US GDP growth in the 2nd quarter was stronger than expected, at an annualized rate of 2.8% compared with the 2.0% expected. The US economy is slowing but not collapsing, which remains an ideal scenario for the financial markets. The biggest risk to the economy is a sharp fall in consumer spending, as excess savings have run out. However, we note that personal consumption in the second quarter was better than expected, which is good news. The core PCE (Personal Consumption Expenditure) inflation index came in above expectations at 2.9% year-on-year. Nevertheless, the trend remains disinflationary.

 Despite these better-than-expected growth figures, the market is expecting interest rates to be cut at the September meeting. A cut of 25 basis points is expected, but some economists are now also considering a 50 basis points cut. The US Federal Reserve has made it clear that it is considering cutting rates even if inflation has not yet returned to the target level (2%).

In Wednesday's session, the S&P 500 index of US equities plunged -2.3%, ending a 356 trading days run, which had lasted since February 2023, without a single daily decline of more than 2%. The longest period without a daily decline of more than 2% was between May 2003 and February 2007.  

The Magnificent 7 (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta) have collectively lost nearly $1.75 TRILLION in market capitalization in 10 days. To put that into perspective, that's nearly 50% of the total market capitalization of Apple, the world's largest company. During Wednesday's trading session, they suffered the biggest daily loss ($750 billion) in their history.

Slovenia, Poland, and Lithuania are experiencing strong growth. As the graph below shows, their GDP per capita is set to exceed that of Spain and Italy by the end of the decade. The speed with which countries such as Poland have managed to improve their living standards is absolutely remarkable.  

If re-elected, Donald Trump would like to weaken the dollar, but economists and investors do not see it that way. Indeed, his trade policy (a sharp rise in customs duties) and the tax cuts he is planning could create a second wave of inflation and push up interest rates, resulting in an appreciation of the greenback - all other things being equal.

To put things into perspective, a euro today can only buy around 60% of what it could in 1999.

Investors and enthusiasts of high-end Swiss watches may be pleased. Recent data shows a steady decline in prices on the second-hand market, particularly for Rolex enthusiasts, who are notorious for supply shortages and long waiting lists. The overall WatchCharts market index shows a 9th consecutive quarterly decline, with prices down 2.1% sequentially and 7.2% year-on-year.