Bonds fatten, oil rises, gold explodes – It’s a big week for economic data and political drama

• Rebalancing the S&P and the Triple Witch will work smoothly.

• It’s a big week for eco data and political drama.

• Thursday is the debate while Friday brings us the PCE deflator.

• Bonds flat, oil up, gold up.

• Does the VIX suggest caution in construction?

• Try Mostaccioli with arugula, Cannelloni Beans and Sweet Sausage.

So we made it through the S&P rebalancing and the triple witching hour – no worries. As I told you on Friday – if you were expecting all kinds of drama – you would be wrong – the road has been preparing for this event for weeks now…. I mean, it’s not like we didn’t know it was coming…. We did…. ….and while it was a massive day in terms of volumes and dollars (much of it in the final moments of trading) – there was no drama at all – think dislocations, or price spikes, etc. $5.5 trillion worth of options – equity, index and futures all expiring at the same ‘moment’ while we also got the S&P rebalancing – just adding to the excitement. But like I said – don’t worry…it’s all good.

The focus was on the S&P XLK etf….As a result of the move to the NVDA over the past year – its weighting in that index increased by more than 14% to a current 21% up from 5%. All this happened at the expense of Apple – where we saw its share drop to 5% from 21%. The change in this ETF driven by a number of factors including – GICS Classification, Market Capacity, Liquidity, Public Release and Committee Review – ensures that XLK includes the most important companies and remains the most important ETF in the sector. technology.

Stocks – in the end – did very little…. Dow gained 15 points, S&P lost 9 points, Nasdaq down 32 points, Russell gained 5 points, Transports +37 while the equal weight S&P gained 8 points.

Eco data remains mixed – with housing continuing to suffer – Existing home sales fell 0.7%, which while weak – was not as weak as the -1% expectation (so I assume it’s positive) while PMI of Manufacturing and Services grew strongly …. suggesting continued strength. Both PMIs are fully in expansion mode at 51.7 and 54.6 respectively (50 pullback is the dividing line). Stronger than expected…which only causes confusion for the paparazzi….which is it? Is the economy weakening or not? Does the Fed need to cut rates or not? SHOULD they lower the rates or not? Have stocks gotten ahead of themselves on the narrative that not only will the Fed cut, but they will cut multiple times before the ball drops in Times Square? All the good questions and the ones that stick to the top of your mind.

No eco data today – but tomorrow we get the Dallas Fed Manufacturing Survey, Wednesday brings us Philly, Richmond, Dallas and Chicago Fed Activity (services), Consumer Confidence, Thursday brings us Applications of Mortgages and New Home Sales – expected to increase by 1.7%. Final revision of first GDP to +1.4%. Thursday will feature Personal Income +0.4% and Personal Spending +0.3% and the all important (actually – the MAIN metric this week) PCE Deflator – (FED’s favored gauge of inflation) and expected to fall (which would be positive). The m/m top line comes in at 0% (whisper count is -0.1%), while y/y is expected to be +2.6% from 2.7%. The core deflator (ex-food and energy) m/m is expected to be +0.1% while annual is expected to be 2.6% from 2.8%. Now remember – if the PCE deflator really does fall – then expect the trader types to gush about the need to cut rates…so they can navigate a soft landing. What do you want…. Again, at this point – the question is not if they cut, but when and how often.

Bonds came under a bit of pressure – sending yields slightly higher… 2-yr. closed the week with 4.71% while the 10-year. gives 4.256%.

Oil is trading at $80.90 – remaining in the $79.40/$85.50 trading range. – WTI is up 10% so far this month (12% ytd) ……this as OPEC+ remains steadfast in keeping production cuts at current levels while global demand is ‘running ahead of global supply’ – what I said all the time? This is NOT a question issue…. the weakness we saw between April ($85) to early June at ($73) was more about oversupply coming from non-OPEC producers (think US, Canada, Brazil, Norway, Mexico, etc.). Supply can outstrip demand – which doesn’t mean that demand is diminishing at all, it just means that there’s a lot more supply. And now that story is being told…. Summer demand in the Northern Hemisphere is strong and overall growth in global energy demand remains strong. Analysts on the Street are now calling for oil to break through the late April high of $82.50 and then challenge the early April high of $85.

