
Canadian housing starts (July, 1:15pm); US New York Fed service sector business activity (August, 1:30pm); NAHB homebuilders index (August, 3pm). |
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Tuesday: |
US housing starts & building permits (July, 1:30pm); Canadian headline & core CPI (June, 1:30pm). |
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Wednesday: |
N/A |
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Thursday: |
Canadian CFIB business barometer (August, 12pm); Canadian industrial product & raw material price index (July, 1:30pm); US Philadelphia Fed business outlook (August, 1:30pm); US weekly jobless claims (1:30pm); US S&P manufacturing & service sector PMIs (August first estimates, 2:45pm); US Conference Board leading index (July, 3pm); US existing home sales (July, 3pm). |
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Friday: |
Canadian retail sales (June, 1:30pm). |
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Key earnings: |
Palo Alto Networks (Mon); Home Depot, Medtronic (Tues); TJX, Lowe’s, Analog Devices, Target (Wed); Walmart, Intuit, Workday, Ross Stores (Thurs). |
Fig B: US Conference Board Leading Index (Y-o-Y %)_
Key European macro data & events
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Events: |
Riksbank policy decision (Wed, 8am). |
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Monday: |
Eurozone trade balance (June, 10am). |
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Tuesday: |
Eurozone current account balance (June, 9am); Italian current account balance (June, 9:30am). |
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Wednesday: |
German PPI (July, 7am); Eurozone headline & core CPI (July final estimate, 10am); Eurozone labour cost index (flash estimate, 10am). |
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Thursday: |
HCOB manufacturing & service sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all August first estimates; Eurozone construction output (June, 10am); Eurozone consumer confidence (August first estimate, 3pm). |
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Friday: |
German GDP (Q2 final estimate, 7am); French business confidence (August, 7:45am); French retail sales (July). |
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Key earnings: |
N/A |
Fig C: Eurozone consumer confidence (index)
Key UK macro data & events
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Events: |
N/A |
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Monday: |
UK Rightmove house prices (August, 12:01am). |
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Tuesday: |
N/A |
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Wednesday: |
Headline & core CPI, RPI & PPI (July, 7am); Land Registry house price index (June, 9:30am). |
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Thursday: |
Public sector finances (July, 7am); S&P manufacturing & service sector PMIs (August first estimates, 9:30am); CBI industrial trends survey (August, 11am). |
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Friday: |
Gfk consumer confidence (August, 12:01am); retail sales (July, 7am). |
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Key earnings: |
N/A |
Fig D: UK headline & core CPI (Y-o-Y %), shown with recession bands
Key Asia-Pacific macro data & events
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Events: |
Chinese policy decision (Wed, 2am); RBNZ policy decision (Wed, 3am); speeches by the RBA's McPhee & Jones (Wed, 3am). |
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Monday: |
N/A |
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Tuesday: |
Australian Westpac consumer confidence (August, 1:30am). |
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Wednesday: |
Japanese imports/exports, & trade balance (July, 12:50am); Japanese machinery orders (June, 12:50am). |
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Thursday: |
Australian S&P manufacturing & services sector PMIs (August first estimates, 12am); Japanese S&P manufacturing & services sector PMIs (August first estimates, 1:30am); Japanese machine tool orders (July final estimate, 7am). |
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Friday: |
Japanese headline & core CPI (July, 12:30am). |
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Key earnings: |
BHP Group Ltd, National Australia Bank (Mon); Xiaomi (Tues); HKEX, ANZ Holdings (Wed); AIA Group, Jiangsu Hengrui (Thurs) Meituan (Fri). |
Fig E: Japanese Headline CPI (shown with pp. contributions from key categories)
This week:
Longview on Friday, 15th August 2025:
“Equities: Europe vs. the US”
Quant Monthly Appendix, 14th August 2025:
“Part II: Eurozone Broad Index Sector Valuation Overview”
The SHORTVIEW (& market positioning), 12th August 2025:
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 14th August 2025:
“UK Jobs Market – How Bad Is It?”
Daily Dose of Macro & Markets 13th August 2025:
“NFIB Recession Warning Signal”
Daily Dose of Macro & Markets 12th August 2025:
“All Eyes on CPI –> Shelter vs. Tariffs”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 11th August 2025:
“Short Term Models Back on SELL”
Last week:
Longview on Friday, 8th August 2025:
“Summer Turbulence Risk Still Present -> Is ‘Crash Risk’ Rising?”
Monthly Global Asset Allocation No. 69, 8th August 2025:
“Reduce Credit Weightings in the Strategic Global Asset Allocation Recommended Portfolio”
Tactical Equity Asset Allocation No. 259, 6th August 2025:
“Equities: Summer Turbulence Risk Ongoing a.k.a. Keep Cautious (for now)”
The SHORTVIEW (& market positioning), 5th August 2025:
“OIL: The ‘Saudi Surge’ & Soft Demand”
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 8th August 2025:
“Batting Against America -> China’s Improving Trade Balance”
Daily Dose of Macro & Markets 7th August 2025:
“Gold: Rotate, Rotate, Rotate”
Daily Dose of Macro & Markets 6th August 2025:
“Copper –> Tariffs out the Way. Fundamentals Supportive”
Daily Dose of Macro & Markets 5th August 2025:
“Chinese Housing: Any Signs of Life?”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 4th August 2025:
“Weekly Bearish Key Day Reversals”