The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Note: I am going to be out of the office Monday through Wednesday next week. No Recaps until I return.
Breather.
The S&P 500 opened positively, just a handful of points, in what seemed like a usual resumption of the current rally. News and data were unremarkable, presenting yet another opportunity for the dip-buyers to get busy during a quiet window. The tape quickly fell after the open and was down 10-20 points for the bulk of the day. Softer U Michigan sentiment, conditions, and expectations survey results threw a little cold water on the bulls in morning trading and may have convinced the market to stay in the risk-off mode from earlier, albeit a mild one. Yields rose some across the curve today as well, hindering the dip-buyers efforts to lift the tape.
Most news was inconsequential for markets today and the press spent the bulk of the day reporting about the Putin/Trump Alaska Summit. Almost all the coverage was speculative or trivial. I watched a lot of CNBC coverage of Air Force One sitting on the tarmac. My point is that lots was reported but little was learned, which may have contributed to a slow and quiet trading session.
Now we move on to the second half of August. Markets will be sensitive to inflation data. In the absence of hot data, investors are inclined to stick with the status quo. That means more upside. It won’t be big and exciting. It will be boring and bite-sized.
There will continue to be loud concerns about valuation and concentration of index exposure in the megacaps. Those concerns won’t change market behavior however. There has to be an event. Something material has to shift the investment landscape. The market will not change randomly.
We’ve already posited that hot inflation data is the likely culprit for ending the bull. The next *major* inflation data will be PCE data in late August. Unless we get a bolt-from-the-blue catastrophe, the outlook for the market is more of the same.
See you Thursday, have a great weekend.
-Mike
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