The bull market in stocks seems like it’s about to hit the brakes as economic growth continues to drag, says Andrew Garthwaite, the top global equity strategist at UBS. He highlighted that implied intra-index volatility, which is close to its low, might soon flip. Plus, UBS reckons U.S. economic numbers are on track to keep slipping, jeopardizing the bull run. Garthwaite mentioned that when this figure shoots up, cyclicals usually underperform 84% of the time. He told clients in a note that August looks like it will be a rough month with U.S. growth slowing, and the Fed likely holding off on rate cuts until September. The S&P 500 has bounced back over 30% from its April dip, hitting new peaks and boosting its gains in 2025 by 8%. The market has shown grit despite climbing tariffs and weak data, especially regarding jobs. Garthwaite noted that hours worked over three months have dropped sharply, and employment PMIs suggest job growth is slowing. The team predicts non-farm payrolls will slow to an average of 48K a month in Q4, possibly turning negative at -12K. While this month might be off, August and September are typically the toughest months of the year.
