The Week Ahead - 8/16/26
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
The Week Ahead
US economic data remains on the lighter side (in terms of importance) next week with highlights July industrial production (our most comprehensive look at manufacturing), housing starts/permits, import prices, and the August flash PMIs. We’ll also get July pending existing home sales and August NAHB home builder sentiment along with the normal weekly reports (ADP, unemployment claims, etc.).
In terms of Fed speakers interestingly none on the schedule, but we will get the minutes from the July meeting which will be parsed with much interest.
US Treasury auctions are light with just the lightly followed 20-year Wednesday and a 30-year TIPS reopening Thursday.
In terms of SPX Q2 earnings we’re very much in the wind-down phase (at least until the end of the month with Nvidia) with just 12 SPX components reporting Friday. There’s a retail focus to the over $100B reporting bunch which includes WMT, HD, ADI, TJX, DE, LOW (by earnings weight). Ex-US we’ll get BABA and BIDU among others.
In terms of Iran, as I said three weeks ago:
things remain very fluid. After two weeks of escalation, things seem to have de-escalated over the weekend. The Iranians know he needs to bring this to a close, but how far they want to push things, I’m not sure.
And last week
Axios reporting that President Trump has decided against escalating things militarily (taking into consideration he has in the past made such statements just before an escalation)… So it appears for now things will drag on with little change through the mid-terms unless/until Iran decides they want to reopen the Strait. It does appear that the administration has intentions to try to put more economic pressure on as noted in the Friday morning update.
So as I said now ten weeks ago, “we’ll just have to see how things progress”. While odds on Kalshi that traffic through the Strait would normalize by the end of the year had risen as high as 86% June 24th, that has dropped to new lows in August currently at just 34%.
Ex-US highlights from DB:
Investors will get a read on global growth on Friday when the flash August PMIs are due for economies including the US, UK, Germany, France and Japan.
In Europe, central bank highlights feature the Riksbank decision on Thursday and the ECB’s July consumer expectations survey due Friday. The UK will dominate the important European data releases. The focus will be on July inflation on Wednesday, where our UK economists expect headline inflation at 2.92% YoY and core CPI at 2.54%, with services inflation declining to 3.42% and food inflation at 1.49%. There will also be labour market data on Tuesday and, on Friday, retail sales and the August GfK consumer confidence index.
Elsewhere in the region, economic indicators due feature the ZEW survey in Germany on Tuesday and Q2 GDP in Denmark on Thursday.
Key economic data is also due in Japan, including Q2 GDP on Monday and the national CPI on Friday. For the former, our Chief Japan economist expects real GDP to grow at +1.6% QoQ and for the CPI he forecasts core CPI ex. fresh food to rise to 1.8% YoY from 1.6% in June and core-core inflation ex. fresh food and energy to increase to 1.8% (1.7%).
In China, the focus will be on July activity data, including retail sales and industrial production, due Monday. Our economists forecast industrial production growth to ease by 0.4ppt to 4.9% YoY and retail sales growth to soften further to 0.9% YoY from 1.0% in June. See more here.
Rounding out with corporate earnings, the spotlight ex-US will be Alibaba and Baidu in China.
Here’s their one-pager:
In this week’s Week Ahead:
An update on the economy, including last week’s mixed data, the Citi Economic Surprise Index, the latest Q3 GDP trackers, the Dallas Fed Weekly Economic Index, Goldman’s Current Activity Indicator, BoA card spending, and financial conditions.
A closer look at the consumer backdrop, including BoA’s card-spending acceleration, the reopening of BoA’s “K” between higher- and lower-income spending, the continued strength in electronics and goods spending, JPM’s Mike Feroli on retail sales, consumer spending, Prime Day distortions, and consumer credit quality, and Redbook sales.
A Q2 earnings season update, including the latest FactSet earnings framework, beat rates, the magnitude of earnings and revenue surprises, Amazon and Alphabet’s impact on headline earnings growth, sector-level expectations, record margin estimates, and market reactions to beats and misses.
A look at earnings beyond Q2, including Q3, 2026, and 2027 earnings expectations, BofA on AI vs. non-AI earnings growth, Goldman on AI infrastructure earnings, enterprise AI spending, AI adoption, and whether productivity benefits are showing up in earnings.
An update on earnings breadth, including Jim Paulsen on the number of S&P 500 companies seeing higher 12-month forward EPS estimates and how that compares with the 2023 earnings rebound and why the current breadth may be healthier than the exceptional peaks in 2018 and 2020.
A look at valuations, including the latest forward P/Es for the Mag-7, large caps, mid caps, and small caps, along with Bloomberg’s Jonathan Levin on the valuation setup.
A breadth update, including the McClellan Summation Index, stocks above 20- and 200-DMAs, new highs minus new lows, equal-weight vs. cap-weight, small caps vs. large caps, growth vs. value, and the continued rise in growth/value forward earnings.
A detailed positioning and flows section, including Deutsche Bank’s composite positioning work, including discretionary vs systematic positioning, large-cap positioning, mega-cap growth and large-cap Tech positioning, Goldman’s prime-book flows and hedge fund leverage, BoA’s systematic flow estimates, CTAs, vol-control funds, and risk parity.
An update on options and leveraged ETF positioning, including Deutsche Bank on call/put volume and skew, BoA on SPX, Nasdaq-100, and single-stock leveraged ETF positioning.
A look at retail positioning and activity, including Citadel’s Rubner on the return of retail participation, cash-equity buying, options hedging, and broad-based ETF option activity, BoA record private-client equity allocations, and Tier1Alpha on the ongoing 401(k) bid.
An update on gamma and buybacks, including BoA and Tier1Alpha on dealer gamma, positive-gamma conditions, the cushion before gamma turns negative, Citadel’s buyback-window work, BoA client buyback trends, Goldman on hyperscaler buybacks, and Goldman on equity issuance versus corporate equity demand.
A sentiment check, including AAII, Investors Intelligence, Goldman’s US Equity Sentiment Indicator, CNN Fear & Greed, BoA’s Bull & Bear Indicator, Helene Meisler’s weekend poll, and Citi’s Panic/Euphoria model.
A seasonality update, including the second half of August, midterm-year seasonality, and how this year continues to track versus the average midterm year.
An update on interest rates and Fed expectations, including the impact of CPI, PPI, and retail sales on September hike odds, BofA’s more caveated three-hike call, Ed Yardeni’s view, curve steepening, BofA on CTA positioning at the front end and back end, the MOVE index, term premium, Nomura’s Jon Cohn on AI-related duration supply and “reverse crowding out,” and the Fed-favored 5-year, 5-year forward inflation rate.
A wrap-up with some thoughts on the market setup, the possibility of a lower-volume summer drift, improving seasonality, earnings, positioning, buybacks, rates, Iran, and why the constructive view still carries into the coming week.
