NFPs Rebound, But..

S&P 500 refused further downside overnight, and it was clear within the first 30min that NFPs wouldn‘t force breakdown to lower lows. Thursday‘s uncertainty and unease over geopolitical escalations was reversed, and the hot (private) non-farm payrolls data were in the end bought – even if rate cut odds understandably retreated (Jun cut only 51% and two cuts by Jul only 22%).

The headwinds for stocks are cropping up – rate cuts getting farther away, corporate share buybacks pause and tax obligations settlements. One day of dip buying following a lower low doesn‘t change that. Is the top in? No, THE top isn‘t in, but local one probably yes, and odds of not totally shallow correction have increased.

Wednesday‘s CPI isn‘t yet to come in on the very hot side (over 0.4% headline and core), but it‘s the market reaction that counts – and yields are again on the move themselves, and it‘s to the upside. Oil and gasoline aren‘t declining, oil stocks aren‘t declining – and that means inflation is going up (I‘ve been saying since late 2023 that sticky inflation will come back to the vocabulary within a few short quarters, and that by year end we‘re going to be looking at 4% if not 4.4% CPI), and also consumer is going to be more squeezed (rising credit card debt isn‘t an issue affecting retail sales still as the economy remains resilient) and corporate earnings likewise, hence valuations (P/E) would also be pressured in 2H 2024.

Friday was a success in intraday ES terms, and also of course as regards real asset calls – just like I delivered Thursday a great oil pick, Friday I favored gold to surge. On the theme of revaluation against real assets, does it mean it‘s straight up? No, pullbacks can and will come, even unpleasant ones, but let‘s get to the charts one by one.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 more of them, with commentaries.

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Credit Markets

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The reprieve in yields is over, and seeing them trending up won‘t be as pleasant for the junk corporate bonds or the stock market in the near term.

Gold, Silver and Miners

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Gold caught up Friday following Thursday‘s rest, and even at these high levels, there is more upside left before taking a breather and correcting. Miners support the upswing amply, and silver is playing catch up just as it should (not only copper is on a fine inflation driven upswing).

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