Last week was a tough week. The declines that came on Monday and Friday in particular were both extraordinarily tough and unexpected. The data that came last week showed that the recession was getting worse in America. There were even some minor data that pointed to a recession. But I think the reason for the decline is different than that. There are both technical issues and the Japanese carry trade issue. When we look at it technically, we can see that the decline may continue a little longer, but we are close to a bottom for at least a slight bounce. But the upcoming period is still a period of very, very intense data flow. Things may get messy again this week. So let's take a look at what awaits us this week.
First, let's look at the economic data flow. There is one important data that will come today, Atlanta's gross national product estimate. As you know, this is constantly changing. Last week, they were expecting 2.5%, Thursday it was 2%. Friday they were expecting 2.0%, it was 2.1. Now they are expecting 2.1 and they are updating it weekly. It is not a very critical data but the markets are still a bit nervous these days. They are also expecting the number of automobile sales in America to be 15.4 million. This was a data that was supposed to come last week, I don't know why it was delayed. Other than that, there is no very critical data today. The Redbook is coming tomorrow. It will give a clue about retail sales in America. There is a FED speaker, Barr, talking about how much Same Store sales increased or decreased. Last Friday was really interesting. There were three FED speakers on the stage while the stock markets were experiencing that decline. All three of them said they would lower interest rates. In fact, if I am not mistaken, one of them said that Waller may not be 25 basis points. We will lower it as much as necessary. Despite that, the stock market did not care. That is why I attribute Friday's decline to the Japanese carry trade a bit more. There is no other important data flow on Tuesday.
Things get a little complicated on Wednesday. The American CPI inflation is coming on Wednesday. Both the core and headline expectations are around 0.2% month-on-month. I have not been making detailed estimates for the last 2 months. Because there is no place left to make inflation estimates other than rents. I think they will also benefit a lot from the decline in commodities this month. If there is no deterioration in rents, these numbers or targets below them can be easily achieved. The stock market does not care much about inflation right now. In other words, if something as high as 0.3 comes instead of 0.2, the stock market will of course move a little. But if there is no sharp movement other than that, the stock market has largely priced in inflation. There is no expectation there right now. It is moving within the framework of a recession with a little more fear. PPI is coming on Thursday, it is an important data. Of course, if you remember, it was the first data that got us off our feet last month.
Apart from that, employment data is coming again. New unemployment applications, average unemployment applications for the last 4 weeks and on the other hand, ongoing unemployment applications. It is highly debatable how much we can believe these numbers. As you know, they revised July and June in the data that came on Friday. They pushed July back by 60,000 people. June is close to 25,000 people and the FED had made some decisions in those months because that employment data was strong. So are they playing a game here? I don't know if their system is too incompetent. That's why I don't know how seriously these will be taken. But the market is also sensitive to these these days. I think the market may fear a recession again if there are new unemployment applications much higher than 229,000.
The important data that will come on Friday is the research of the University of Michigan; here are the 5-year inflation forecast, the 1-year inflation forecast and data on consumer sentiment, that is, how the consumer feels, what their expectations are. These are not super critical data, but the stock market is a little confused about how to react to which data these days. Because the stock market says, I think we are entering a recession, everything will die. It says, no, the FED will intervene in time, everything will go well. It says, oh my, if the FED lowers interest rates, will the Japanese carry trade go crazy this time? We are fluctuating here and there like this. They are playing nicely with us. I make small purchases at the bottom where I see fit.
This week, but the real important data flow is the Trump - Harris debate to be held on September 10th, according to the latest polls and the latest betting sites, Trump seems to be a little ahead. But there is no gap, some other research shows that Harris is also ahead. But I give more importance to betting. When people put their money on something, they focus more on predictions. Trump seems to be ahead, but there is no such clear victory. The debate will determine this and when we look at the stock markets in the debate, the most critical issue is that if Harris wins, there will be a roughly 5% decrease in profits in American companies because Harris will increase taxes. This is of course reflected in valuations. Because valuations are a function of profitability.
On the other hand, Trump is also talking about new tax cuts. This will again add 5% profit to American companies due to the 5% tax cuts there. Of course, there is also the issue of tariffs. Harris is a little calmer on that issue. Trump has more aggressive tariff ideas. The sectors that will be affected by those tariffs may be affected worse if it becomes clear that Trump will win. It is a little difficult to know who will win the debate, I have watched the previous debates. Trump usually does well for the first hour. Then he falls off and turns into the traditional slightly racist Trump. Maybe Harris will try to force Trump to squeeze in this way.
We do not know the final rules of the debate. In the last debate between Trump and Biden, the microphone of the person who did not have the right to speak at that moment was turned off. This reduced the teasing and intervention of each other. Harris does not want this, Harris because I have watched her other debates. I watched her debate with the Republican vice presidential candidate in the previous election. She loves to tease, laugh etc. She is a strong lady in that way. If the markets become more positive that Trump will win that day, I think it will be good for the market. News that Trump will lose will not be good for the markets. Of course, this matter cannot be decided with a single debate. But when we look at the history of American elections, we see that the winner of the first debate usually wins the election, and don't forget that Trump won the last debate against Biden. Biden's candidacy is gone.
Harris, despite not having any political success in her, surprisingly became the presidential candidate from the vice presidential quota. My preference and prediction is that Trump can win this debate as well. But I don't know what Trump will do that day, how he will feel, how much Harris will push his buttons. Because I think the whole game Harris will play is that Trump is actually a criminal, a racist, in other words, she will try to anger Trump from these points. Trump needs to keep himself calm and attack Harris on the economy, on immigration policy. Let's see how it will turn out. Everyone seems excited.
Apart from that, today is also Apple Day. Apple will introduce new ones today. iPhone 16s are coming to the market. We know that iPhone 15 Pro and above devices are suitable for artificial intelligence. Apple will introduce them today that are suitable for new artificial intelligence applications. In addition, of course, a lot of change is expected in the watches. Apple's day is also interesting, especially artificial intelligence stocks may be affected by what Apple will say today. Because if Apple really brings artificial intelligence to our devices, I think this could benefit all the microchip companies that make that artificial intelligence work in the background and took a big beating last week.
We are entering a week where data flow is relatively low, there is no critical data other than inflation, but there is a lot of communication due to the elections. I will try to watch the Apple meeting live today if I can find the time. Please note that although I wrote this article on Monday, September 9th, I could not share it yesterday due to the criteria of only being able to share 2 articles in 24 hours.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
