Seems like impending PCE report will be closely watched.
Looks like this might not be a week for trading. Let's see... We have to be nimble and adaptable with a new Fed chair at the helm...right ?
Inflation & Geopolitics halts US Market rally ?
@JC888：
What was supposed to be an anticipated Mon, 22 Jun 2026 rally, has been completely derailed after: Peace talks in Switzerland collapsed on Friday without an official deal. Re-closure of the Strait of Hormuz as Israel continues its unilateral military campaign in Lebanon. With US market short-term sentiments interrupted by above events, will investors have to defer to last week’s US economic reports to justify any investment exercise ? Pertinent US reports out the week before: Mon, 15 Jun 2026 - Industrial production report. Tue, 16 Jun 2026 - Import price index. Wed, 17 Jun 2026 - US retail sales. Thu, 18 Jun 2026 - US jobless claims. US Industrial Production. YoY Report. US industrial output grew by +1.67% YoY for May 2026, missing market consensus of 1.9% but higher than April 2026’s upwards revised +1.37%. Production capacity utilization remains elevated across manufacturing, that makes up 78% of total industrial output. This shows that while supply chains are functioning, industrial demand is tight and operating near normal capacity limits, leaving very little margin for external supply shocks. MoM Report. However, before one celebrates, the MoM Industrial Production report paints a radically different picture. (see below) US MoM Industrial output for May 2026, grew by a meager +0.1% vs market consensus of +0.3% vs April 2026’s upwards revised +0.9%. Latest reading marks a sharp deceleration from previous month's strong expansion. This sequential slowdown indicates that while YoY momentum remains positive, monthly manufacturing activity is flattening out under the weight of current economic pressures. The rapid loss in short-term momentum signals that factory output is losing steam much faster than annual metrics suggest - not a good sign if you asked me. Import Price index. YoY Report. US May 2026’s Import Price Index YoY surged to 6.7% in the latest 16 Jun 2026 release. This figure represents a sharp acceleration from April 2026’s of 4.2%, continuing a consistent upward trend observed since March 2026, after hovering near 0% early in 2026. (see above) Incidentally, latest reading marking the largest over-the-year advance in nearly 4 years. The massive spike was fueled by a +12.5% monthly leap in petroleum & fuel imports, underscoring exactly how vulnerable the US domestic inflation landscape is to the recurring blockades in the Persian Gulf. The chart’s steepening trajectory clearly indicates inflationary pressures from imported goods have intensified significantly over the last 3 months. The rapid increase highlights a growing risk of imported inflation filtering into the broader US economy, likely exacerbated by recent global supply chain and energy logistics disruptions. MoM Report. The May 2026’s MoM Import price reading also surged by +1.9% MoM vs market forecasts of 0.9% increase vs April 2026’s +2.0%. Meaning, the May 2026 increase has outpaced market forecasts and continued an upward trajectory from April's. While fuel was the primary driver of the monthly acceleration, non-fuel import prices also remained elevated, signaling broader cost pressures across global supply chains. More importantly, acceleration of import prices suggests that global inflation is translating into higher costs for domestically consumed goods, that could trickle down to the consumer. And just like that, inflation is backed. US Retail sales. Consumer spending showed immense resilience as advance retail sales jumped +0.9% MoM to $763.7 billion, comfortably vs the 0.5% forecast vs April 2026’s downwards revised +0.4%. (see above) Core retail sales that control group used for GDP calculations (excludes food services, auto dealers, building materials, and gasoline stations to feed directly into GDP consumption calculations) rose by a robust +0.7%. Even when excluding volatile gasoline station receipts, broad-based strength in online retail and automotive purchases proves US consumer is still spending aggressively despite high interest rates. US Jobless Claims. The number of Americans filing claims for unemployment benefits fell last week, but remained at slightly higher levels, suggesting some moderation in the pace of job growth in June. Weekly claims. For week ending 13 Jun 2026, weekly jobless claims edged down by -4,000 to 226,000, pointing to a structurally tight & highly resilient labour market. The result came in just above the 225,000 estimates that analysts polled by FactSet had anticipated. Weekly claims had increased for 3 