Good morning,
If you’re in the cautious investor camp (like I am), it’s hard not to chafe at the rudeness of this equity market. It just keeps going up—almost in defiance of the headlines. The S&P 500 is up +0.04% so far this week and notched another all-time high yesterday, right in the middle of what was supposed to be a rough stretch for markets given the tariff noise.
Futures are down -0.50% this morning after President Trump escalated his rhetoric and issued more threats overnight. But lately, there’s been little correlation between where futures open and where the cash market ends the day. Just rude.
The big headline risks this week had been around the July 9 expiration of the tariff pause—but that can has now been kicked to August 1. The next wall of worry is earnings season, which begins next week. Investors will be watching not just results, but management commentary around tariffs and second-half expectations for their companies.
A reprint of my monthly letter sent to clients this week is below. It references the four outside market research groups often cited in these Morning Notes. Two of them updated their second-half outlooks yesterday. Essentially the same tone, just a bit softer.
- Ned Davis sees continued, but slower, growth with inflation still tame—but with rising pressure. They’re calling it stagflation-light (nothing like the ‘70’s)
- BCA (the most bearish of the group, with a 60% probability of recession) says they’ll drop their recession call if U.S. data shows clear signs of stabilization through the summer (reports into September). So far, it hasn’t.
At this point, we’re all very data-dependent—just like the Fed.
Have a great weekend,
Mike