Financial News vs. Noise
Congratulations to everyone who survived the bear market of July 11th. Once again this market shows us the folly of trying to call a top. The real interesting thing for bulls is that pretty much everything was up. The S&P 500 percent of stocks above their 20 day is something I have brought your attention to a few times, it’s now near the highs of the year.
Something to keep an eye on when we get there again is that 25% level seems to be a decent counter trend indicator (except for April of course).
NVDA continues to hold support.
TSLA said FU to the bears and pulled an undercut and rally at it’s 10 day.
TSLA is up big this morning, probably on this. I am probably going to sell a good portion of my long into this news today. Shots Fired, Elon Musk Heard a Call: Donald Trump-WSJ. Not political in any way, shape or form. I think there is no reason TSLA should rally on this and a Trump Presidency, if anything, should be a negative for EVs.
Software came back.
Small caps went from nowhere to yearly highs.
Our trend following models picked up half positions in IWM and MDY (mid cap). Don’t quite trust this rotation, but want to be there if it’s real.
Dow went from nowhere to near yearly highs.
Helping to fuel the fire are rates which are expecting a September cut, and maybe more than one this year.
Dow Rises Above 40000 With Investors Putting Rate Cut in Sight-WSJ
The Federal Reserve is widely expected to hold rates steady at its meeting later this month, but traders on Friday were pricing in a 94% chance that the central bank will cut interest rates in September, according to CME Group data. That is up from 78% a week ago.
From Mike O’Rourke…
Bloomberg indicates the CPI and PPI readings likely result in a June Core PCE reading of 0.125%. That is a 1.5% annualized pace and it lowers the 3 month annualized pace to 1.89%. The 6 month annualized pace moves down to 3.19%, but once the lofty January reading falls off, it is closer to 2.5%. As the market quickly surmised, these numbers place Core PCE on a path to 2%. The notable difference between inflation cooling in 2024 versus the sharp cooling in 2023 is that GDP is not averaging 4%, it is just shy of 2% and the Unemployment Rate has crept 50 basis points higher. It will be easier for the FOMC to establish "greater confidence" that inflation will return to 2% when the economy is not running hotter than forecasted potential.
It’s Time for the Fed to End the Waiting Game-WSJ
Why wait until September?
That is the question hanging over markets after Thursday’s surprisingly weak inflation reading. There doesn’t seem to be much reason for the Federal Reserve to put off cutting rates any longer, and waiting too long carries risks of its own.
Bottom line is this, the consumer is stretched, there is a time bomb in regional banks, inflation is not going down, we may be heading into a recession.
Stock market’s long-awaited Great Rotation needs to overcome this nagging worry-MarketWatch
Stock-market investors got more than a whiff this week of what bulls hope to be the start of a long-awaited rotation away from an increasingly narrow band of megacap technology winners to left-behind parts of the market.
But a big question remains: Will the consumer play along?
Jefferies….
As long as Fed September rate cut expectations remain in the cards, we expect the narrative to support risky assets. A resilient economy with slowing inflation should indeed lead to the Russell 2000 outperforming. But with our view that the economy will slow down over the coming months, we do not see a sustained outperformance of Russell over NASDAQ
The market doesn’t care. One day it will, so I do think you should have longs and shorts, but I think you need to continue to buy dips, especially in tech, and especially in anything to do with AI.
What about the attempt on Trump’s life?
Haven Rush, ‘Trump Trades’ on Investor Minds After Shooting-Bloomberg
Investors will initially favor traditional haven assets and perhaps lean into trades most linked to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
Regardless of what you think about him, what happened isn’t right. Doubt it has an impact on the overall market, but if he jumps in the polls it could have an impact on DJT (which I am kicking myself for stopping trading). I could also have an impact on the law and order stocks, like GEO, which I do own.
Negatively it will probably impact solar and other clean energy.
I would ignore any noise that comes out about how Trump would do this or that to the economy or inflation. I would also ignore any noise about what Trump would do for the deficit, all Presidents suck on that.
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