The S&P 500 Continues on Expected Trajectory

The S&P 500 (Index: SPX) is following its expected trajectory following the Federal Reserve’s annual Jackson Hole event. Investors remain focused on the upcoming future quarter of 2021-Q4, which for as long as that holds, suggests a relatively flat, range-bound trajectory for the index.

At least, that’s what we’re already seeing in the alternative futures spaghetti forecast chart, where we’ve added a redzone forecast range to project the likely trajectory of the S&P 500 based on that assumption.

We’ve had to add the latest redzone forecast because of the dividend futures-based model‘s use of historic stock prices as the base reference points from which its future projections are made. Here, the past volatility of stock prices can skew the model’s projections of the future, which we’ve found we can generally compensate for by bridging across the period we know will be impacted by the echoes of the index’ historic volatility.

For the latest redzone forecast, we’re bridging a period that continues into early December, making it the longest we’ve attempted since early early 2019.

Looking backward at the past week, we find little to motivate investors to shift their forward-looking focus to other points of time in the future as the market headed into the long Labor Day holiday weekend.

Monday, 30 August 2021

• Signs and portents for the U.S. economy:

• U.S. pending home sales drop for second straight month in July
• Oil settles up as U.S. producers, refiners assess storm damage

• Ida’s fury hits US oil production, gasoline supplies

Hurricane Ida damages Louisiana grain terminal, disrupts exports

Fed minion wants more inflation:

• Fed’s Mester not ready to accept recent inflation surge as meeting central bank’s goal

COVID: Bigger stimulus developing in Japan; China, Australia slowing; France winding down stimulus:

• Japan’s PM candidate Kishida calls for huge stimulus package – Nikkei
• China August factory activity seen growing at slightly slower pace: Reuters poll
• Australian economy likely already slowing in Q2 before Delta downturn
• France winds down crisis support for companies

Bigger inflation developing all over:

• German inflation hits fresh 13-year high in August
• Housing affordability to worsen near-term, even as price rises cool off: Reuters poll

ECB minions may start paying more attention to business financing conditions:

• ECB needs to take account of improved financing conditions – Villeroy

S&P, Nasdaq post record closes on dovish Fed taper-talk

Tuesday, 31 August 2021

• Signs and portents for the U.S. economy:

• Delta variant likely to hurt U.S. restaurant recovery -report
• Ida’s fury hits U.S. oil production, gasoline supplies
• U.S. June home prices rise at record annual pace -S&P/Case-Shiller
• Oil settles down 1% as U.S. refineries shut; Washington pushes OPEC to pump more

COVID continues dictating national economies:

• India’s economy likely rebounded in April-June amid pandemic risks
• Australia government spending binge may help dodge recession
• Japan’s July factory output slips as COVID-19 hits car production
• German unemployment falls further in August as recovery continues
• China’s economy under pressure as factory activity slows in Aug, services contract
• Canada’s economy posts surprise contraction in Q2 amid election campaign

Bigger inflation developing all over:

• French inflation stronger than expected in August at 3-year high
• Turkey’s booming growth cuts both ways as inflation stings
• Euro zone inflation surges to 10-year-high, in headache for ECB

Wall Street’s subdued finish fails to detract from strong August

Wednesday, 1 September 2021

• Signs and portents for the U.S. economy:

• U.S. manufacturing activity rises; shortages linger
• Construction spending rises in July amid abroad gains

Factories hit by pandemic-related supply disruptions

• S. Korea’s factory activity growth slows as output shrinks for first time in 12 months
• China’s factory activity contracts for first time since April 2020
• Indian factory growth slipped in August, job cutting returned
• Supply bottlenecks slow German factory growth to six-month low -PMI
• Supply chain woes stunt UK manufacturing growth in August -PMI
• Brazil GDP slips as second COVID-19 wave stalls recovery

Bigger inflation developing all over:

• Rising costs feed through to British retailers – BRC
• Euro zone Aug factory growth strong – as were price rises, PMI shows
• UK house prices bounce back unexpectedly in August

ECB minions to adjust policy because of better-than-expected growth:

• ECB decisions to reflect better growth: de Guindos

• Euro zone unemployment falls as expected in July

Tech stocks send Nasdaq to fresh record close, boost S&P

Thursday, 2 September 2021

• Signs and portents for the U.S. economy:

• U.S. trade deficit shrinks in July as imports fall
• U.S. factory orders increase in July despite supply constraints
• U.S. labor market powers ahead as weekly jobless claims fall, layoffs hit 24-year low
• Oil rises on economic recovery hopes, weaker dollar

Bigger inflation developing all over:

• World food prices jump in Aug, cereal harvest outlook cut -FAO
• Euro zone producer prices rise more than expected in July

S&P 500 advances on boost from oil stocks, Nasdaq retreats

Friday, 3 September 2021

• Signs and portents for the U.S. economy:

• U.S. economy’s hot vax summer ends in cool COVID fall as Delta rises

• US August payrolls rise much less than expected, while wages heat up
• Soaring COVID-19 infections restrain U.S. job gains in August
• Analysis-Weak August U.S. jobs report throws doubt on Fed taper

As U.S. unemployment benefits end, firms hope for a wave of applicants

Oil rises on demand outlook, Gulf outages

Coronavirus continues shaping national economies:

• Japan’s Aug service sector activity shrinks at fastest pace since May 2020 – PMI
• China’s August services activity slumps into contraction- Caixin PMI
• India August service activity grows at fastest pace since pandemic began

ECB minions can slow but can’t stop stimulus bond buys:

• Emergency purchases set to slow but ECB to buy bonds for years: Reuters poll

Tech drives Nasdaq to record finish but Wall Street mixed on jobs report

Did you know the CME Group trades annual dividends futures contracts for the S&P 500? And that they cover 10 years out into the future? We normally follow the CME Group’s quarterly dividend futures for the index, because the five future quarters it covers corresponds to the typical investment horizon for investors and directly influences current day stock prices. For us, the annual dividend futures data is useful for filling in gaps in future quarterly data, but you might find the data useful in other ways.