July was a great month for stock markets, investors concluded that due to positive economic surprises and earnings, paired with a significant decrease in inflation figures year-on-year, a soft-landing scenario was more likely and FOMO (Fear Of Missing Out) helped lift performance.

We have said over the months that June would show the biggest drop in inflation from a base effect. That happened and it left investors confident about the Fed’s next move.

Despite mitigated indicators, investors have chosen to focus on the one good thing that happened in June – The Fed did not raise interest rates during their June FOMC meeting.

While the US job market remains very healthy, more and more consumer surveys seem to indicate less willingness to spend in the coming months, likely linked with draining savings accumulated during the COVID years. At the end of the day, it is the American consumer that will dictate if there is a recession or not and a decrease in consumption is not a good sign.

With about 50% of the S&P500 companies having published their Q1 results, the observation is overwhelmingly positive on a relative basis, with over 80% of companies beating expectations.