Equities pushed to new highs by the close yesterday, aided by another 90-day reprieve on China’s tariffs and, of course, a 10%+ smackdown in VIX.
I have to catch a plane, so will post more later today. In the meantime, our upside targets remain unchanged.
Following the recent takeover of BLS data by the Oval Office, we’re less trusting than ever of headline CPI. But, for what it’s worth, the print came in on target: +0.2% MoM and a repeat of June’s 2.7% YoY. Core CPI ticked higher to 3.1% versus 2.9% prior and 3.0% expected.
The algos believe what they’re told, so futures popped up to the .886 Fibonacci retracement on the “news.” Just to be on the safe side, Trump postponed China tariffs by another 90 days.
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Futures are essentially flat ahead of the open as traders await important inflation data and digest the latest wrinkle in trade: the 15% of sales that NVDA and AMD will pay the US government in order to sell AI chips to China.
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Equities are up moderately again today, primarily on AAPL’s decision to buckle under to Trump. Whether or not it’s wise in the long run, it’s a political winner in the short run. The stock is up sharply in the last three days.
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As a reminder, I will be posting only weekly from July 9 through August 6.
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Nonfarm payrolls expanded by only 73,000 in July. But, it was June’s revision from 147,000 to 14,000 and May’s from 125,000 to 19,000 that shocked investors. There should now be no doubt that a recession has begun.
Rather than acknowledge that his tariffs are responsible, Trump responded to the weak data by shooting the messenger, firing widely respected BLS Statistics Commissioner Erika McEntarfer on charges of being partisan.
Equities didn’t take well to news of the economic slowdown nor the realization that the White House will be providing future “data” releases to McEntarfer’s replacement.
ES completed the backtest of its former highs.
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As a reminder, I will be posting only weekly from July 9 through August 6.
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The meltup continues, driven by resolution of the trade negotiations with Japan and the Philippines. While a 15% tariff is lower than was threatened, it will still lead to diminished profits and/or higher prices – risks which are both being ignored by algos.
Oh, and meme stocks are back.
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As a reminder, I will be posting only weekly from July 9 through August 6.
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Stocks continue to be propped up at the previous highs, as seen on ES’ 15-min chart below.
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As a reminder, I will be posting only weekly from July 9 through August 6.
♦ ♦ ♦
It has now been over a month that SPX has traded within 2.5% of its former all-time highs. That’s over a month of flip-flopping, ignoring fundamentals, and pretending that tariffs won’t make any difference,
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DXY and EURUSD have both reached our targets from April.
USDJPY reached its in April.
There is plenty of discussion re DXY’s collapse, but the administration’s expressed desire for a cheaper dollar has probably run its course for now.
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