{"id":333401,"date":"2025-08-10T14:56:26","date_gmt":"2025-08-10T14:56:26","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/333401\/"},"modified":"2025-08-10T14:56:26","modified_gmt":"2025-08-10T14:56:26","slug":"the-u-s-economy-may-be-bad-to-ugly-right-now-but-investors-are-loving-every-minute-of-it","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/333401\/","title":{"rendered":"The U.S. economy may be \u2018bad to ugly\u2019 right now, but investors are loving every minute of it"},"content":{"rendered":"

S&P 500 futures were up 0.74% this morning after the index itself closed up 0.73% yesterday. A lot of that jump came from tech stocks: The Nasdaq<\/a> Composite closed up 1.21% after a blowout earnings call from Palantir, which added another 3.62%.<\/p>\n

The current bullishness on Wall Street is a stark contrast to what economists are seeing in the macro data. Last week\u2019s dismal jobs report being the most recent aspect of that. \u201cWe got what I would call an economic data dump last week, lots of data. And they were all uniformly bad to ugly,\u201d Mark Zandi, chief economist of Moody\u2019s Analytics, said<\/a> on the Concord Coalition podcast Facing the Future<\/a>.<\/p>\n

Zandi added later, \u201cI set off the alarm bells this weekend in that post, just because once I really sat down and started looking at all the data, I go, \u2018Oh, gosh! This economy is really struggling to move forward.\u2019 And thus, \u2018at the precipice of recession,\u2019 I think, applies.\u201d<\/p>\n

So if the economy is fragile, why are investors buying? Because they are expecting the Fed to step in with interest rate cuts to rescue their bets. (Cheaper money generally turns into stronger demand for equities.) <\/p>\n

Goldman Sachs is currently predicting there will now be three rate cuts this year: \u201cA weak U.S. labor market report last Friday (Aug. 1) has raised market concerns over the U.S. economic outlook, driving a significant front-end-led rally in U.S. rates. We see room for this repricing to continue, as our baseline expectation remains for the Fed to cut rates three times this year, and two more times in H1 next year, and we see room for market pricing to shift in excess of that,\u201d Tadas Gedminas told clients in a note seen by Fortune.<\/p>\n

His colleague Vickie Chang says that the fundamentals\u2014a bad labor market and declining consumer enthusiasm\u2014are essentially being ignored by stock traders today. \u201cThe core risk to growth pricing is something that threatens the market\u2019s belief that it can look through current weakness and discount the prospect of recession,\u201d she said in a research note.<\/p>\n

So, cuts from the Fed are in the mail, right?<\/p>\n

Not so fast. Zandi is gloomy about that, too. President Trump\u2019s tariffs and his restrictive immigration policy \u201craise inflation and weaken economic growth. So if you\u2019re at the Fed and you have a dual mandate to maintain full employment, economy, and low and stable inflation, that gets pretty difficult. How do you respond to that? And the answer is, you do nothing, and that\u2019s exactly what the Fed\u2019s doing.\u201d<\/p>\n

He\u2019s also predicting a bond market selloff, so \u2026 fingers crossed, everybody!<\/p>\n

Here\u2019s a snapshot of the action prior to the opening bell in New York:<\/strong><\/p>\n