Financial News vs. Noise
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Yesterday’s rally was driven by further data that we are not going into a recession. First was WMT earnings….
"Even in the first couple of weeks of August here, things have been remarkably consistent. So, I know everyone is looking for some piece of information that maybe indicates further weakness with our members and our customers. We're not seeing it."
Initial Jobless Claims declined for the second week in a row and July Retail Sales was much stronger than expected. Interestingly, 2/3 of the gain in retail sales was from Vehicles and Parts, which detracted a like amount from June’s reading. So, most likely, June was not as weak as thought and July was not as strong.
On the negative side, Industrial Production contracted, and WMT did say this….
"And while we have not seen any additional fraying of consumer health in our business, other economic data out there, as well as the state of affairs globally, would suggest that it's prudent to remain appropriately cautious with our outlook."
SPY is now almost back to the all time highs…
Anyone who panicked and sold (or went short) on that so called Black Swan event last week got their head handed to them. Again, market is looking overbought, but that doesn’t mean that it is. No data today and futures pretty flat.
Maybe, but as I always say you trade based on what you see, not based on what you think. Markets Are Way Out of Line With Reality, According to These Measures-WSJ
I’ll consider three gauges here, the CAPE, the forward PE and the Fed Model. All show that the offers being presented by Mr. Market—as legendary investor Benjamin Graham personified it—are unattractive for large U.S. stocks at present. They are expensive not only compared with the past but compared with smaller stocks, foreign stocks, corporate bonds and Treasurys, too.
If these measures are right, the rebound of the past couple of weeks is a fools’ rally, and it’s time to switch away from the biggest stocks.
Certainly, if you haven’t been buying and are on the sidelines, I wouldn’t be jumping in today. But, remember, the market can remain irrational longer than you can remain solvent.
I have said, and will continue to say, the demand for power from AI means we will need everything. If you think you are going to power AI with wind and solar you are crazy. How Booming Electricity Demand Is Stalling Efforts to Retire Coal and Gas, in Charts-WSJ
After 15 years of relatively flat power demand, projections of electricity use are surging. Companies are extending aging fossil-fuel plants to accommodate the expected hike in demand, which is undermining U.S. goals to cut carbon emissions.
Most power companies raised their demand forecast in 2023, and some have indicated higher revisions are expected.
