July 29, 2022
Good morning,
Financial news broadcasters and headline writers alike are flummoxed over the equity optimism rolling on this morning (Futures + 0.5%) in the face of broad economic pessimism. Even more perplexing is the massive beat from European GDP figures this morning and the irony of European growth crushing that in the U.S. despite its vulnerability to Russian energy and sanctions. This is the market fooling the most (July 18th ‘s Morning Note).
The rally that started two weeks ago on surprisingly high CPI number has the S&P 500 Index (SPX) up about +9%. Recall that there is little in the way of technical tape resistance up to 4200 on SPX – that is another +3% from last night’s close. There has not yet been sufficient evidence to classify the current rally as something other than a bear market rally, but it is early yet. We have to give it more time.
It seems reasonable to expect a volatile day across a range of assets as it is the last day of the month – in the midst of a possible narrative shift. Let’s not assign too much importance to today’s action. Have a good weekend.
Be well,
Mike