Chinese GDP last night showed that China has returned to growth +3.2% – The Shanghai Index however traded down a hefty -4.5% overnight. Likely consolidating recent gains – China remains bullish trend.
US and European Equities traded down overnight, perhaps tracking China. US Retail Sales and of course Initials Claims will be in focus this morning. Yesterday we noticed the growth vs value rotation perhaps taking place in stocks. The NASDAQ traded flat to lower all day, while the Small Cap index ripped for a nearly 4% gain. Pretty obvious what was taking place. The NASDAQ for the first time since March has begun to show some signs of intermediate term top. However, we still don’t think you play for the downside here, so long as tech is a top long in the model and we remain bullish trend. We’ve been bearish on U.S. growth, bullish on U.S. inflation and we think the markets has more than satisfied our projections up to this point, and there’s likely more to come as we move deeper into the back half of the year.
The ECB met this morning as well, here are the highlights:
Commodities are correcting mildly this morning. Copper has shown some signs of a near-term top, but we’ll absolutely be a buyer towards the low end our target range. Oil, not much to speak of there – dead market at the moment, chopping in a $1.00 range.
Soybeans- something potentially explosive could be happening here. Not only does it fit within the lens of our Stagflation call, but also news yesterday of China importing a record amount of Soybeans in June. We’re bullish grain, and yes I may have pulled the plug too soon on our Corn trade, but Corn doesn’t look nearly as ready to blow higher as the beans do.
Gold/Silver- small corrections for both this morning. Silver likely to continue to outpace Gold in % terms going forward.
Not much else to discuss outside of that. Be in touch.
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