Good Evening:

Markets had a strong week and rallied robustly on Friday. Stocks rallied into the close and ended near sessions highs. All sectors were in the green. The top three sectors on Friday were Materials, Financials and Consumer Discretionary. Earlier in the week Defensive sectors like Healthcare, Utilities and Real Estate showed relative strength, but everyone joined the Party on Friday, even Energy which was down big for the week. The University of Michigan Consumer Survey showed new record lows in consumer sentiment this morning. Consumers across many different categories expect economic weakness. While inflation expectations for the year ahead remain at the elevated level of 5.3% the crucial long-term inflation expectations moderated significantly to 3.1%. This is an encouraging sign for those who fear inflation expectations are becoming unanchored. Earlier in the week, Powell referred specifically to this figure in the last report as “quite eye-catching.”

The Purchasing Managers’ Index for June was just expansionary at 51.2. A reading below 50 indicates that activity is contracting. Nearly 80% of surveyed consumers expected bad economic times in the year ahead. This reading today was only slightly lower than heights experienced in the 2008-2009 Financial ...

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