Stocks, commodities and crypto flatline as Goldman downgrades growth outlook

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Good morning.

Asian stocks are rallying, but everywhere else, it’s crickets. European shares and U.S. futures are flat as traders return from the long weekend. A reminder: U.S. equities are higher so far in September with the next big event the Fed’s FOMC meeting two weeks hence.

With so little on the calendar, it doesn’t help then that Goldman Sachs has just downgraded U.S. growth for the second half. I explain what that all means in the essay below.

Elsewhere, commodities and crypto are soft.

Let’s see what else is moving markets. We begin out East.

Markets update


  • The major Asia indexes are higher in afternoon trading with the Shanghai Composite up 1.5%.
  • Investors cheered Chinese trade data showing exports soared more than 25% year-on-year in August, well above expectations.
  • Inflation hawks, here’s some bad news. The price of aluminum skyrocketed to a decade-high on Monday following a coup in Guinea, a big supplier of bauxite. You’ll recall from your high school chemistry classes that bauxite is needed to make aluminum (and gallium)… Who here remembers the molecular weight of bauxite?


  • The European bourses closed out Monday in the green, and are limping along this morning. The Stoxx Europe 600 was down 0.1% in early trading.
  • Deutsche Telekom sold its Dutch unit for €5.1 billion ($6.1 billion) and orchestrated a share-swap deal with SoftBank to increase its stake in U.S. carrier, T-Mobile. Shares in the German telco giant were up nearly 1.9% at the open on Tuesday.
  • There’s no Waterloo for ABBA. The Swedish super group, with hits like “Mamma Mia,” “Dancing Queen” and “Money, Money, Money”, has announced a new album and virtual tour. Fortune‘s Katherine Dunn dives into the big business of ABBA, Inc.


  • U.S. futures look set to start the short week on a weak note. Recap: the major averages finished last week in the green, though Friday’s disappointing jobs numbers pushed the blue-chip Dow lower on Friday.
  • Looking south of the border, El Salvador today will make Bitcoin legal tender. To ring in the moment, crypto bulls on Twitter and Reddit over the weekend orchestrated a pump-up-BTC campaign, which triggered a mild rally.
  • UBS economist Paul Donovan says the crypto monetary experiment could likely backfire on El Salvador, pushing locals to hoard dollars. Why? He sees it as a case of Gresham’s Law, or “bad money drives out good.”… Is he being overly pessimistic? If there are any Bull Sheet readers in El Salvador please send me a note about what you’re seeing there on Bitcoin day.


  • Gold is down, but mostly holding last week’s gains. It’s trading around $1,815/ounce.
  • The dollar is a tick higher.
  • Crude is mixed. Brent continues to trade in a tight range around $72/barrel.
  • Bitcoin surpassed $51,000 this weekend. You can thank El Salvador for that.


Storm clouds ahead

There are only a few weeks left in Q3, and already Goldman Sachs economists and equity analysts don’t like what they see. (You’ll recall, on Friday, I shared Goldman’s bearish view on the labor market, and, a few hours later, the jobs numbers came in below even Goldman’s lousy outlook.)

What are they saying now?

The consumer, the engine of the U.S. economy, is in trouble. Goldman forecasts consumption growth to fall by a half-percentage point this quarter on an annualized basis, and, looking forward, that Q4 GDP growth will come in at 5.5%, a full percentage point below its previous forecast. Part of this weakness is due to fiscal support running out—extended unemployment benefits this week and, soon, mortgage forbearance. But equally big factors include supply chain bottlenecks and Delta.

“The coronavirus situation has deteriorated over the last couple months,” Goldman writes in a September 6 investor note. “Daily new cases increased from 20k to 163k (based on a seven-day moving average), daily fatalities have increased six-fold, and hospitalizations now exceed the winter peak in the South.”

Delta is really messing with the travel and leisure portion of the economy, with restaurant bookings down along with subway ridership in big cities and airport throughput. In short: the consumer is dialing back spending.

Ordinarily, a weaker economic outlook would send investors for the exits. But that hasn’t been the case since the start of the pandemic. With fewer spending options, people have been putting their spare cash in equities (and crypto). The assumption is this TINA—there is no alternative—phenomenon will continue.

As you’ll recall, Goldman last month increased its year-end forecast for stocks, and it’s sticking with that call. It is hardly the first Wall Street firm to cut its GDP outlook while getting more bullish on stocks.



In Italy, before there were banks (or banks stocks), there were the powerful money-changer guilds, wealthy merchant families with the capital to lend out to any enterprising tradesman in whom they had the confidence they’d get paid back.

In Perugia, the money-changer guild was called the Cambio. For centuries, they had a lock on the city’s financial and political power. The members of the Cambio not only set lending terms, they controlled nearly every facet of the money supply down to the exchange rate. They were such a big deal that they had a special say in all civic matters in the city. A bunch of them met at the College del Cambio, a fabulously ornate chamber in the city’s Palazzo dei Priori to adjudicate civil cases.

Original photo: Bernhard Warner

If you were a stone mason who got short-changed by a customer on a stone-wall project, your dispute would probably end up here. And this tribunal of money changers would mete out the justice.

Judge. Jury. FX market-maker. Lender-of-lone-resort. This is what DeFi, or decentralized finance, looked like in the 13th and 14th centuries, in an era before banks.

One of the Cambio’s most lasting decisions came in 1496. That’s when they decided they needed a chamber befitting their power and influence. They commissioned the early Renaissance master Perugino, tutor to an up-and-comer by the name of Raphael, to paint the room in a series of elaborate scenes depicting figures of prudence and wisdom (Socrates), virtue and heroism (Lucius Quinctius Cincinnatus) power (the roman gods Mercury, Saturn, etc.) and biblical heroes and prophets (Moses and Daniel).

The chamber has a bit of a bro feel. The biblical heroes are all dudes, and, in one fresco, they can be seen turning against the pagan prophets, all females. (But Perugino had the last laugh here. The female pagan figures are stunning and confident, their heads held high. Don’t mess with the fair-haired sibyl, Tiburtine, the artists seems to be saying.)

I’m sure today’s DeFi advocates will be more inclusive, and will be as supportive of the arts as the old Cambio boys.

Bernhard Warner

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Today's read

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Market candy

Quote of the day

“If anything, that retail flow has been accelerating recently. It looks more like a melt-up.”

That's Nikolaos Panigirtzoglou, cross-asset research analyst at JPMorgan, on the recent uptick in retail money flowing back into the markets, as reported in the Financial Times. The S&P 500 is up a solid 20% so far this year, and it's retail investors fueling much of the rally. But, dear investor, be forewarned: “The problem with melt-ups is that they don’t continue forever,”Panigirtzoglou adds.

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