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Central bank meetings are are on tap this week with the with the Reserve Bank of Australia, European Central Bank and the Bank of Canada all ready to tackle inflation. The ECB is expected to hike rates 75 basis points after recent remarks from members turned more hawkish, although there is still some speculation of a 50-point increase. The Beige Book report will be released and Jerome Powell will make a notable conference appearance. In the energy market, the OPEC+ meeting will take place amid more talk about output cuts with some producer nations forecasting near-term oil surpluses. The earnings calendar slows down for the holiday-shortened week, although the reports from GameStop (NYSE:GME), DocuSign (NASDAQ:DOCU), and Kroger (NYSE:KR) are likely to create some buzz. Meanwhile, Apple’s (NASDAQ:AAPL) ‘Far Out’ event is expected to reveal the next generation of iPhones.

On Tuesday, researchers at Goldman Sachs released a paper titled “The Housing Downturn: Further to Fall.” The investment bank now forecasts that activity in the U.S. housing market will end 2022 down across the board. The firm projects sharp declines this year in new home sales (22% drop), existing home sales (17% drop), and housing GDP (8.9% drop). And don’t expect relief in 2023. Goldman Sachs projects further declines next year in new home sales (another 8% drop), existing home sales (another 14% drop), and housing GDP (another 9.2% drop).

For investors, all of this suggests the potential for volatility in the short run. However, it is also important to think about the economic environment over the next few years. This will be an environment of fading fiscal stimulus hurting consumption, higher mortgage rates clobbering housing, slow profit growth inhibiting investment and a high dollar and overseas weakness hurting exports.

Jackson Hole Fed Meeting. Stocks plunged Friday as Chairman Powell gave a message that the Fed plans to keep raising interest rates. During his Jackson Hole speech, Powell said that the Fed will continue raising interest rates and hold them at a higher level until it is confident inflation is under control. He noted that reaching an estimate of the longer-run neutral rate is not a place to pause or stop.

S&P 500 Finds Resistance. What stocks do from here is very important from a technical standpoint, and should help determine if the summer rally is just a bear market bounce or something more lasting. This is precisely where the rally in stocks should fail if the major downtrend is still intact. A 50% rebound up to 200-day moving averages and a major downtrend line represents a major test of the downtrend that started earlier in the year. Any serious pullback from current levels would suggest that the summer rally has probably run its course and would also keep the market’s major downtrend intact. That also warrants a more cautious view on stocks from current levels.

The focus of the markets this week will be on Jackson Hole and the tone from Federal Reserve members at their annual symposium.

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Stocks notched their fourth straight positive week with strong gains Friday. The monthly report from the University of Michigan showed a rise in consumer confidence, marking the second consecutive gain for the index since its June low. The bond market continues to take a pessimistic view of the economy, with the spread between the two-year and 10-year yields deeply inverted at negative 41 basis points.