Stocks in the U.S. trended lower this week coming off the long Labor Day weekend as investors remain concerned about the Delta variant and its potential impact on economic growth. Meanwhile, some Wall Street banks have turned bearish on stocks in the short-term, with Morgan Stanley cutting U.S. stocks to underweight and global equities to equal weight, citing “outsized risks” to growth through October. At the same time, Citigroup said that bullish positioning means corrections can be amplified, while Credit Suisse Group AG said that it has a small underweight to the U.S. market (Bloomberg). Across the pond, stocks in Europe treaded water ahead of Thursday’s European Central Bank meeting. A recent spike in euro zone inflation and an uptick in economic activity has led some investors to anticipate a more hawkish tone from policymakers.

On Wednesday, the Job Openings and Labor Turnover Survey (JOLTS) came in higher than expected with job openings increasing by nearly 750,000 in July. Job openings outnumbered the unemployed by more than 2 million in July as companies continue to struggle to fill a record number of vacancies.  It will be a slow rest of the week for data with only the ECB decision on Thursday as well as PPI (wholesale prices) on Friday. There will be a lot of action on the bond side of things this week, with $120 billion in U.S. Treasury auctions and $45 billion in corporate bonds. In commodities, WTI Crude Oil continues to trade around $70 per barrel as falling inventories have helped balance out global growth concerns in the wake of the pandemic. In aluminum markets, there was an interesting development over the weekend in Guinea, where an elite military unit seized power and arrested the country’s president. As the world’s second-largest producer of bauxite (a raw material that can be refined and smelted into aluminum), instability in Guinea could pose headwinds for the global aluminum supply chain as well as car manufacturers who have increasingly turned to lightweight materials like aluminum to hit emissions targets. Aluminum prices have already climbed 40% this year and futures jumped another 3% over the weekend (Daily Upside).

Source: GSAM, Daily Upside, JPM, Factor Investor

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