Cestrian Stocks Bulletin

By Cestrian Capital Research, Inc

Jay. JAY. Read That Report Again. Properly This Time! (Cestrian Stocks Bulletin #151)

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Cestrian Stocks Bulletin
Jay. JAY. Read That Report Again. Properly This Time! (Cestrian Stocks Bulletin #151)
By Cestrian Capital Research, Inc • Issue #151 • View online
Guy needs to spend less time tweaking the stops on his SPY puts, and more time reading stuff.

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Food And Energy, Jay. Food And Energy.
Here’s two completely different takes on the inflation situation in the US. They’re both in the same report, by the way, published by the US Government.
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High End Analysis Brought To You By Cestriancolor
Month-on-month PCE index, up. No arguing with that one. +0.2% from March to April, +0.6% from April to May. Fact.
Looking at the annualized trend, ie. April ‘22 vs April '21, May '22 vs May '21 - PCE index, flat ie +6.3% last month, +6.3% this month. Fact.
So, on a quick read - say when you were trimming your toenails or adjusting the stops on your SPY puts - you would say, well, we need to keep going with this rate hike stuff. Maybe jack it up a little to teach those dang overspending consumers a thing or two. STOP BUYING TOO MANY IPHONES PEOPLE and then rates can come back down some.
But what’s that you say?
You’re still on a two-generations-old iPhone?
Sorry, what now?
You’re worried you won’t be able to afford yams by Thanksgiving?
Huh. Then why are you all spending so much money?
< … incoming abuse … >
Oh.
Gas prices. Food prices.
Right. I see now. Because PCE excluding energy and food? Flat month vs. month for the last few months. 0.3% every month. And down on an annualized basis. Feb, peak at +5.3% vs Feb '21. May, +4.7% vs. May '21. OK. So, gas prices and food prices.
C'mon Jay.
Now, Jay’s buddies up the road are actually doing things to bring gas and food prices down. The futures market knows this. The bond market knows this. But apparently nobody has yet told stock jocks.
Crude futures are 20% off their recent high.
Wheat futures are 35% below their recent high.
And the 10-year yield is a lot less stressy too. About 15% down from its recent high.
Right now the S&P is thinking about what to do about that. It is sat at a key retracement level, the 0.382 retrace of the move up from the Covid lows. It can, of course, go either way from here. But it’s a difficult time to be a bull or a bear right now. Bears think they have the momentum, and they may be right. Bulls can point to all the factoids above and in addition may observe that, well, it’s a midterm election year and 401(k)s are all beat up. Not a good look.
We’re watching this stuff daily here at Cestrian Towers. If you’d like to watch along with us, sign up for our great-content-terrible-name-but-it’s-free-so-who-cares-really newsletter that covers top-level market developments - market direction, sector rotation, all that stuff. It’s called Cestrian ETF Select and you can sign up for it here. Even if you don’t play with ETFs, you’ll still like it. And we offer a 100pc money back guarantee for anyone who thinks the free version isn’t worth the money.
Read all about it, here:
Cestrian ETF Select | Cestrian Capital Research, Inc | Substack
Cestrian Capital Research, Inc - 1 July 2022
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