straight weeks, pushing to the upper end of the 190,000-230,000 range for 2026. (see below) Continuing claims. For week ending 6 Jun 2026, continuing claims rose by +24,000 to a seasonally adjusted 1.81 million. (see above) Analysis attributed it partly due to the rise in filings in Minnesota and also aligned with data showing many unemployed people are experiencing long bouts of joblessness. The median duration of unemployment jumped to 11.6 weeks in May, the longest stretch since November 2021, from 11.0 weeks in April, as reported by the Trump government this month. According to Citigroup economist Gisela Young, she expects weaker job growth and higher unemployment rates in the coming summer months. Summary. Taken together, to me above reports signal a US economy characterized by a highly problematic "no-landing" scenario. US domestic economy is fundamentally too strong to cool down on its own: Consumers are still spending heavily. Companies are keeping unemployment near historic lows. Industrial capacity is heavily utilized. However, issue is the “robust” economic health is happening alongside a massive, supply-driven inflation problem. Massive spike in Import Prices report proves that international supply chain disruptions and energy blockades are feeding directly into domestic costs. With a resilient consumer willing to absorb these higher prices, the Fed faces an incredibly hawkish outlook. This means interest rates will likely stay higher for much longer to keep the booming, conflict-strained economy from overheating. Will US market rally this week ? As I compose this post, US stock market futures are slightly lower to start the week as investors weigh progress (or lack thereof) in US-Iran peace talks against a more hawkish Federal Reserve. One thing for sure, the broader market continues to digest strong momentum driven by semiconductor and AI-related stocks. Besides hoping for a successful US-Iran negotiation, if there is/are any catalyst/s that could impact US market this week, it would have to be the PCE inflation reports out this Thu, 25 Jun 2026. Personal Consumption Expenditure. As the Fed's preferred gauge of inflation, PCE report will confirm (a) if US economy is stuck in a "no-landing" pattern OR (b) offer some unexpected relief to short-term market sentiments. Based on Fed. Reserves Bank of Cleveland’s NowCasting estimation: (see below) Data last updated on 18 Jun 2026 PCE (MoM) is expected to fall by -0.26% from April 2026’s 0.4% to 0.14% for May 2023. PCE (YoY) is forecasted to rise by +0.02% from April 2026’s 3.8 to 3.82 for May 2026. Core PCE (MoM) is expected to rise by +0.07% from April 2026’s 0.2% to 0.27% for May 2026. Core PCE (YoY) is forecasted to remain unchanged at 3.82%. Wall Street analysts’ review of above PCE and core PCE numbers reveals a stubborn reality On a MoM basis: Headline inflation ‘sudden’ contraction largely reflects short-term fluctuations in energy. Core inflation tells the true underlying story - of accelerating inflation. On a YoY basis: Core inflation is expected to remain unchanged at a sticky 3.30%, above the Fed's 2% target. My viewpoints : (mine only) Looking at last week’s economic reports and the NowCasting’s PCE forecasts - the data strongly indicates that inflationary pressures have firmly entrenched themselves, with the US economy. The massive supply chain shocks and Persian Gulf energy blockades are trickling down into the core layers of domestic costs. US economy is tilting back towards an elevated, persistent inflationary environment. This forces US central bank into a structurally hawkish corner where interest rates must stay higher for longer, directly impacting US stock market. Personally, if US is really in a "no-landing" economy with sticky inflation, I will not chase overvalued growth stocks (eg. $SpaceX(SPCX)$) and pivot to blue-chips stocks instead. Will remain laser focus on the following sectors’ stocks : Financial (eg. $SoFi Technologies Inc.(SOFI)$, $Nu Holdings Ltd.(NU)$ ) Energy ($Cameco(CCJ)$ ). Equally important, “cash is king” - I would hold extra cash (disportionally) to earn safe yields and tactically buy great, low-debt businesses when the market drops. Will this be your strategy too should US inflation pans higher in the coming months ? Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. Nokia decoded : Bad, Good & AI Future ! SoFi’s Paradox: Growth vs Brutal Crash XOM, CVX - Still a Buy Amid US-Iran peace ! Do you think it is possible (even for a second that) US market will rally this week ? Do you think “cash is king” should US economy slips further into inflation quicksand in the coming months ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Like
Report
Login to post
No comments yet