U.S. Equity Markets ended Friday firmer, with outperformance in the small-cap Russell 2000 (+1.1%) which closed out the week with strong gains, although the SPX and NDX saw weakness into the close to settle off best levels. In the wake of the US PPI report, which was hot overall, there was a broad-based hawkish reaction, although this swiftly pared as participants digested the details of the report. Highlighting this, analysts at Bank of America stated that overall, the components of the PPI report that affect the PCE report, were softer. As such, so far analyst forecasts for Core PCE M/M are ranging between 0.15-0.20%. Elsewhere on the data footing, Prelim University of Michigan Consumer Survey for July was weak with headline sentiment falling to the lowest level since November 2023, in addition to both conditions and expectations short of consensus, while both the 1Year and 5 Year dipped to 2.9% from 3.0%. The Dollar was eventually weaker, despite strength on the aforementioned PPI report, and printed a low of 104.04, keeping its head above the round 104. The Japanese Yen was one of the G10 performers with possible intervention once again touted as USD/JPY hit a low of 157.39 against a peak of 159.44. The crude complex ended the day with marginal losses as they saw the first week of losses in four, and T-Notes were sold on hot PPI but pared as PCE components were soft. For the record, US earnings season begun on Friday with highlights from JPMorgan (JPM) (-1.2%), who are a little bit more cautious on IB outlook, Wells Fargo (WFC) (-6%) NII and NIM coming in light, and Citi (C) (-1.8%) missing on IB and FICC sales and trading revenue. Looking ahead, participants await Fed Chair Powell at the Economic Club of Washington DC (Mon), Retail Sales (Tues), Waller (Wed), Williams (Fri), and a slew of earnings (all week). Headline PPI M/M came in at 0.2%, hotter than the expected 0.1%, while the prior was revised up to 0.0% from -0.2%. The Y/Y also came in hot at 2.6%, above the 2.3% forecast, with the prior also seeing a revision higher from 2.2% to 2.4%. Core was also higher than expected on both fronts, with the M/M at 0.4% (exp. 0.2%, rev. 0.3%); Y/Y at 3% above the expected 2.5%, with revision upwards to the prior (prev. 2.3%, rev. 2.6%). Lastly, Supercore Y/Y again saw revisions upwards, printing 3.1% for June (prev. 3.2%, rev. 3.3%). Although the data overall was hot, analysts at Bank of America note that overall, the components of the PPI report that affect the PCE report, were softer. So far analyst forecasts for Core PCE M/M are ranging between 0.15-0.20%. The Prelim July University of Michigan survey was weak with headline sentiment falling to the lowest level since November 2023 at 66.0 from 68.2 in June, beneath the 68.5 consensus. The downside was met with a drop in both current conditions, falling to 64.1 from 65.9 (exp. 66.3), with the forward-looking expectations dipping to 67,2 from 69.6, despite expectations for a rise to 69.8. The report notes that “Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead. With the upcoming election, consumers perceived substantial uncertainty in the trajectory of the economy, though there is little evidence that the first presidential debate altered their economic views”. Meanwhile, year-ahead inflation expectations fell for the second consecutive month to 2.9% from 3% in June. The 5 Year ahead forecasts also came in at 2.9%, down from 3.0% previously. On Thursday we had the latest US CPI data which came in cooler than expected across the board. Core CPI rose by 0.1% M/M in June, beneath the 0.2% forecast and prior, while the Y/Y pace eased to 3.3% from 3.4% in May, despite expectations for the pace to be maintained at 3.4%. The headline came in beneath all analyst forecasts at -0.1%, beneath the +0.1% consensus and down from the prior unchanged print. Headline Y/Y eased to 3.0% from 3.3%, beneath the 3.1% forecast. Looking at the breakdown, indexes that increased in June include shelter, motor vehicle insurance, household furnishings and operations, medical care, and personal care. The indexes for airline fares, used cars and trucks, and communication were among those that decreased over the month. Pantheon stated how the huge drop in airline fares and used autos offset the rebound in auto insurance, although they labelled the 5% drop in airline fares as unsustainable. From a Fed perspective, this report is very welcomed and will help support the argument that the disinflationary trend has resumed after the cool April and May reports. This has seen money markets now fully price in a rate cut by September, vs a c. 72% probability beforehand. Looking to year-end, 60bps of easing is priced, implying two 25bp rate cuts, with a 40% probability of a third rate cut. Fed speak since the data from Mussallem and Daly has seen that the Fed would still like to see more data before acting, but they did acknowledge the inflation progress. Elsewhere, Oil fell 0.5% while a much weaker Dollar saw Gold end Friday above $2400 with a 1.2% gain.
To mark my 3025th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 160 points on Friday and is now ahead by 194 points for July after closing June with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 to 4 updated emails throughout the trading day to demonstrate this value, a points, after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.55% higher at a price of 5615.
The Dow Jones Industrial Average closed 247 points higher for a 0.62% gain at a price of 40,000.
The NASDAQ 100 closed 0.59% higher at a price of 20,331.
