The week ahead is marked by the annual Jackson Hole Symposium held by the Federal Reserve during the summer. It starts on Thursday, and the Fed’s Chair, Jerome Powell, will speak about the US economic outlook on Friday.
Therefore, traders do not expect much until Friday – tight ranges and low volatility should be the norm. As such, it is best to look at what happened in the meantime in the stock to try to position for the long run.
Sure enough, the market is bearish US stocks. For instance, the put-to-call ratio reached the highest since January. If stocks can’t hold here, this is bad news.
However, for those looking for a contrarian take to bearish stocks, here are three reasons to buy US stocks:
- Atlanta Fed GDPNow forecasts a massive growth
- US manufacturing increased in 2023
- Goldman Sachs lowers the probability of a US recession
The US economy might be on track for another wave of rapid growth, at least judging by what the Atlanta Fed GDPNow is saying. The forecast for Q3 2023 is 5.8%, much higher than what JP Morgan expects (2.5%) or what Blue Chip consensus is (2.1%).
Manufacturing is up 1.8% this yearOne of the reasons the market participants were bearish on US stocks was poor data, especially in the manufacturing sector. The ISM surveys were quite weak.
But they were only surveys. As reflected by the Industrial Production release, real data tells us that manufacturing is up 1.8% this year.
Goldman Sachs lowers the probability of a US recessionThe consensus in the market is that the US economy will enter a recession in the next six months – the probability for such an event is 60%. However, some beg to differ. For example, Goldman Sachs, the leading US investment firm, just lowered its forecast that the US will enter a recession in the next twelve months to 20% – well below the 60% median forecast.
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