The session was doomed, but the type of selling expected never materialized yesterday, as a lot of investors dived into Energy (XLE), which has a great risk-reward ratio. However, I like the action in industrials (XLI) as well.

It’s amazing how much Wall Street is dismissing the bounce as run-of-the mill. There’s a good chance of another big dip, although I do not think the June low will be tested.

The year began with a fair amount of optimism, then came the reality checks. First, the stubbornness of inflation, and now, confusion over how well the Fed will engineer its soft-landing effort. The median target for the S&P 500 was 5.050 in January and is now 4,300, which would mean the bottom was put into place in June.

Inflation

While all eyes are on the shift to recession watch, there are signs it might be too early to look past peak inflation. For example, look at the ten-year breakeven and the 5Y/5Y Forward, which have turned higher.

Consumers Keep Spending

But we got the Redbook retail sales report, which might reinforce inflation but suggests it’s premature to say a recession is here or inevitable. I’m sure part of the story is the pullback in gasoline prices freeing up funds to go shopping. 

But ironically, therein lies the main problem – we never stop spending even with doom and gloom around the corner.

The Richmond Fed Manufacturing number was -8 consensus was -4. So, it’s a tough stretch.

Portfolio Approach

There are no changes today, current Buys remains suspended.

Today’s Session

July’s durable goods order holding up, despite weaker Capex plans in business surveys.

• Durable goods orders unchanged; consensus +0.8%
• Orders excluding-transportation +0.3%; consensus +0.2%

Business investment’s rate growth remains steady but slowed to 0.4% from 0.9% last year.

The housing market has already shown clear signs of weakness. We are waiting for pending home sales at 10 am ET.

Comments

That business activity report is unreal. Only way it changes is through the ballot box. Craig Michaels on 8/24/2022 4:37:35 AM

I paid all my loans in full all my life...now 70 years af age. They should likewise pay the debts they incur whether it be a student loan, car loan or mortgage. Stewart on 8/24/2022 9:57:33 AM

A major move to socialism/communism, coupled with the certain tuition increases to come, along with instant inflation. g leff on 8/24/2022 9:58:11 AM

I paid all my loans in full all my life...now 70 years af age. They should likewise pay the debts they incur whether it be a student loan, car loan or mortgage. Stewart on 8/24/2022 9:58:35 AM

Democrats - the gift that keeps on giving. Problem is, we're the ones paying. Great windfall for those still owing on student loans. Slap in the face to the millions who have kept their word and repaid their debt. Bob Marchi on 8/24/2022 10:04:03 AM

I sure am happy that I do not own some of the companies that loaned that money. Of course, this will not be the last thing the cretini in DC will do to win the mid-terms. Call your Representative and ask for a handout! vittorio on 8/24/2022 10:09:55 AM

Abomination! I worked hard through school; paid my tuition and loans off. I paid off loans for my children, and they paid off their portion of student loans. So now I'm a chump and have to pay for doctors and lawyers. Debra C. Kipp on 8/24/2022 10:24:38 AM

HELL NO, they'll never leave mommy's basement and get a job JOHN CHIODO on 8/24/2022 10:29:30 AM

Debt like any other lesson in life is something we should learn there are consequences for. I saved, worked during college, and my parents paid my student loan until I got a job and paid it off. This debt should not be paid for by some who are not even going to college. It will not teach anyone a thing about responsibility. Marney McKee on 8/24/2022 10:31:04 AM

NO! Not right! Why? They borrowed it they should repay it! Schools that kept raising tuition are part of the problem. Bad start to the beginning of life making many irresponsible financially, college isn't worth the price! Lorin Kenfield on 8/24/2022 10:38:49 AM

This is a biden's effort to boost his popularity among these college grads and non grads with ongoing debt! Bail me out and I'll vote for you! If I remember, huh, what! Duh. The borrower's need to pay for their debt and then the colleges who sold these loans to the government! NO debt reduction! Lorin Kenfield on 8/24/2022 10:45:29 AM

This idea of granting student loan forgiveness or any loan forgiveness is an extremely bad idea for many reasons. It rewards the wrong kinds of behavior and is fundamentally unfair to all the people who diligently paid off their student loans including my own two daughters. It also fails to deal with the source cause of this mess....the obscene and runaway amounts of tuition being charged by colleges and universities, a mess created by our own government. Bob Cayia on 8/24/2022 10:57:21 AM

There is not going to be any debt forgiveness. This is a transfer of debt to the US taxpayers. This cannot be constitutional. Above all, it’s just not ethical or fair. Debby Deering on 8/24/2022 11:05:45 AM

Waiving student debt is totally unfair to everyone that has paid their debts. How about giving me a new loan and forgiving it? Joe Biden is the worst President in American History. Jim Weaver on 8/24/2022 11:24:30 AM

Why not just forgive everybody's debt? We can all start over again! Charles Haselberger on 8/24/2022 11:52:56 AM

what about all the others who paid all their debt? After getting $10,000 of their school debt forgiven, will they start asking for the full amount; teaches them not to be responsible for their actions. william slutz on 8/24/2022 12:31:02 PM

Most ridiculous policy yet from this administration. Spend more money from the middle class to pay for the elite. I've paid my way all my life and should be able to depend on my government to demand the same from others. Guess a cell phone, free stimulus money, and extended unemployment weren't good enough bribes for votes. John R on 8/24/2022 5:23:34 PM

Can I get a $10,000.00 refund on my student loans I paid off. Wait! I also received Pell Grants. Can I get a $20,000.00 refund on my student loans I paid off! Troy D on 8/26/2022 10:32:12 AM

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