Good morning,
Two big stories while we were away.
The first, is that the Fed held its first meeting under Kevin Warsh. In sharp contrast to the reason he was appointed, the meeting seemed to further solidify that a hike is the next move, and everything from September forward is live.
Ironically, over the past two weeks, oil completed its round trip from where the spike started at the beginning of March, and yields have seen a similar decline. The combination of a tighter Fed and already lower inflation expectations broke the dollar out of its 14-month range, a potentially bearish development for most risk assets.
The second story, is that everyone has now woken up to the lagging Mag 7 and the dominance of small caps. This does mean that trend is over, but I think it’s important to recognize it’s no longer a secret.
The two most important questions going forward tie the two stories together.
Can the rest of the market continue to work with a stronger dollar?
How much downside could the S&P 500 have if semiconductors join the current trend of technology deterioration?
This week’s report will review:
The most important charts while we were away
Winners and losers from the move down in oil and rates
More cracks in the memory trade
Changes to the Dow
Healthcare and biotech
July seasonality
and more!
