TGIF – Bring on the Consumer Data!

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S&P 500 Hourly Chart

We’re up for the month!  

That’s right, things have seemed really crappy but actually they are “eh” because we began the month on a low note at S&P (/ES) 3,765 and now we are at 3,805 so – Yay!  Of course, we’ll feel better if we can get back over 3,840 so the weekly chart isn’t a disaster and the Dollar is finally taking a pause – back at 108.3, so there’s the 2% recovery we’ve had in the indexes since yesterday.  

The Dollar has a very direct, short-term effect on the indexes but, once it settles down (not lately), THEN you can see what’s actually going on.  Earnings data is just starting to come in and we’ll be focused on the Retailers as Consumer Spending is 2/3 of the Economy – so are we in trouble or aren’t we?

8:30 Update:  June Retail Sales are up 1% over May, which was down 0.1% from April and, for the year, we’re at a +8.4% pace – that’s not very recessionary, is it?  Ex Auto and Gas, we’re up 1% vs 0.5% expected by the Leading Economorons who scream doom and gloom non-stop in the financial media.  

Of course, we need to keep in mind that Consumer Prices were up 9.1% so if Retail Sales are up 8.4% it means people are actually buying 0.7% less stuff and just paying more money for it.  How many businesses do you know that will suffer from selling less items for more money?  Not many.  

In fact, the Empire State Manufacturing Index is also an embarrassment to Economorons (I’m just kidding, they seem incapable of being embarrassed, no matter how wrong they are), coming in at +11.1 vs -2 that was predicted.  The best part of that report is shipments rose 25.3, from 4 prior – so it seems like bottlenecks are easing – at least on the East Coast.  

CitiGroup knocked it out of the park on earnings this morning – that’s helpful but JPM, MS, BLK, BNY, UBS and WFC all missed this week as Banks generally upped their loan-loss provisions.  DAL and ERIC also missed but PEP, FAST, WAFD, CAG, FRC, TSM, PGR, STT and UNH all beat so, as I’ve said a lot recently, it’s a stock-picker’s market.

Next week we get a lot of housing data and that’s likely to be depressing but it should be as housing is one of the things the Fed is TRYING to cool off.  We’ll see if the Philly Fed agrees with the NY Fed  and we get PMI on Friday but not much data otherwise so it will be all about the earnings next week.  

Have a great weekend, 

    • Phil 

 

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Good Morning.

Good morning! Futures flying

Good Morning.

Options expiration, I do anticipate the morning spike will not hold today.

It may be useful to keep in mind the Friedman/Monetary adage about the lagging effect of money supply changes. Slow and steady supply as the economy expands. Over/under supply takes time to work through the system. So, supply contraction via the Fed may not be felt until a bit further down the road. Given the current 2/10 rate spread it seems the bond vigilantes are factoring this in and may be why some of the bankers and pundits are sheepishly hinting at recessionary impact in 2023.
Short term earnings will call the ball but I am keeping my eye on the horizon for any brewing storms.

Feature or bug? New comments appear at the top of the comment queue initially then move to the end after a refresh.

Did The article links moved to a different section of the site? Thanks

Sorry I meant all the news & interesting articles you would post in chat room From various other websites. I believe the link was red text and the background was light blue.

Baked in? Perhaps at least to some degree. The aforementioned 2/10 spread says the oven is at least in preheat mode. Traders tend to react to whatever their nose bumps into while investors take a longer view. IMO it rides on the steepness of the FED glide path which may make for a bumpier landing. That may impact earnings more negatively which will likely freak out the traders and make for better bargain hunting next year. Nobody knows but ……

I agree it is not binary. Nibble now and take bigger bites later as conditions warrant .

President Biden promised Friday to take executive action to combat climate change after Senator Joe Manchin pulled out of talks with Democratic leaders on a sweeping economic package that included new spending on climate measures.
“If the Senate will not move to tackle the climate crisis and strengthen our domestic clean energy industry, I will take strong executive action to meet this moment,” the president said.
Manchin said he stopped the spending package because he wanted to wait for July inflation data and to see what the Federal Reserve does next, but that he would reconsider revisiting the issue in September.

I guess I’ll start reading bottom up! I do like the yellow contrast much easier to read. What do you think of GM/Pilot/EVGO story about more charging stations on our interstates? 2024 EVGO BCS 7/10 for .50.

https://arstechnica.com/cars/2022/07/gm-evgo-and-pilot-will-install-2000-fast-chargers-at-travel-centers/