Gold, which rallied higher ($2,390) over the past week – ended Friday down $30 points at $2,331/oz as the latest data continued to point to US resilience leaving multiple cuts unlikely of the norm this year. This morning – gold traders are pulling it back $11 to $2342/oz as they continue to analyze and digest the latest news…. We remain in the $2300/$2400 trading range.

US futures are mixed this morning as investors await a week full of political risks and economic data points. Dow futures are +75. S&P’s +4, Nasdaq -10 while Russell is up 5.

Thursday – brings us the first US presidential debate – and while Donny has been hitting the campaign trail – visiting key swing states and key blocs of voters, JoJo has been holed up in Camp David preparing for the event . All eyes will be on JoJo – to see how he performs cognitively – will he suddenly seem smart and in control or not? What about Donny – how will he introduce himself? Remember – both men are in their 80s… and that in itself is a problem, but according to the polls – this is the best we have (sad commentary for us) – so expect Thursday’s debate to be widely watched and then wait for the mainstream media to tell us how alive, aware, smart and in control JoJo is… and how ‘out of control’ Donny is (reminding us that he’s a ‘convicted felon’ )….That won’t change, but we will be told what they want us to hear regardless of what we see. Don’t expect the debate to drive market performance, because it won’t…but it will provide a level of entertainment that can’t be recreated in the movies.

European shares are up this morning… Germany rose +0.5% while Italy rose 1.1%. Look for monetary policy decisions from Sweden and Turkey, while we get GDP from Spain on Tuesday and Italy on Friday.

Keep an eye on the VIX – up 13% since last Wednesday…. now kissing trendline resistance at 13.73. All of this suggests creating caution—not real fear, but simply more caution. Look – a rising VIX is about 4 key points. Increased uncertainty about the future path of stocks, Risk Aversion – caused by economic worries, a possible downturn and some clear hedging activity – where investors buy PUT options to protect against possible downsides while maintaining their positions long. VIX is at a key level…. a push and resistance will cause the stock to pull back for sure – something I’ve been looking for (almost hoping) as a long-term possibility.

Other places you can look to get a sense of sentiment are – Contrarian ETFs – SH (-10% ytd) short the S&P, PSQ (-13% ytd) short the Nasdaq while DOG (-1, 5% ytd) makes you short the Dow. SPXS (-31% ytd) – is short the S&P with triple leverage and while exciting – can cut like a very sharp knife if you’re on the wrong side of that trade. In contrast, SPXL is triple leveraged LONG S&P – which is up 41% ytd….

On the RSI scale – the SPX and Nasdaq are still slightly in overbought territory at 71.2986 and 70.61 respectively.

The S&P ended at 5,464 – down 8 points – but remains up 14.5% ytd…. This is the last week of the second quarter. – expect a lot of ‘window dressing’ and reallocations in the second half of the year. Remember – portfolio managers want to give themselves the brightest light…and June is a marked period. Like January, September and December.

Mostaccioli rigate with beans with cannelloni, sweet sausage and arugula

This is a great dish and you can make it vegetarian just by eliminating the sausage.

Bring a large pot of salted water to a boil. Add the Mostaccioli and cook until they are al dente – 8/10 min.

In a pan – heat some olive oil, crushed garlic and a cut/sliced ​​”red” onion. Fry until the onion is soft and translucent. Now add the crumbled sweet sausage and fry until brown.

Next – add a can of cannelloni beans – stock and all and stir to heat through… about 4 minutes or so. Now add the arugula and mix. The arugula will dry out – don’t worry. Drain the pasta – reserving a cup of the pasta water… add the pasta directly to the sausage and beans and toss well. Add a handful of Parmesan cheese and toss. If you need to add some of the pasta water, now is the time to do so. The dish should not be soupy, but should be moist.

Serve immediately in warmed bowls with fresh toasted garlic bread.