The Stoxx Europe 600 Index closed 0.88% higher.
This Morning, the MSCI Asia Pacific closed 0.2% higher.
This Morning, the Nikkei closed 2.45% lower at a price of 41,190.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% lower.
The Euro closed 0.6% higher at $1.0907.
The British Pound closed 1.1% higher at 1.2988.
The Japanese Yen rose 2.2% closing at $157.80.
Bonds
Germany’s 10-year yield closed 4 basis points lower 2.50%.
Britain’s 10-year yield closed 3 basis points lower at 4.11%.
U.S.10 Year Treasury closed 9 basis points lower at 4.19%.
Commodities
West Texas Intermediate crude closed 0.5% lower at $82.21 a barrel.
Gold closed 1.2% higher at $2411 an ounce.
This morning on the Economic Front we have Euro-Zone Industrial Production at 10.00 am. This is followed by U.S. New York Empire State Manufacturing Index at 1.30 pm. Finally, we have a speech from Fed Member Daly at 3.35 pm and Fed Chair Powell at 5.30 pm.
Cash S&P 500
After falling over 65 Handles on Thursday, the S&P took back every inch of that decline on Friday before having a small sell-off into the close. Despite the aggressive rotation in the Small Caps last week, it is hard to see the Russell 2000 continue to rally if both the S&P and NDX are trading lower. Although the RSI fell with Thursday’s S&P fall, it still closed on Friday night with an overbought 73 print. The seasonal chart is calling for an extended sell-off in both the S&P and NDX over the next two weeks and I will use any move lower to set up a long position. The S&P has broken every trendline that I can find and is now outside both its Daily and Weekly Bollinger Bands. There is no doubt that this is a melt up where normal rules go out the window. I am still short the S&P at an average rate of 5550. I will now raise my exit level to 5575. I will continue to look to add to this position on any further move higher to 5670 with the same 5705 wider ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
Thankfully, we had no sell level in the Euro as the market is now trading 80 points higher from where I marked prices last Thursday. The Euro has strong resistance from 1.0980/1.1060 where I will be an aggressive seller with a 1.1115 ‘’Closing Stop’’. I will now raise my buy level to 1.0770/1.0840 with a higher 1.0695 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 1.0920. If I am taken long, I will have a T/P level at 1.0890.
Dollar Index
The Dollar never came close to Thursday’s sell range. The Japanese Intervention by the Bank of Japan sees the Dollar trading over 1% lower. The Dollar has support from 102.50/103.30 where I will be a buyer with a 101.85 ‘’Closing Stop’’. I no longer want to be short the Dollar at this time.
Cash DAX
Despite the much weaker than expected German Economic data over the past few weeks, the DAX continues to attract large buying on any dip and is now close to all-time highs. The DAX has resistance from 18820/18910 where I will be a small seller with a 20005 tight ‘’Closing Stop’’. I still do not want to be long the market at this time. If I am taken short, I will have a T/P level at 18730.
Cash FTSE
My latest 8190 long FTSE position finally worked out as the market rallied to my 8230 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 8120/8190 with an 8055 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8240.
Dow Rolling Contract
Friday’s rally saw the Dow take out its May high with the market rallying over 1000 points last week. Although the Dow fell 250 points in the last 30 minutes of trading is still closed at 40,000 and is trading slightly higher at 40100 this morning. I will now raise my Dow buy level to 39630/39880 with a now higher 39495 ‘’Closing Stop’’. I still do not want to be short the Dow at this time. If I am taken long, I will have a T/P level at 40050.
Cash NASDAQ 100
On Thursday the NDX hit my 20740-sell level before reversing these gains and falling 600 points. Unfortunately, I covered this short position at my revised 20620 T/P level and I am still flat. Hopefully you were able to get a better exit level than me as the market sold off aggressively as I was emailing my Platinum Members. This was a massive reversal on Thursday but like all Key Day Reversals, the NDX rallied on Friday and is trading higher at a price of 20410 this morning. The NDX has support from 20100/20250 where I will be a small buyer with a 19985 ‘’Closing Stop’’. My only interest in selling the market is on a further rally higher to 20650/20800 with a 20905 tight ‘’Closing Stop’’.
September BUND
The Bund continues to build value above the 130.50 key support level. I am still flat. I will now raise my buy level to 130.40/131.10 with a tight 129.65 ‘’Closing Stop’’.
Gold Rolling Contract
Gold is trading $40 higher from where I marked prices on Thursday morning. I am reluctant to chase Gold higher given the economic backdrop. As a result, I will only raise my buy level slightly to 2350/2366 with a higher 2339 ‘’Closing Stop’’. If triggered, I will have a T/P level at 2379.
Silver Rolling Contract
Although Gold managed to close over $2400, Silver has struggled over the past two trading sessions, after finding strong resistance at 31.50. I am still flat. I will not chase the market higher, leaving my 29.50/30.30 buy level unchanged with the same 28.25 ‘’Closing Stop’’. If triggered, I will have a T/P level at 30.95.
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