INTRADAY ALERT: July Core PCE inline and good details. U Mich good progress

INTRADAY ALERT: July Core PCE inline and good details.  U Mich good progress
INTRADAY ALERT: July Core PCE inline and good details.  U Mich good progress
INTRADAY ALERT: July Core PCE inline and good details.  U Mich good progress

Today had 2 data releases and both had positive implications for the path of inflation and inflation expectations, which in turn give Fed confidence to focus more on the labor mandate. Meaning, the Fed “put” was strengthened today and good for stocks.

  • July Core PCE came in at +0.16% MoM and the details good
    – two biggest upside contributors were housing and financial services (+0.07 and +0.04, of +0.16, respectively)
    – financial services is due to stock market rising and not the inflation that worries Fed
  • U Mich 1-yr inflation expectations fell to 2.8% and that is not only stable but anchored to pre-pandemic levels
  • To us, this gives Fed more confidence to focus on its labor mandate — keep job market healthy
  • Thus, Fed can lower rates with confidence back towards neutral to 2.5%-3.0% from 5.5% now
  • Moreover, this strengthens the Fed put. After all, falling stock prices threatens the labor market
  • And this gives us another reason to see Sept rate cut as the catalyst to trigger a rotation:
    – into cyclicals XLF 0.77%  XLI 0.98%
    – small-caps IWM 0.59%
  • Bottom line, this was a good day for data

Have a great labor day weekend.

INTRADAY ALERT: July Core PCE inline and good details.  U Mich good progress

_____________________________

42 SMID Granny Shot Ideas: We performed our quarterly rebalance on 7/16. Full stock list here -> Click here

______________________________

PS: if you are enjoying our service and its evidence-based approach, please leave us a positive 5-star review on Google reviews —> Click here.

___________________________

More from the author

Disclosures (show)

Sign in to read the report!

We have detected you are an active member!

Ray: f5f1fa-516a4b-ca73de-1b9a8a-fb0244

Want to receive Regular Market Updates to your Inbox?

I am your default error :)
Trending tickers in our research