Once the early rally effort stalled and stocks began to drift yesterday, you could see the air immediately seep out of the balloon of hope. It was only a matter of time or quick time because the move hit terminal velocity in the blink of an eye. Energy (XLE) was higher, but other than that, it was really ugly.

Consumer Discretionary (XLY) continues to be crushed, which begs question if households can withstand raging inflation and then raging efforts to make everyone poorer.

I keep reading that there are $2.5 to $3.0 trillion in excess savings, and I find it hard to believe with savings rates plunging and credit card usage is surging. According to the Fed, the top 2% of incomes have 67% of excess savings using traditional Distributional Financial Accounts (DFAs). Goldman Sachs (GS) sees that number at 40%.

Commodities Stupor Cycle

Cotton has been slammed 35% since June 22^nd – a remarkable decline.

It’s not the only commodities under huge pressure, as 19 or 39 major commodities are now in a bear market (down from 20% from the high).

Commodities-sensitive stocks are down more than the Bloomberg Commodities Index. This is not the stuff of strong economic backdrops.

More Manufacturing Damage

The Richmond Fed Manufacturing Survey joined its brethren in a disastrous showing that saw all key components move in the wrong direction.

Wages remain elevated, along with prices.

Portfolio Approach

There are no sector weighting changes this morning.

Today’s Session

Futures are pointing to mixed open with the Dow up, S&P 500 relatively flat, and Nasdaq down slightly.

This morning we got a read on the economy with the final revision for Q1 GDP, which showed an ugly move down for personal consumption to +1.8% from +3.1% (q/q). Headline GDP moved lower to -1.6% from -1.5%.

Revision for consumption places Q1 GDP at the weakest since Q2 of 2020.

 

Fed Chair Powell is speaking now at the ECB’s 2022 Forum on Central Banking.  He said that the economy is "well positioned" to handled tighter monetary policy.  The futures are shaky. 

Comments

So Powell is spouting the BS party line.....Don't worry, Be Happy! What a lot of crap. And they all go along! Charles Haselberger on 6/29/2022 1:12:12 PM

I'm on board with DIAMONDS AMID THE RUINS Lourdes M Paz Kawaguchi on 6/29/2022 10:38:12 PM

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