Morning Market Update July 28

Providing Market Insights and Returns

Yesterday’s home runs don’t win today’s games. Babe Ruth

Huge day yesterday: Green across the board, the NAS led the charge with a +4% gain. It was interesting that after GOOGL & MSFT both missed they both rallied more than 6%. Likely due to the fed’s 75bps rate hike and some words that seemed more dovish. From the FOMC statement, “Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”. Wondering if this was a soft way of saying they are very prepared to stop tightening. Powell continued in his prepared remarks to say that their goal was sill to squash inflation but then took a dovish turn when he remarked on some of the weakening areas of the economy. It will be a divided market between those believing that peak hawkishness is over and those believing Powell will be able to take inflation down. The big thing to watch will be the jobless numbers over the next few weeks, with unemployment this low it is unlikely that anyone will classify this as a “recession” regardless of the GDP numbers that come out later today. The GDP numbers for Q2 come out this morning, in our opinion, they will decide the direction of the market today. On the hill, the Senate passed the Chips Act which hopefully will bring more chip manufacturing abilities to the US, and there has been some movement with the new climate and tax bill which may end the ability to tax carried interest as a capital gain (sorry hedge funds).

Equity futures in the red, DOW down 0.18%, S&P down 0.27%, NAS down 0.64%, Oil up 2% after low inventory data yesterday, Gold up 1%, and the US 10yr up @ 2.768%. Asian and European markets mostly up. JetBlue will buy Spirit, pushing out Frontier. A real mix in the earnings so far, so far we have had ~238 S&P companies report earnings with a 4.46% earnings surprise. Still a way to go and everyone will be watching the big guys AAPL and AMZN reporting today. Even with the huge rally yesterday, NYSE and NASDAQ new lows are exceeding new highs, an important indicator if a bottom is in yet.

We don’t think the market is giving all clear yet.

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