Hi YXI friends,

We saw a fairly benign set of CPI report on Tuesday, with the Headline figure coming in line with estimates but the Core CPI below consensus.

However, the Fed is most likely unmotivated to cut in the July FOMC. Moreover, we need even better inflation reports in August and September before the Fed could consider cutting in September.

Of course, Trump will not like this. Machiavellianly, if Trump wants to further pressure Powell to resign with the misconduct investigation, this is the best month for it.

Powell could do a shock resignation announcement at the July 30th FOMC Press Conference. The new Chair candidate can be introduced by the time of Jackson Hole (August 21-23), with some paradigm shifting announcement to induce a blow-off top.

So we speculate.

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Let’s dive in!

Table of Contents

• 1. June CPI Review

• 2. SPY, QQQ, (SPDW)

• 3. FOMC Projections & Rates Futures

• 4. Summary Of Today’s 4-3-2-1 Ratings

• 5. USO

• 6. 30-Year Treasury Yield & TLT

• 7. Bitcoin (BTC) & Coinbase (COIN)

• 8. Gold (GLD, GDX)

• 9. Magnificent 7 Stocks

  • Apple

  • Amazon

  • Alphabet

  • Meta

  • Microsoft

  • Nvidia

  • Tesla

• 10. Other

  • SOXX

  • PLTR

• 11. Trade Updates & Monitoring

• 12. Notable ETF Flows From Previous Day

DISCLAIMER: This newsletter is strictly educational. 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. 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.

1. June CPI Review

June’s Headline CPI rose by 0.3% MoM, driven by a big surge in energy prices due to the Israel-Iran conflict. This brings the YoY figure to 2.7%. As oil prices cooled in the aftermath, we could see a reversal in the Headline figure next month.

June’s Core CPI rose by 0.2% MoM, below estimates. Shelter costs cooled to 0.2% MoM and while commodities (ex-food and energy) also rose by 0.2%.

Overall, while the YoY figures rose from last month, it is a fairly benign set of report. However, at the 2.7% Headline CPI and 2.9% Core, the Fed is likely unmotivated to cut this month. More on the Fed Funds impact in Section 3.

2. SPY, QQQ, (SPDW)

SPDW is updated every Monday.

SPY (https://www.tradingview.com/x/efxV35bw/)

SPY opened at a new all time high on Tuesday, only to get sold into the close with heavy volume. It seems that the 1.618 extension is becoming a natural distribution region here.

If correcting, we could see a pullback into the $575-595 region, which likely sees a lot of dip buying rather than a total collapse.

In terms of valuation, SPY trades above the highest PE ratio in February, but marginally below the 2020 high.

However, the high P/E is partly justified by higher earnings growth expectations. At an NTM PEG of 2.58, it is just above the long-term mean of 2.38. In short, earnings growth needs to hold up in the coming quarter for the equity market to sustain its valuation.

QQQ (https://www.tradingview.com/x/7ONdkA2D/)

QQQ also opened with a new all time high, but got sold into the close with reasonable volume. For risk management, a correction from here could find support in $510-525 region, where the volume profile is the densist.

3. FOMC Projections & Rates Futures

FOMC Projections

We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.

Fed Funds futures actually priced away 5bp of cuts for the September meeting. With each new piece of economic data, if the numbers don't significantly align with the Fed's goals, traders face the gradual market repricing that there will be no interest rate cuts in upcoming meetings.

3-month SOFR Futures Yields

4. Summary Of Today’s 4-3-2-1 Ratings

SPY, QQQ, BTC, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR, TLT

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