After the global market experienced 'Black Monday', the global stock market generally rebounded.

Goldman Sachs also pointed out in its report released on the 7th that although some economic data in the United States performed weaker, investors' concerns about the recession in the US economy may have overreacted. Employment is indeed weak, but the severity of the economic recession has been exaggerated.

Goldman Sachs: US employment data is weak, but concerns about economic recession may be exaggerated.

Goldman Sachs pointed out that the non-farm employment report for July in the United States showed that the weakness in the labor market had exceeded expectations, and wages and household employment had both grown weakly, and the unemployment rate further increased by 0.2 percentage points to 4.3%.

Therefore, we have raised the probability of a US economic recession by 10 percentage points to 25%, and expect the Federal Reserve to cut interest rates by 25 basis points in September, November, and December (previously it was once per quarter).

However, Goldman Sachs also stated that it is usually wrong to infer too much from a single employment report, unless there are major economic impacts that suddenly change the situation.

We believe that the danger of an increase in the unemployment rate in the short term is lower than before. Part of the reason is that more than 70% of the rise in the unemployment rate in July in the United States was due to temporary layoffs, which may reverse in the next few months.

Moreover, historically, temporary layoffs are not a good indicator of predicting economic recession. We are skeptical about the risks that the labor market is facing rapid deterioration, because job vacancies indicate that labor demand is still stable, and final demand continues to grow at a healthy rate, and there have been no obvious negative impacts that may catalyze an economic recession.

If the market further declines significantly in the future, the US economy may fall into recession, so we believe that the risk of recession is still limited.

As Chairman Powell of the Federal Reserve emphasized last week, the Federal Reserve still has 525 basis points of interest rate cuts. If data or market conditions permit, the Federal Reserve will quickly take action to support the economy.

There is a possibility that the market will continue to decline.

Goldman Sachs pointed out that concerns about US economic growth have pushed risk appetite in asset markets sharply lower this week. Although some assets have rebounded in the past two trading days, the market may still face further declines.

In terms of interest rates, although the market currently has reason to expect that the Federal Reserve will cut interest rates, and some radical analysis believes that the Federal Reserve may cut interest rates ahead of schedule to appease the market.

We believe that excessive early easing policies are unreasonable unless there is clear evidence that the economy or the market has serious problems.

In terms of stocks, Goldman Sachs expects that profit growth will push the S&P 500 to 5,600 points at the end of the year.

Historically, a 5% drop often represents a buying opportunity. Nevertheless, given our expectation that US consumer spending will gradually slow down, we believe that the risk of US consumer stocks still tends to decline.

In addition, we are still cautious about the Japanese stock market in the near future, because the Japanese stock market may once again face risks such as liquidation, stop-loss, and systemic investor sales, and we are also cautious about the Asian stock market.

Goldman Sachs also reminded that the future needs to closely watch the US presidential election, the results of which may have important impacts on the macro economy and the market.

If Trump wins, because he has indicated that he will increase tariffs, this may cause the US dollar to strengthen.

On the contrary, if Harris wins, this may cause the US dollar to weaken.

Furthermore, if Trump is re-elected and raises tariffs, it may lead to a redistribution of the global trade pattern. This trade redistribution may benefit Mexico and Southeast Asia, and increase the GDP growth in these regions by 1-2%.

Editor/Lambor