Yesterday was a good day, but nobody was under any illusion that the coast was clear. All sectors rallied with Energy (XLE) leading the way. But the S&P 500 is significantly below its 50- and 200-day moving average.

The S&P 500 has to get above 4,200 before there would be a sense of urgency the train is leaving the station.

Heat Map

Meta (FB) stood out from other mega-cap names, as the stock was down on a multi-million-dollar court decision.

I think the economy is turning lower much faster than what the data and mavens suggest.

Today we’ll probably see the Atlanta Fed update their second quarter (2Q22) Gross Domestic Product (GDP) forecast to negative growth – that would be back-to-back negative quarters, otherwise known as a recession.

Portfolio Approach

There are no sector weighting changes this morning.

Today’s Session

There is no follow through this morning from yesterday’s rally.  All the major indices are under pressure and futures are pointing to a decidedly negative open. Recession concerns and slowing global growth is weighting on the markets.

Even the latest gimmick out of the White House to suspend the Federal gas tax for 3 months is not doing anything to ease investors’ fears.  While the tax holiday may help reduce prices at the pump in the short term, as it would shave 18.4 cents off the price of a gallon of gas, and 24.4 cents for diesel, it could also bolster demand, and some Democrats say it would only add to the coffers of big oil companies.

President Biden is also expected to ask State and Local governments to do the same.  It should be noted that several states such as Connecticut, Georgia, Florida, Maryland, New York have already done so. 

WTI crude is down over 6% currently to $104 barrel and gasoline is down 2% to $3.70 a gallon. 

Treasury yields are taking a breather with the 10-year down 11 basis to 3.25% and the two year trading down 10 basis points to 3.12% ahead of Fed Powell delivering the Semiannual Monetary Policy Report to the Senate Banking Committee at 9:30am ET.

Mortgage applications were up last week by 4.2%. 

Purchase application rose 8%, but year over year, are down 10%. Refinancing declined 3.1%, as the 30-year fixed mortgage rate rose to 5.98%, up 33 basis points and the highest read since November 2008.