Financial News vs. Noise
That was ugly. SPY is now sitting on it’s 50 day moving average, which will be important support.
QQQs broke below, which is bearish.
Watch the 10 day on IWM, which is holding up much better than the others.
Watch the 20 day EMA on the Dow.
Some interesting earnings yesterday. TSLA and GOOGL were the obvious ones, but there was also VRT which is a data center smack in the middle of the AI trade. It got crushed, most likely because of this line..
"we expect a sequential decline in orders from an extremely high second-quarter."
This, along with GOOGL contributed to an unwind in the AI trade. I do continue to believe you buy dips in AI but it’s not going up in a straight line.
Another interesting report was Lamb Weston, the potato producer. They stated…..
"The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic."
What’s going on at restaurants continues to point to issues with consumers.
Further fueling concern about the consumer was an Op Ed by former NY Fed President Dudley…
I Changed My Mind. The Fed Needs to Cut Rates Now.-Bloomberg
Now, the Fed’s efforts to cool the economy are having a visible effect. Granted, wealthy households are still consuming, thanks to buoyant asset prices and mortgages refinanced at historically low long-term rates. But the rest have generally depleted what they managed to save from the government’s huge fiscal transfers, and they’re feeling the impact of higher rates on their credit cards and auto loans. Housing construction has faltered, as elevated borrowing costs undermine the economics of building new apartment complexes. The momentum generated by Biden’s investment initiatives appears to be fading.
Today Mohamed El-Erian joins in….
Speaking of AI, I think the next area of interest is going to be nuclear power. I took profits in NEE yesterday in my short term counter trend model, but still have a long term holding in it. NextEra considers restarting Iowa nuclear plant amid rising demand for carbon-free energy-CNBC.com
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