Today we have July inflation data out with the CPI which usually means a larger up or down opening. Pre-market is showing a decent bounce from this week’s pause. Given the strong move last week and rest this week, history suggests an upside resolution to new August highs. That is just a very short-term play. While price remains strong, the intermediate-term has not resolved itself and the challenges I continue to write about exist, even as many of our models have maximum or significant stock market exposure.
Someone asked about last week’s employment report which I forgot to mention on Monday. The economy lost 23,000 jobs where expectations were for a gain of 83,000. This was a surprise although it fit in with my ongoing thesis for some softening during the second half of 2026. It also was the first shot across the bow for what I believe will be a Fed pivot to neutral and then dovish with the next move being a rate cut. I know. I know. No one agrees with me. That’s okay.
Getting back to jobs, the loss was led by 50,000 jobs in government education and 40,000 in hospitality where the World Cup was likely a factor. The unemployment rate actually fell to 4.1%, but not for the right reason as Americans continued to exit the workforce. FYI, May’s initial report was also revised lower by 66,000. So, we do have some softness in the employment picture. Next month’s report will be even more heavily scrutinized.
Finally, someone asked about the opportunity in gold and gold equities I wrote about at the end of July. That setup has passed and risk now equals reward after the big rally. Our strategy has systematically reduced exposure over the past three trading days into the strength. Another opportunity will require a decline and stability which isn’t likely for at least one to two weeks at the earliest.
On Monday we bought SSO and VST. We sold QLD and some MQQQ. On Tuesday we bought TQQQ, QLD, more MQQQ and more XLU. We sold IBIT, PCY, TQQQ, some GDX and some PINK.
