OIL on the move, inflation ticking up and GDP is flat. Stocks are still range-bound with erratic day-to-day moves. There is some talk that Japan’s Abe is going to move back the sales tax increase and plenty of central bank gibberish about rate hikes and live meetings.

Coming up this week we are looking forward to plenty of earnings news from some of the key discount retailers as well as minutes from the latest Fed meeting. Watching for further signs that more stimulus is on the way!

 

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News flow is a bit on the light side. Not much ultra exciting to be honest….Earnings season winding down, summer is just ahead…

Solid start to the week – with oil moving higher, equities rallied Monday was a good day overall as it started with some opening bullishness from Warren Buffett – $1 billion new position in Apple (AAPL) for Berkshire Hathaway. But then Tuesday came and washed all that away.

Tuesday – CPI update. Inflation is on the rise – latest report shows that a month-over-month gain of 0.4% (annualized at 4.8%). Year-over-year 2.1%, still above the 2% Fed target.

Inflation Chart

Some mail in – comments that we are being too negative lately. The question was if it is because there is nothing good to talk about or we are just picking on the “bad” news. Also wondering if we can try to be more balanced….

Some good news: Inflation is picking up… Commodities continue to get bid, Transports are holding…

More good news? Goldman now believes that the supply-demand has switched and we will be seeing draw-downs on crude inventories due to lower production and interruptions of flow from Canada and other areas. This is a major change as they have been very bearish of pricing for some time. (Crude @ $48.50)

Even better news: The U.S. released the treasury holdings for Saudi Arabia for the first time.. $116 billion. (The concern was that they may have had at least $750 billion and if the 9/11 papers were released they would sell all… Since 1970 this information has been secret and all of a sudden it is released? (Follow up – Senate passes bill allowing for 9/11 lawsuits against Saudi Arabia)

S&P 500 Earnings estimates trend:

S&P 500 Estimate Trend

Oh my – the big-box retailers not doing so well. Macy’s (M) down 23% this month, Dillard (DDS) down 18%, Kohls (KSS) down 20%, Sears (SHLD) down 31%, JC Penny (JCP) down 21%, Nordstrom (JWN) down 26%.

Discount retail doing much better so far this month. Dollar General (DG) down 1%, WalMart (WMT) down 2.6%, TJX Companies (TJX) down 0.3%, Target (TGT) down 7%…

AND – Amazon (AMZN) up 5.5% this month.

Central banker talk – just today:

* Fed’s Williams and Lockhart both say that two to three rate hikes this year is possible

* Fed’s Williams says wages are picking up more than suggested by the averages

* Fed’s Lockhart says Fed wage tracker in on the rise

* Fed’s Williams comments out here… pressing the hawkish view again, “June is a Live Meeting” etc

* Fed’s Kaplan says a rate hike may be warranted soon

* Williams is noting that the Brexit vote could have an impact on the dollar