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Afternoon Note

A Sigh Of Relief

By Charles Payne, CEO & Principal Analyst
7/15/2022 1:45 PM

The market is in a sigh of relief mode with the better-than-expected news this morning on earnings, retail sales, and consumer sentiment. 

There was a slight bounce in July’s University of Michigan – Consumer Sentiment, which came in at 51.1 vs. 50 expectations, led by current conditions improving.

Five -year preliminary inflation expectations came in at 2.8% vs. 3.0% consensus. 

For me there are two important questions.

More information has to be digested, but it’s a clear heavy sling following this week's huge inflation data. At some point, the market will see real relief.

Today, the Dow is ahead of other indices because United Health Care (UNH) is the biggest component of that index. 

The markets are bifurcated between value and higher risk tech names (unprofitable tech). Banks are ripping with Wells Fargo (WFC) and Citi (C) rallying following this morning’s earnings, and Financials are faring the best, what a difference a day makes. Meanwhile, rotation out of defensive names continues, and Utilities is the only S&P 500 sector in the red.

S&P 500 Index



Communication Services XLC



Consumer Discretionary XLY



Consumer Staples XLP



Energy XLE



Financials XLF



Health Care XLV



Industrials XLI



Materials XLB



Real Estate XLRE



Technology XLK



Utilities XLU




This would be a great way to finish that week, where the number should have been anticlimactic if Wall Street consensus was as smart as Main Street knowledge (nobody in the regular world was shocked).

We want to keep legging in cash this summer.

Labor participation is low, money supply is ridiculously inflated, the president is talking about another spending bill, 14 states are planning on another stimi check, we're not planning to invest in domestic oil, we're in a recession, etc, etc, etc.

I'm still bearish through the end of the year.

Jeffrey J. Riddell on 7/15/2022 1:57:24 PM

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