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Yesterday, we witnessed a short burst of momentum - anchored by stronger banking earnings and improved expectations around rate hikes in July.
And then... Apple Inc. (NASDAQ: AAPL) happened.
The company announced plans to slow down hiring thanks to the ongoing fear of higher interest rates and a slower global economy. Apple will also reduce its spending in some divisions, according to various reports.
The news pumped the brakes on the near-term rally quickly and pushed a momentum pop into a momentum flop. I quickly had to cut some long positions after Apple effectively kneecapped the Dow, S&P 500, and Nasdaq.
I'll be on Midday Momentum to explain that so goes Apple, so goes the market. The stock is part of more than 300 ETFs, and remains a core holding of plenty of institutions.
And in the World's Biggest Trade, we'll look to regroup and look for another downward move in the broader market.
Momentum remains red heading into Tuesday.
This morning, my watchlist includes AAPL, GIS, WMT, NFLX, HLT, ARKK, SARK, TARK, and CHPT.
Chart of the Day: What's CPI... Really?
I've shown Shadow Stats inflation for June pointing north of 15%, a statement echoed by Peter Schiff. The "official" CPI number from the Labor Department was 8.7%. But check this out...
The Case-Schiller index tracks the cost of housing and rentals. Pantera Capital incorporated housing into the CPI to give another alternative - and likely more accurate - measurement of U.S. inflation: 12.9%.
This is a very important chart. It signals to me that inflation will continue to run hot throughout the summer. As I've noted several times, the latest CPI date has just started incorporating large annual rent gains.
Given that rent is a major part of Americans' budgets, I wouldn't be shocked to see a prolonged challenge with elevated prices. Also, energy prices are starting to push higher again after Iraq's energy minister pronounced that crude prices would remain above $100 for the rest of 2022.
- Look for earnings from Netflix Inc. (NASDAQ: NFLX), Johnson & Johnson (NYSE: JNJ), Halliburton Co. (NYSE: HAL), Lockheed Martin Corp. (NYSE: LMT), Cal-Maine Foods Inc. (NASDAQ: CALM), and Ally Financial Inc. (NYSE: ALLY).
- Microsoft Corp. (NASDAQ: MSFT) will host an event for its cloud partners. I wasn't even aware it had partners. I figured it would just run everyone out of business and then create some puppet companies to do its bidding.
- The Bloomberg Crypto Summit happens in Manhattan. That should be awkward for anyone with a Celsius badge.
- The day before Tesla reports earnings (and talks about the impact of COVID-19 lockdowns in China once again), Twitter Inc. (NYSE: TWTR) will kick off its first hearing on a motion to expedite its trial to force Elon Musk to purchase the company. That's clearly on purpose, right?
I'd love for you to join us in the World's Biggest Trade where we scour the globe in search of the day's winning trade. Take part in shorting the world. A prolonged downtrend in the stock market sets us up for repeated wins going short.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.