Is the inflection point approaching? Bank of America and Goldman Sachs see the risk that the market is still unpriced

Retail sales data were released overnight in the United States, and all three major indexes of US stocks fell from their highs. Chris Chris Hussey, a strategist at Goldman Sachs Group, said in a report that the overnight data did not bode well for the US economic outlook.

The Goldman Sachs Research News pointed out that although core retail sales were revised up in May and June,Us retail sales fell 1.1 per cent in July, a bigger-than-expected drop.It is worth noting that this decline has not been accompanied by travel restrictions and closures that occurred in the early stages of the outbreak, suggesting that US consumers choose to stay at home and spend less-in line with last week's sharp drop in the Michigan Consumer confidence Survey (UMichigan Consumer Sentiment Survey). In addition, surveys of individual categories showed the biggest slowdown in non-essential consumer goods (such as electronics and electrical appliances) and non-physical retail stores, which may also reflect that some unemployment benefits are about to expire. Consumer behaviour is slowing, according to results released yesterday by Walmart Inc and The Home Depot Inc, consumer leaders.

On the supply side, the increase in industrial production in July was mainly driven by an 11.2 per cent increase in the car and parts manufacturing sector, while corporate inventories also increased.Driven by current sales and expected sales components, builders' confidence also fell to its lowest level since July 2020Although future sales expectations remain unchanged.

To sum up, Goldman Sachs Group strategist wrote, "lower-than-expected retail sales and car production in July, coupled with the fact that Delta mutations are increasingly likely to be a drag on service consumption, our economists may revise their assumptions for growth in the second half of the year, although we still expect that the Delta variant will not have a material economic impact on the United States in the context of COVID-19 's policies, which are adequate and relatively loose in vaccine supply. "

Not only Goldman Sachs Group, but Bank of America Corporation's story is even worse: Michelle Meyer (Michelle Meyer), chief economist of Bank of America Corporation, stressed in her comments on the retail sales data that although sheRetail sales are expected to grow slightly in August, but "there are still downside risks". Spending by non-store retailers should rebound, but spending on services will weaken-travel spending has fallen significantly, which seems to be in line with the increase in COVID-19 cases.Similarly, the University of Michigan (University of Michigan) consumer confidence survey fell sharply in early August as consumers expressed concern about the increase in COVID-19 cases and high prices. "We have been emphasizing this for months. "

Meyer also pointed out: "after adjusting for higher prices, the weakness in nominal spending led to an increase of only 1.5% in real consumer spending we tracked in the third quarter and 12.3% in the second quarter. "put this data into GDP's prediction modelBank of America Corporation now finds that "the economy slowed down in the third quarter".The economy is currently expected to grow at just 4.5 per cent after the retail sales report is released, below the bank's official forecast of 7 per cent.

David Donabedian, chief investment officer of CIBC Private Wealth, said: "the Delta variant has undermined the confidence of ordinary Americans, so we need to pay attention to its knock-on effect on the economy." "this will be a long-term problem and will lead to some volatility in the market. "