This week investors return from an extended Independence Day holiday to see new economic data, the Fed's Chairman testimony before Congress, and start of Q2 earnings reports. Some data suggests that the second quarter ended with a hint of stagflation or a slowdown in economic growth while prices rose.
Renewed Co-vid fears drove some of the selloff on Thursday as Japan declared a state of emergency and said no spectators to be permitted at the Summer Olympics. The markets recovered solidly on Friday, but that looked a bit frothy.
Treasury yields and the performance of reopening stocks are moving together, suggesting that Co-vid and its variant could spook the market. The economic impact should be less than that from last year’s lock downs.
S&P Large, Mid, and Small Cap and Europe indices remain strategically Bullish; equal weight S&P 500, Mid and Small Caps weaker vs. the S&P 500. China in Bear market.
Equity Styles: Large Cap Growth continues leading vs. Large Cap Value, Small, Mid Cap and equal weight indices.
Sectors: Leaders - Real Estate, Communication Services, Energy, Technology. Laggards -Health Care, Materials, Consumer Staples, Utilities.
30-year US Treasury Bond, 10-year Note Yield downtrends may have halted July 9; 2-year note yield rose from 0.190 to 0.230. Yield Curve long term flattening may have halted, spread increased from 1.11 to 1.15.
Australian Dollar, the British Pound, and the Euro weakening may have halted. Gold rose after having fallen dramatically in June. The US Dollar rise may have halted.
Second quarter earnings start this week with big banks reporting first.
All of our short and intermediate-term market indicators reversed up from lows set on Thursday July 8, suggesting market gains this week. Systemic risk is not indicated.