So, the reasonably big market move this week: SPX reversed its 7-week decline, and printed a strong-looking bullish reversal candle, but it was not enough to pull the skeptical forecaster back into an uptrend. The SPX move (+6.58%) came mostly on Thursday and Friday, alongside a bullish sector map (discretionary, energy, financials, and tech led).
What caused the move? All better now? Wolf (Richter) likes to say, “nothing goes to heck in a straight line.” Monthly still shows a downtrend. Could be a dead cat bounce. If Chris is right, and we have a food shortage queued up for arrival this winter, I’m going to pick “dead cat bounce.”
The alleged good news for equities: consumer spending rose +0.9% m/m (not recessionary), while the PCE (an inflation measure, with all inflation carefully removed) rose just +0.2% m/m. Supposedly this “lack of inflation” will cause the Fed to calm down. We are expected to ignore the Producer Price Index by Commodity (PPIACO), which was up (same month – April) 2% m/m, or 24% annualized. Here’s Main Stream Media’s spin:
World stock markets rally, treasury yields fall on inflation data
And that pesky PPIACO data – no drop visible here – worst since Nixon:
Supporting the equity-market bullish move was a wildly strong move in crappy debt; up +4.84% on the week. While the percentage move was less than seen in equities, the move on the weekly chart looks far more dramatic. The big move higher in crappy debt started on Tuesday, with the bulk of the move happening Wednesday and Thursday. This is one of my markers for “risk on”. And/or, increased hints of a willingness by our friends at the Fed to print money and bail out the people who lent money to corporations with the highest number of corporate-debt comorbidities.
It was a big move.
The dollar continued falling for the second week in a row, but the drop wasn’t lined up in time with equities or crappy debt. The buck’s big drop (and the Euro rally) came on Monday. For the week, the buck fell -1.48%. The Euro move on Monday was likely linked to some surprising news from the European Central Bank, which hinted that (after eight long years) it might consider raising rates above 0%.
by cmartenson 
