In Case You Missed It: Key Charts for the Week:

By Mark Masterson on August 2, 2024

It has been said “a picture is worth a thousand words.”

Last week was interesting. 

Charlie Bilello noted on the interesting rotation that took place over the Last 12 Trading Days…

• Regional Banks $KRE: +19.3%
• Homebuilders $XHB: +14.7%
• US Small Caps $IWM: +9.5%
• REITs $VNQ: +5.1%
• Japanese Yen $FXY: +4.7%
• Energy $XLE: +3.5%
• Value $IWD: +3.2%

Yet, look at the names that were down….—

• US Dollar $UUP: -0.5%
• US Large Caps $SPY: -3.1%
• Apple $AAPL: -4.9%
• Netflix $NFLX: -7.5%
• Growth $IWF: -7.6%
• Nasdaq 100 $QQQ: -7.9%
• Tech $XLK: -8.8%
• Microsoft $MSFT: -9.0%
• Amazon $AMZN: -9.8%
• Google $GOOGL: -11.5%
• Semiconductors $SOXX: -13.5%
• Nvidia $NVDA: -14.5%
• Tesla $TSLA: -16.0%

The tech selloff has insiders taking some profits. 

Corporate insiders are dumping stock at the fastest rate in more than a decade https://marketwatch.com/story/corporate-insiders-are-dumping-stock-at-the-fastest-rate-in-more-than-a-decade-4cc5ed3a?mod=search_headline

Insidersentiment.com 7 28 29

No rate cut is expected tomorrow, but strong language towards a September cut is likely.

Very interesting chart below that shows the 2 year treasury yield in blue, and the Fed funds rate in red.

Historically, the 2 year has led the Fed funds.

It turned lower, and would suggest the Fed is behind the curve and will be cutting soon.

Yardeni Research 7 30 24

The Treasury Department said in a statement Monday that it now estimates $740 billion in net borrowing for July through September, down from a previous prediction of $847 billion released on April 29.

It’s being touted as a victory that they are borrowing less.

Yet, we are on pace for $3 trillion added to the national debt per year.

Remember, this week the total US Federal debt has officially hit $35 trillion for the first time in history.

Since 2020, the US has now added ~$12 TRILLION in Federal debt.

In other words, the US has added an average of ~$280 BILLION of Federal debt EVERY MONTH since January 2020.

This means that the US now has ~$105,000 in Federal debt for every person living in the country.

All while deficit spending as a percentage of GDP is currently at World War 2 levels.

Kobeissi letter 7 30 24

I mentioned that the market has broadened out a bit over the past few weeks.

Take a look…..

Better than 70% of constituents are outperforming the S&P over the last 20 days, not only good for the most potent reading of the last several years, but as robust as any thing we’ve seen since 2001 – according to Strategas

Strategas 7 30 24

A refresher…..

What happens after the first Fed cut? It all depends on the strength of the economy.

If the economy does not enter a recession, the S&P 500 averages gains of about 12.5% over the year that follows.

If the economy does enter a recession, the S&P 500 averages losses of about 13%.

Goldman Sachs 7 25 24

Tech is looking to bounce today on Fed day.

The Magnificent 7 stocks have now erased a combined $2.6 TRILLION of market cap over the last 20 days.

Below is a look at the drop over the past 20 days for the “magnificent 7” names representing the largest tech names in the index……

We shall see later today if Powell will keep the bounce going, or reverse the early market momentum off of the lows…..

7 31 24

The rally in tech may just be a bounce off of the lows though.

As Strategas points out – tech is not yet oversold….

Strategas 7 31 24

So – expect volatility in both directions here in the third quarter.

Perhaps the bounce starts today via Powell’s push.

After all, markets rarely top in July.

After the bounce, more weakness into the October window ahead of the election….then the year end bounce as often happens?

Strategas 7 31 24

Several folks I follow have commented that Powell is getting behind the curve and probably should have cut in July given the jobs data and slowing economy.

Powell expects a soft landing, and they do happen – but they are rare.

The stats…..There have been 13 tightening cycles since 1954

Hard landings = 10

Soft landings = 3

Game of Thrones

I posted that markets rarely top in July yesterday.

Today I show you that markets most often bottom in October…..

October lows…

-market likes to bottom in Oct

-did so in 2022 & 2023

-surely not 3 in a row in 2024??

Callum Thomas 8 1 24

Also – as noted before about the yield curve inversion….

Once the inversion ends and the yield curve normalizes – and de-inverts – a recession is near historically.

We are now very close to de-inverting the yield curve.  Notice that the line is almost back above the 0 level.  It may happen today with the rally in bonds.

Keep in mind – rate cuts are now the norm.

In fact, we saw 35 rate cuts around the globe last month….

Bank of America 8 2 24

The 10 year bond yield is crashing lower over the past few days – post Fed meeting.

We went below 4% yesterday, and it is nearing 3.85% this morning.

Investors are running for cover in bonds ahead of a possible economic slowdown.

Gold has broken out above the $2500 level.

We’ll see if it can continue – but today’s decline in the dollar should be a tailwind for gold.

Again – investors seem to be running for gold ahead of an economic slowdown.