Video summary
The market is currently celebrating a significant milestone as the S&P 500 closes at all-time record highs of approximately 78.26, marking a remarkable surge from July 30th when it traded around 73.31 in just under two weeks. This rally has been particularly strong for growth stocks, with the NASDAQ 100 gaining over 400 points to reach within about 700 points of its own record levels and posting a gain of roughly 1.4%. While the broader market rejoices at these inflation-cooling data releases that have eased yield pressures, there is some divergence in performance; the Dow Jones Industrial Average has experienced slight selling pressure this morning after dipping below recent lows, whereas small-cap stocks represented by the Russell 2000 remain positive with a gain of about one-tenth of a percent.
A key driver behind today's market optimism was the release of relatively light inflation data from both CPI and PPI reports, which have successfully reduced expectations for aggressive interest rate hikes in the coming months. Specifically, the Producer Price Index (PPI) showed that headline inflation rose only 4.7% year-over-year after previously climbing at a faster pace, while core measures excluding food and energy are trending downward with monthly increases of just 0.2%. This cooling trend has shifted market probabilities significantly regarding Federal Reserve policy; whereas there was less than a quarter chance the Fed would hold rates steady last month, that probability now stands above two-thirds for their September meeting, though markets still price in potential hikes later into December as they digest upcoming economic data through August and early September.
Despite the bullish sentiment on equities, certain sectors like gold and energy miners are facing headwinds due to a strengthening dollar and elevated yields following the positive inflation news. Gold has dipped by over 1% while the GDX semiconductor index pulled back more than 3%, even after experiencing an impressive run of gains earlier in the month; however, analysts note that this recent pullback is occurring on lighter volume compared to previous weeks and does not necessarily signal a reversal of the broader trend. The volatility indicator known as the VIX has also ticked up slightly from its lows, suggesting some nervousness or profit-taking after three days of strong gains, yet the overall market structure remains robust with no clear signs of weakness despite these minor fluctuations in specific asset classes and currency values.
Read the full video transcript
Good afternoon, folks. Tommy O'Brien
coming to you live from TFN. Just after
3 PM Eastern time. About 60 minutes left
to go in the trading day. And we got S&P
at all-time record highs for a close
right now, folks. If we're there, 78.26.
We reach a high in the futures intraday
at 7838. And yeah, we got PPI numbers
coming in light. Yields ease a bit. the
market taken some of those possible
hikes out of the pricing in terms of
where the Fed is going for the next few
meetings and then some and we'll get
into it but equities rejoice and yeah
S&Ps you're talking about a record folks
you put this thing on a daily and how
about it man pushing higher pretty
remarkable that July 30th you were
trading at 7331 and here we are 500
points higher folks barely 2 weeks after
that date 782650 S&P is up by 7/10%
NASDAQ 100. You talk about a run. Yeah.
3,000 plus points, 30, 259 from the lows
of July 30th and today we're up by 400
points or 1.4% and we're about 700
points away from the all-time highs. The
Dow right now little bit of a
divergence. Got a little rotation, some
selling in the Dow this morning. You
drive down to 53,715
and right now we're barely in the green
by 28 points. and the Russell positive
by 4/10% or 11 points at 3,64.
So, as I mentioned, as I mentioned,
yields. So, this is a five minute.
Here's your 8:30 acceleration, right? We
get the PPI numbers and those numbers,
folks. Okay, the headline,
inflation cools on the wholesale level
as wardriven energy shock fades. Okay,
that's the headline from Bloomberg. But
the bottom line is on a headline basis,
the PPI was up 4.7%
year-over-year. And that's after being
up 5.5. And on a month- over-month
basis, it was flat. Now, that's the
headline. You take out food and energy,
year-over-year, it was 4.2%, month over
month.2%.
And you look at the trend, okay? The
black here is the headline number.
The yellow is the change year-over-year.
But more importantly, right, is that you
guys, these numbers coming down cuz the
headline just went up nothing for a
30-day basis. And the core is only up 2%
on a monthly basis. You multiply those
times 12. Well, 0 time 12 is zero and
0.2 time 12 is 2.4%. Both of them well
under where you are year-over-year
numbers. So the trend is going to be
down here. And yeah, that's the number
we get at 8:30. So that's the context of
the move you get, right? We got higher
higher price, lower yield.
