Macro Economic Data Releases:
Monday
Nothing of interest today in the data. I didn’t bother with JP because he’s been talking so much lately, everyone knows what he’s going to say. I did see the article on Bloomberg though.
”Powell says US data offer confidence that inflation is on the path to 2%”
”Says risks to employment, inflation goals now more balanced”
”Latest 3 inflation readings add ‘somewhat’ to confidence”
Sounding pretty dovish to moi!
Tuesday
Retail sales flat MoM, lower than forecast. Not great for the economy in one sense, that spend is shrinking. Good in the sense it encourages rate cuts, which are very expansionary for the economy. Auto sales are weighing this one down though. If we take that out, things don’t look as bad as they were expected to be. 0.4% higher is miles above the negative -0.1% that was expected. We saw an even bigger disparity when removing Gas.
So the consumer isn’t buying any big ticket items, they certainly don’t seem to want to buy homes right now either. Bear in mind these numbers are adjusted, so the reality is worse. Unadjusted actually sits around -2.8%. Baaaaaad. I seem to have lost the chart for this that I had saved and can’t find it again on the web, so can’t add it in but I’ll keep an eye out for it. The bank earnings so far this year seem to agree more with the adjusted data.
Wednesday
More housing data for the market to promptly ignore. Nice to seeing building permits rising though, even if they are only preliminary numbers. Mortgage applications and refinance also up, this bodes well for SoFi if it continues. Highest levels since August 20222. Noice.
Industrial and manufacturing data ticks up. It may never get back to the highs of pre 2000, but anything over contraction levels is a win. We’ve talked about it a bunch, the US just isn’t a large manufacturing hub. Services data is where the tea is.
Thursday
We saw a lot of the Fed comments today suggesting the time was coming for cuts as things were getting close to being overcooked.
Initial jobless claims cam in hot but nothing too crazy, revisions are heading upwards so no shock there. The numbers that much catch my eye are the continuing jobless claims. This is grinding higher. It builds more on the narrative that we are seeing more people leaving their jobs, and not getting back into the workforce.
Business conditions also up a loooot, now at their highest level since 2021. Love it. Gives us good hope for continued growth but bear in mind this is the Philly area only. In the area we also see Capex down, employment up, orders up and prices paid lower.
Big picture? Manufacturing in the area is doing well. I mention a lot this isn’t the sector I love in the US, I’m more interested in services but this is still reassuring data.
Friday
Nothing of note today.
Worrying Data:
We do have some data that is worrying for inflation. Such as Containerized freight still being spicy. As you can see in the charts below, it’s starting to set a worrying trend towards the Covid highs. I would like to see this start to roll over but this is heavily affected by the ever evolving situation in the red sea. With the capacity squeeze still fresh on everyone’s minds, its seem shippers are willing to start scaling up now in preparation for peak season in Q3. up 265% YoY. Price is stabilising but I would prefer to see it come down more.
The Dollar
Every week we talk about how the market struggles with a strong dollar, especially international and small companies. We wanted to see more downside in this and we got it, price has had a rebound though but only a small one, struggling to break over the EMA and back testing recent support, now turned resistance. Still bearish price action at this point… just having a rest.
Oil
We talked about all that resistance above price action that was going to make it hard for oil to break higher, and that has been the case this week. It’s continued to grind down, maybe not as much as we would like, but its better than nothing. Price now sits below the 0.5 Fib and back in the purple trend line. I don’t think a move back down to the next fib at $78 is unreasonable but price is may chop around a little on this thin bull market band. Though, it doesn’t look like it wants to stay above it.
Commodities
Lithium down again this week. Noice.
Agriculture has been a big driver of inflation, it influences a large part of the chain and it’s always good to see most prices falling. Still some sticking areas but cocoa shaving off some gains this week. Can’t hate that.
You can check out the rest of the commodities here.
CME Interest Rate Probabilities
Not much chance of a cut in July as this has increased by a nice wedge, but September looks good, now at 88.1%. Market shouldn’t throw it’s dummy out of the pram if we don’t cut at the next meeting then. You can check the live data here.
Truflation
My go to source as a live indicator for inflation data. The government data is very lagging in nature and often off the mark when it comes to honest reporting. I have a post here that explains more about why I like this tool.
WoW we are up a measly 0.04%. This still looks good.
Fear and Greed Index
Primary index’s flopping around their all time highs and so is my portfolio. Yet we are tracking perfect neutral on this index.
