- One man's ceiling is another man's floor.
- Paul Simon
Our Call
We stated in our amended piece that if our call for a market correction were to happen, it would begin after the Independence holiday. For the first week, the Industrials were down a half percent on average volume. The S&P 500 was up a full percentage point on average volume. The transports were up a half point on low volume. NASDAQ was neutral with low volume. The Russell (IWM) was down a half point on low volume. Bottom line: Little change on summer trading. No clear trend.
Next Week
This period begins the earning season. The banks will lead the parade. We see them making big money, but the real effect upon the market will be high tech. They spent a ton of money on chips for their data centers and AI. This will impact the market. We know from their recent actions that they are feeling it in the bottom line. They have begun layoffs and they are seeking money through notes. This is a red flag.
Related Aspects
At the end of the month, the Fed under Warsh will have his first meeting where he cannot BS the public. Wherever he directs the Fed, it will directly effect the market. If he shows that he intends to fight inflation, a raise in interest rates will have consequences. Higher rates will attract bond money. This will take money out of the market into the safety of bonds. If he does nothing, this is something. It could show patience or a lack of a plan and conviction? If he lowers rates, he will make Trump happy, but this will hurt the dollar. King $Dollar has been very strong lately. Any fall will pump inflation that needs no pumping. Prices will rise across the board and the precious metals will awaken. News of our federal debt has been kept quiet as well as the rumors in private credit. We read this interesting thing about our debt. The US spends $24 billion each week on...Can you guess? Interest on our debt. This does not lower our debt which compounds, but it just services interest on the debt. All these stories will be back on the front page.
In addition...
...The market has seen a recent flurry of IPOs. The latest was the big firm from South Korea, SK Hynix (SKHY). The firm raised $26.5 billion. It became the largest foreign company IPO. It helped to pump the market last week and the week before SpaceX. The problem with these and all the other IPOs is that they take money from one stock to their stock. This is a form of distribution. When a man dances on his floor, the person below suffers the noise. When there is a sudden drop in price, the danger is that it can cause a catagious withdrawal. Then, there is the court battle between Open AI and Apple. These things happen along with fraud cases just before a market drop. We will see says the blind man...Peace.
