– We are vulnerable to economic downturn

Olav Chen and Robert Næss believe that the week ahead will focus primarily on how the market digests new labor market data and quarterly reports from US tech giants.

– Last week was marked by widespread attention to labor market data and speculation about whether they would trigger a recession. Sam’s RulesSam’s RulesIf the average unemployment rate over the past three months rises by 0.5 percentage points or more from its lowest level over the past 12 months, the Sam’s Rule recession indicator signals the beginning of a recession. Olav Chen, head of distribution and global interests at Storebrand, told E24 it will be exciting to see how the market digests this data and assesses future recession risks.

Fresh on Friday U.S. labor market data Job growth in July was lower than expected. Meanwhile, the unemployment rate rose to 4.3%, while expectations were for it to remain at 4.1%.

They have been marked by weak employment data and fears of a recession. US Stock Market Last weekend, the stock market fell sharply on both Thursday and Friday.

Chen said the biggest question now is what the future outlook for interest rates will be. There are mixed discussions on accelerating rate cuts and not postponing them.

– Labor market data led to a sharp drop in interest rates. Now the market is unsure whether this is good for stocks or a precursor to a recession, Chen said.

– We are vulnerable to economic downturn

Multiple Analyst Links Stocks fell sharply this week Investors are concerned that the economy could be heading for worse times, or even a recession.

Others have pointed out that the U.S. central bank’s (Fed) interest rate cuts take too long, which could lead to weak economic development and higher unemployment.

Held earlier this week The Fed expects interest rates to remain unchanged.

Olav Chen said the market currently expects further rate cuts in 2024 due to falling interest rates and weak employment data.

He pointed out that the U.S. labor market was extremely tight during the pandemic due to suppressed demand, but recovered quickly, and the unemployment rate was also at a historical low.

Chen believes that we are in the normalization phase and expects employment data to be weak in the future.

– The question is not if there will be a recession, but when it will come. We are in the late stage of the business cycle and I believe we are vulnerable to a recession. It may be a little early to expect it to happen immediately, but I would not rule out the possibility of it happening in the next 12 months. But I don’t think we are there yet, he said.

– Market becomes more uncertain

Robert Næss, investment director at Nordea, also pointed out that the most important thing to watch this week will be how the market digests economic data and the quarterly results of major companies.

Last week, tech giants apple, Amazon, YuanMicrosoft provided the numbers. Tesla and Google owner Alphabet Submit quarterly reports.

– So far, these companies have performed well, and there is nothing that stands out. At the same time, we are seeing estimates fall, which may indicate that there will not be big surprises, Ness said.

– Many people talk about a recession, but I think it’s just nonsense, he continues.

The market’s disputation over data released by the tech giants has had a major impact on Wall Street in recent weeks. On Thursday, the Nasdaq Technology Index Worst trading day From October 2022.

– The market has become more uncertain when it comes to tech stocks. Some companies are up 10% one day and down 11% the next. Ness said this creates uncertainty in valuations, which have been high so far.

Beaubourg Effect

“When you know companies aren’t delivering, they’re priced lower relative to earnings,” Ness said. “These companies have to deliver strong numbers to meet the market’s expectations.”

The investment chief has focused on artificial intelligence giant Nvidia, which has surged on the stock market so far this year on the back of optimism surrounding artificial intelligence (AI).

Næss noted that Nvidia is in a good position and making a lot of money. The company has delivered good numbers recently.

– In Nvidia’s case, it’s priced 30 times higher. Ness said that’s because the market hasn’t realized that strong earnings may eventually slow.

– In a way, you could say that Nvidia might be in a bubble. Microsoft was expensive in the 90s, and now Nvidia is expensive. He continued, saying that if Nvidia goes down, the market will go down too.

Nvidia is expected to report figures for the quarter ended July 31 on August 28. The company operates on a different fiscal year and will now report figures for the second quarter of fiscal 2025.

Norway price increase

Back home in Norway, both inflation data and house price statistics for July will be on the menu next week.

On Friday, Statistics Norway publishes its Consumer Price Index (CPI) and we get our answer as to how prices moved last month.

Inflation in the country fell in June as price growth slowed more than expected 2.6%Core inflation, which excludes energy prices and taxes, fell to 3.4%.

Inflation in June was at its lowest level in more than three years, according to Statistics Norway.

On Monday, Eiendom Norge published house price statistics for July.

I June House prices fell by 0.2% nationwide. So far this year, they have risen by 8.2%, according to Eiendom Norge. This is a stronger development than many people thought.

E24 has interviewed senior brokers and reported The sales figures are staggeringly high last month.