Sethi Associates

Daily Summary – July 30, 2021 - The Chop Continues Please excuse any typos. The choppy market action which we anticipated coming into earnings season resurfaced today with stocks pulling back on the last day of trading for the week (and month) as the CDC suggesting the delta variant spreads "like chickenpox" and the continued dramatic rise of cases put a damper on things.  At least that was the news narrative (along with the continued issues in China, etc.).  Or maybe it was just markets being markets given the fact that BofA's  Michael Hartnett's latest edition of his popular weekly “Flow Show” series  gave Covid a collective yawn as it came in below China, asset bubbles, taper tantrums, and inflation as a worry.   IMHO, more likely it was some of that "peak growth" worry (Amazon a catalyst today) paired with some profit taking after what was a pretty good month for the larger caps (and Naz did finish green also in July although RUT was firmly negative).  O

  US Personal Income Jun: 0.1% (est -0.3%; prevR -2.2%; prev -2.0%) US Personal Spending Jun: 1.0% (est 0.7%; prevR -0.1%; prev 0.0%) US Real Personal Spending Jun: 0.5% (est 0.3%; prevR -0.6%; prev -0.4%) US PCE Deflator (M/M) Jun: 0.5% (est 0.6%; prevR 0.5%; prev 0.4%) US PCE Deflator (Y/Y) Jun: 4.0% (est 4.0%; prevR 4.0%; prev 3.9%) US PCE Core Deflator (M/M) Jun: 0.4% (est 0.6%; prev 0.5%) US PCE Core Deflator (Y/Y) Jun: 3.5% (est 3.7%; prev 3.4%) June personal income bounced back after declines in April and May, edging just into positive territory at 0.1%, as private compensation filled the void left by decreasing government payments. I'll go through specifics below. That said, with inflation (PCE prices, the Fed's preferred inflation metric) up a half percent (same as May), it means that real personal income (inflation adjusted) did fall by -0.4%. Spending also beat estimates with a 1% nominal gain (0.5% real) following May's -0.1%/-0.6% decline). I'll go thro

As we approach the open... - 7/30/21  Apologize for any typos. As we approach the open of US equity trade in NY, a risk-off tone pervades global markets with stocks and other risk sectors mostly down, bonds and other safe havens mostly up.  In the US, tech leads to the downside following poor reactions to big tech last couple days followed by a big down open on tap for Amazon after it missed revenue estimates and guidance.  NDX indicated down -1.18%, SPX -0.67%, RUT -0.5%. Stocks, though, are off the lows as we got better than expected personal income and spending (and PCE) numbers covered below. I honestly wouldn't be shocked to see us in the green later. Remember our summer caveat: One thing to keep in mind is after July 4th until around Labor Day, there is significantly less liquidity in the markets due to vacations, etc., so we can get more whippy action and "overshoots" in all markets. In U.S. corporate news: Amazon.com (AMZN 3364.00, -235.92): -6.6% after missing re