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“If we really want to know who is responsible for the mess we’re in, all we have to do is look in the mirror.” – Ross Perot
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Less than three months after President Trump unleashed “Liberation Day” on the world and sent the S&P 500 plunging by nearly 20%, a new phrase has made its way back into the lexicon: new highs. Equity futures are higher this morning, with the S&P 500 trading at record highs following a strong session in Europe. Treasury yields and crude oil are modestly higher, while gold is plunging over 1% as investors continue to exit safe-haven trades.
For these new highs to hold through the closing bell, we still have to navigate a decent amount of economic data for a summer Friday with reports of Personal Income, Personal Spending, and PCE at 8:30, followed by Michigan Sentiment at 10 AM. The 8:30 data was mixed but mostly in the wrong direction. Personal Income came in sharply weaker than expected, falling 0.4% versus expectations for an increase of 0.3%. Personal Spending fell 0.1% compared to expectations for an increase of 0.1%. On the inflation front, headline PCE was right inline with expectations at 0.1% m/m and 2.3% y/y, but the core reading was a tenth higher than expected on both a m/m and y/y basis at 0.2% and 2.7%, respectively. The initial reactions to the data have been pretty muted.
Looking at US equity market performance, we were struck by how uniform the gains have been over the last five trading sessions. All fourteen of the index ETFs in our Trend Analyzer screen have gained at least 2%. At the top of the list, both ends of the market cap spectrum are represented with Microcaps (IWC) up 3.4% while megacaps in the Nasdaq and S&P 100 are the second and third best performers with gains of 3.26% and 2.90%, respectively. Relative to their short-term trading ranges, all fourteen index ETFs are at similarly overbought levels, and they are all at least 4% above their 50-day moving averages. The only area that returns haven’t been uniform is on a YTD basis, where the Nasdaq 100 is up 6.8% while small caps are in the red.
