Morning Roundup

By Mark Masterson on July 12, 2023

Good morning,

Below are the news items moving markets today:

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Executive Summary:

The Morning Roundups will be few and far between in the following week.  I’ll certainly update if anything important or consequential happens in or across capital markets.

The main event today is the CPI report.  As expected – it was lower and slightly better than predicted/expected….

• *U.S. JUNE CPI INFLATION RISES 0.2% M/M; EST. 0.3%; PREV. 0.1%
• Consensus = 3.1% / Actual = 3.0%

Here is a look a the price changes over last year (June CPI report):  You can see most of the downside came from energy prices. 

• Transportation: +8.2%
• Shelter: +7.8%
• Food away from home: +7.7%
• Electricity: +5.4%
• Food at home: +4.7%
• New Cars: +4.1%
• Overall CPI: +3.0%
• Medical Care: -0.8%
• Used Cars: -5.2%
• Gas Utilities: -18.6%
• Gasoline: -26.5%
• Fuel Oil: -36.6%

One area where inflation remains elevated is in credit card interest rates.

Credit cards issued by commercial banks have interest rates soaring close to 21% as of May, which is a record in Fed data going back to early 1970s…..

Not great for the masses…..

Liz Ann Sonders 7 12 23

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Articles of Interest:

• US economy:
  • US June CPI report to show lowest core inflation since 2021 (Bloomberg, FT)
  • Americans cutting back on hygiene products, everyday products as benefits wane and budgets tighten (Bloomberg)
  • US consumers planning double-digit cuts to their budgets for back-to-school supplies (FT)
  • Workers experiencing shorter hours, more involuntary part-time work in latest sign labor market loosening (Washington Post)
• Corporate:
  • Judge’s ruling that Microsoft can close Activision deal could spur more M&A (link)
  • Global PC shipments fell 12% in Q2, an improvement from the 30% declines the past two quarters (Reuters)
• Geopolitics:
  • NATO agrees to faster track for Ukraine membership (Bloomberg, BBC)
  • Yellen’s China trip faces political headwinds as anti-China sentiment grows (Reuters)
  • North Korea fires suspected missile ahead of South Korea, Japan summit (Reuters)

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Charts of the day:

Another measure of “fear” or concern about markets is the put/call ratio.

Investors buy puts when they are looking to hedge the market downside.  They buy calls when they are betting on upside.  The ratio today is as low as its been since……November of 2021 – which marked the near top of the bull market.

Put /Call Ratio is crazy low….

Northmantrader.com 7 12 23

Starting to see commodities come to life here as the dollar breaks down…..

Here is the CRB broad commodity index.  It is getting very close to a breakout of the downtrend…

It needs to push above that blue line – in the red circle

Here is the Goldman Sachs commodity index.

It has broken through – blue circle.

This index is heavy in energy – which has had a nice bounce the past few days – pulling up the broad index.

If these get going – you can expect inflation to start rising again in the months ahead.

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Quote of the day:

“The safest and most potentially profitable thing is to buy something when no one likes it.”

— Howard Marks