We found out  investor sentiment beat a hasty retreat back to deep bearishness after the biggest one-week improvement the prior week. However, investors put a finger in the wind, and felt a gust that suggests the hurricane is still coming.

No Brave Souls

Even in down sessions, there was evidence investors were easing back into the market, mostly focused on safer names listed on the New York Stock Exchange (NYSE). Unfortunately, that came to an abrupt halt and reversal yesterday. While volume was light, down volume was nine times greater than the up volume. That ratio speaks to panic.

Market Breadth	NYSE	NASDAQ
Advancers	553	1,230
Decliners	2,760	3,418
New Highs	12	25
New Lows	111	176
Up Volume	293.85 million	1.86 billion
Down Volume	3.84 billion	3.48 billion

Heat Map

I was looking at the topography of Mars, the infamous red planet with no signs of life. No sector was spared with growth getting slammed. The two consumer sectors held up best, but not enough to even be considered moral victories.

There were no green shoots outside of Home Depot (HD) and a few others…it was simply a brutal day.

Bracing for More Inflation

Perhaps one reason for the late rush for the exits was the realization headline that the Consumer Price Index (CPI) has only come in below the consensus twice since Nov 2020 – the last time was the February 2021 release.

Core Consumer Price Index (CPI) has only come in better than expected twice as well.

We’ll see what happens, but here’s the current trend:

Portfolio Approach

We closed positions in Consumer Discretionary, Financials, Materials and Technology in our Hotline Model Portfolio.

Today’s Session

May CPI year over year rocketed +8.6% (highest since December of 1981).  Consensus was 8.3%.

• Energy prices +34.6% (gasoline +48.7% and fuel oil +106.7%, the largest increase on record)
• Electricity +12% and natural gas +30.2%
• Food costs surged 10.1% (proteins +14.2%)
• Shelter +5.5% (most since February 1991)
• Household furnishings +8.9%
• New vehicles +12.6%
• Used cars and trucks +16.1%
• Airline fares +37.8%
• Core y/y +6.0% consensus +5.9%

• Monthly Headline +1.0% consensus +0.7%
• Monthly Core +0.6% consensus +0.5%

Real Wages Really Awful

The big problem is people got addicted to spending when all that free money was gushing, and now, they cannot stop.

 Wages are soaring but not keeping up with inflation, except for teenagers, but they aren’t making big money (they are spending it).  Job switcher are fetching 7.5% raises but inflation is +8.6%.

 

Comments

The elites at the Fed and the Biden administration need to go to the store and buy something. What we have is the government failing the people AGAIN! Larry Leonard on 6/10/2022 9:58:57 AM

The Biden administration and the leftist elites couldn't be happier over the results of their efforts to raise energy costs to drive consumption down, regardless of how devastating it is to the lower 90% of American citizens. Their plan to bring equity to America (lower the standard of living of citizens to global averages) is also right on schedule. Their only concern is whether they can get enough done to lock in their plan before the 2022 and 2024 elections. John Manley on 6/10/2022 11:00:28 AM

Looks like wstreet got a bunch of "get me out!" calls and down limit orders. Happens every time in a bottoming prosses. I wish I could create regular sale prices like like the biggest Brokerage house's can. After 30 years (slow learner) I have learned to always have some cash! Donald McArthur on 6/10/2022 11:36:36 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.