You take a look at the volume, decent
volume coming into the final hour, 1.7
million on the 10ear right now.
with the higher price, lower yield. The
10-year still sitting though, folks, at
4.64. It's quite a number, man. 4.64.
And you get the dollar right near 100.
99.96
on the dollar. Negative by six pennies.
Okay, we were as high as 100.83. You
back off a bit. We zoom in on the
action. And that was the move this
morning. as in when you got lower yield,
you had a weaker dollar, but the dollar
shakes it off. Yeah, we're right back to
near 100.
And that's weighing on gold down by
1.3%, down 57 bucks right now. You got a
GDX down by 3.1%. But folks, it's been a
heck of a run. Okay, GDX is up 30% in
less than a month, right? Just a 382 of
the run we've had in the last month
could bring you back down to 85 in a
heartbeat. We're trading right now. GDX
off $287, off 3.2%. And yeah, a little
bit of an uptick in volume today for
sure. We're down by more than 3%. Okay,
but look at the volume we're going into
in terms of
last Friday
44 million. We're at 24. And then you
also had a sign of strength last
Wednesday at 41 million. You take a look
at the weekly right now,
we only have one trading day left,
right? It's 3:00. We get the close of
today and tomorrow. Yesterday you push
higher on the GDX on 145 million we'll
call it and we're at 81 million right
now.
So yeah, I don't think we're doing 60
million between today and tomorrow.
We'll see the price action but pulling
back on a little bit lighter volume on
the GDX. Jump over the VIX.
I was joking this morning and somebody
was asking me about what I think of the
S&P. I said the VIX is saying it's never
going to go down again, right? And yeah,
up a bit, up by 21 pennies, which is
interesting. Okay, we have an S&P right
now at record highs. We're up by 57
points. And you have a VIX that's
elevated from the last 3 plus hours of
trading yesterday afternoon.
So maybe we've seen a low at 1439, but
right now this market showing no signs
of weakness whatsoever.
And yeah, when we talk about rates,
yeah, we got a light CPI print on
Wednesday. We got a light PPI print this
morning. And when you look at the odds
that the Fed's going to hike or cut,
right now we're at about a 2 to1
probability that they stay put at 35 to
375. This is the September 16th meeting.
That's their next meeting. Okay, look
where we were a month ago. A month ago,
the market had less than a 25% chance
the Fed would stay put by this meeting.
Yeah. Now, we've had a meeting in
between then, right? But shifting
dramatically. Okay. And even a week ago,
there was only a 45% chance that the Fed
would stay at 35 to 375 at the September
meeting. That number at now 65% chance.
Okay. You go out to December, three
meetings from right now, there's still
some hikes in here, folks. Right. The
market only pricing a one out of three
probability that we don't get any hikes
in the next three meetings. Did you just
hear that? The market is assigning only
a one out of three chance that over the
next three meetings we remain by
December 9th at 35 to 375. Now really
you could get a hike and then a cut.
However you end up there, but this this
is priced in that somehow they don't
hike. And there's a 45% chance we get
one hike and almost a 20% chance that we
get two hikes. So still a lot of hikes
priced into this market following a a
light CPI, a light PPI. Now before the
September 16th meeting going a little
bit of fundamental here, but that's
what's in in focus today on inflation
data.
These numbers are also going to jump
around because we get the entire month
of August prior to that September 16th
meeting. So what's so interesting is
that when you go from the last meeting
to this September 16th meeting, we get
two full months of data. The most recent
data to that meeting going to be the
most important and that's going to be
August data. We'll get August non-farm
payrolls in there. We'll get another
inflation print for August and then
you'll have the September
Federal Reserve meeting. And so yeah,
those numbers are going to jump around.
You better believe it. But right now,
quite a shift. And not many would know.
All right, we know. You know, if you're
listening to this program, you know the
type of hikes priced into this thing.
But that's still a lot of hikes
considering where we are right now, cuz
we are making progress on inflation with
those numbers. No denying it. S&Ps right
now up by 53, NASDAQ 100 up by 382.
We're coming right back, folks.
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