1- This Sunday the Founders group will be doing a Tuey Technical breakdown with stocks as his focus. Also we will do Gold and Silver CoT/CTA reports with focus on the recent news/moves.
Sundays Post Content
2- Weekly Preview: We will break this full report down Sunday in our Weekly missive. It is very good for some no nonsense explanations and scorecard. Good charting piece, no noise, not salesy.
MARKET RUNDOWN: PCE is Bad
PCE is out, and it’s very bad for the next year ( in our opinion) or so for inflation. See below.
Zerohedge: “With both headline and core inflation re-accelerating, it appears the 'peak inflation' narrative has busted once again.”1
Bottom Line: Spending is up again at record highs, even with wage growth slowing. But how? People continue to spend because of increased credit use and credit offers. That is stagflationary at best, and at worst very inflationary in next cycle.
Here are the Markets Post PCE. Stocks are shrugging it off so far. This implies they do not believe the Fed will tighten more despite the numbers.
Here is something on that we wrote inApril on increased credit as fuel for continued inflation. Credit is key to the next inflationary spike and just not talked about enough as an inflationary driver ( its a sign of recession for sure) in our opinions.
Strong loan growth was absent in the past decade – households and businesses deleveraged. Bank loan/asset ratios were crushed by regulation (Chart 2).
But banks currently have no regulatory block keeping them from returning loan/deposit levels to pre-Covid levels, and recent loan growth indicates banks are doing just that. That feeds inflation.
We are definitely ahead of the curve on worrying about credit but that’s ok. Until credit use drops, inflation will not collapse.
Data: PCE was the most important one today.
PCE Deflator 1.0% M/M, Exp. 0.9%
PCE Deflator 6.8% Y/Y, Exp. 6.8%
Personal Income 0.6%, Exp. 0.5%
Personal Spending 1.1%, Exp. 0.9%
Implying inflation is not yet peaked, but people are using credit, not pay raises to buy now. Noone is saving enough.
FEATURE:
Leon Tuey, Bloomberg, and a bank’s trading desk morning news.
Leon Tuey on Stocks and Technical Indicators:
Leon Tuey is a classical technician who is not afraid to lay out his opinion and what makes him wrong. Mr. Tuey is a Founders Group favorite (we will go through this report in Sunday’s Master Class) when it comes to technicals. His work will also be used in a Master’s of Finance class we are teaching at UCONN on Futures and Options this fall. He has called many market moves, most recently the Gold bull run from December to March of this year.
Read more about Leon Tuey here. Incidentally this particular report is heavily focused on Bollinger Bands and he is bullish stocks again. We count him as a mentor in our own continuing education
As shown below, many of the key market indices and internal measures have broken above their moving average of the weekly Bollinger Bands. Therefore, they will likely test the upper Bollinger Band implying the market will move higher, yet.
One of many many charts explaining his opinion
These indices and internal indicators tell investors much more about “the market” than the S&P. As pointed out repeatedly, the S&P obsessed have no clue about “the market”. Until my return, meanwhile, enjoy this great bull market and this great life we have all been blessed.
Final comment: Leon is in his 80’s and just recovering from surgery. We wish him well and a speedy recovery. He’s a rare man these days
More at bottom
Bloomberg’s McGlone: The 2022 Fed Endgame May Shine on Gold
Industrial metals in the process of trading places from the top of our 2022 scorecard in 1H toward the bottom in 2H may have staying power. An aggressive Federal Reserve fighting the highest inflation in about 40 years is buoying the dollar and pressuring the stock market -- strong headwinds for base metals.
It's a question of duration, which may result in gold gaining an upper hand. China in decline and the slumping US stock market are reflected in copper's 2022 drop through July 26 of around 23% -- about the same as the Nasdaq 100's drop.
