Weaker Employment – Lower Inflation – Rate Cut
I hope everyone had a memorable 250th birthday celebration! Some friends and I did a little reminiscing about the bicentennial from our days at Camp Laurelwood in between the parties and golf and trying to stay cool. Thankfully, the heat wave broke and some much needed liquid is falling from the sky today.
The June employment report was released on Thursday and it showed an increase of 57,000 new jobs, roughly half what was expected. The unemployment rate fell to 4.2% which was mostly because there were less people in the workforce. All in all, it was a weaker but not weak report which further reinforces my thesis that the masses are wrong about the Fed and inflation. I don’t care what the pundits or media opine. The next Fed rate move will be a rate cut as I have said all year. Inflation is not the issue. It got a little warm as I warned and it’s going to get cool. The yield on the 10-Year Note is below. It is back in the trading range where it belongs. If I am wrong then it is going north of 5% in the coming few months.
This is the third time I am showing the chart below. The sexy and popular NASDAQ 100 still cannot get above the area where I have the arrow. Until that happens, risk is elevated for a decline below the June low.
Stocks are set to open higher and bounce back from the drubbing late last week. On the surface that is an opportunity to reduce risk rather than add more.
Finally, the Trump Accounts for children born between 2025 and 2028 have launched. If you have any relatives that this applies to, I cannot more strongly recommend taking advantage of this incredible program. So many unbelievable philanthropists have donated tens of billions including two millions shares of SpaceX.
On Thursday we bought GDX, EMB, SSO, more MQQQ, more QLD and more IYR. We sold FSEP.