Put and call options are in extreme greed and momentum is in greed. Is it a surprise we are seeing this? Lots of opportunity out there for stock pickers who expect a decent 2025 and 2026, with many stocks having very generous upside potential. Even the momentum driving mega caps still drawing in investors who see upside still there, with their expanding EPS, but this week we have seen some cooling. This is very healthy for the markets.
Crypto Fear and Greed Index
With Germany out of the market crypto has been juicing and BTC price is on a tear to the upper resistance line. All that and we are barely in greed? Yum.
Other News and Data
We had Netflix release earnings. It was largely overshadowed by the Crowd strike drama that swept the world on Friday but the earnings overall were good, with slightly lower guidance than expected. This suggests that maybe some caution is warranted but at least for the last quarter things weren’t too bad, the consumer wasn’t in dire straits. You can check out the earnings breakdown here.
Now, this doesn’t mean the consumer is fine and dandy. We are seeing the banks start to comment the spending growth is slowing, and credit lapses are growing so there’s definitely strain there. That’s an important distinction. We can also see some confirmation of that in the retail sales numbers we had early in the week. Flat and lower than expected with the adjusted numbers… but definitely in contraction for adjusted data.
We also have the Trump assassination attempt. It’s crazy that these are the times we live in, I can’t imagine what would have happened if this was successful. Don’t want to get too involved with politics but it does seem that the market is happy to price in a Trump victory. At least until they heard some of his tariff plans…. They seem pretty inflationary but we have to wait and see, his stance on bumping up oil production in the US is deflationary so it could be a nice balancing act over the long term, but short term could impact the chances of cuts next year. Remember when the UK added a 10% levy on Chinese cuts? That was 10% more the consumer had to pay. No sense worrying yet about things that have not come to pass…. in the world of politics change is slow most of the time, doesn’t happen at all.
This week we also saw the continuation of the small cap rotation and the move to more risk on assets. This played out beautifully and as we rose I rotated some positions around in my portfolio whilst leaving some cash aside for the pull back. We did break nicely over the FIB line but had a load and clear reversal candle. I made some trims to a bunch of positions and during the last two days off pullback we’ve been adding back to them.
It’s been a very choppy weak with lots of things going on an I don’t expect it to change. Earnings season has started, so brace yourself!
I also wanted to touch a little on crowd strike, I bet a lot of people want to know if this is a good buy right now. Personally it’s a no from me. I work in IT and my company is directly affected by this outage, resulting in us failing to meet our own internal standards. I can say with first hand experience that our customers will want answers, reassurance’s and compensation in some cases. Do you think my company won’t pass on that cost to the provider of the tools that caused the issue? That would be bad business. So at the very least there will be some impact there for Crowd Strike.
Also bear in mind this event has shown a very large business issue. Too many companies relying solely on one tool. We’ll likely see CWRD’s rev drop as companies diversify away from them in the future to enable better disaster recovery, resulting in a loss of market share. This is great news for their competitors though.
There’s also the potential for legal fall out here and turbulence within the companies management structure.
Price did drop down to more than -21% during pre market as this was all happening. We normally always get dip buyers in these situations and this time seems to be no different. They only closed the day down -11%.
Am I saying this company is for sure going down? No
Am i saying this company is a good buy right now? No.
For me there’s way too much unknown at this point and there’s a thousand better opportunities in the market today, with a great risk reward profile.
One last thing, with how we’ve seen the market react to the upcoming rate cuts I thought it made sense to take a look back to how this affected the S&P 500. Not good it turns out. On average it’s fallen 23.5% over the following 195 days from the 1st cut. My portfolio has been mainly out of the big dogs for a while, I recommend caution on those assets going into cuts. If a full blown recession is looking unlikely at the 1st cut, the cut will be expansionary and likely to push small’s and risk on assets back up, so more support for a larger rotation.
New Website Content and Updates
- End Of Week Macro Economic and News Wrap Up 19/07/2024
- Chart Updates for Top Stocks in My Portfolio 19/07/2024
- Portfolio tracker updated
- Netflix earnings update.
- Recap Of Earnings This Week
- Tesla Mega Pack News Update
- SOFI Short Report News
- Added a zoom feature to all future images with small print for easier viewing.
YouTube and the Delay getting data out
I’m working on speeding the process up in creating the content and getting it out there. As my talking and editing skills improve this should become easier but right now I’m still learning so please be patient.
Macro update and Chart update videos will be posted Monday at 2:00pm on a schedule.
I know everyone thinks I have all the time in the world because I only work part time, but I have a very busy life, both working on projects and socially. I take many long weekend trips too, so I aim, at the latest to have the YouTube content out by Monday market open.
Thanks for pushing this out when you are so busy Jody
Your welcome, I’m working on having better time management 😛