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Trendsters, the much-anticipated Harris-Trump debate didn’t disappoint, with tariffs, tax cuts, and fracking taking center stage. While Harris criticized Trump’s tariffs as a “sales tax,” Trump defended them with his usual flair. Both candidates promised tax cuts, though the details left plenty of room for interpretation. The debate stirred up plenty of market questions, and today’s newsletter is here to break it all down.
Meanwhile, in our Chart of the Day, Cisco Systems is back in focus after a strong rally last month. After a pullback to key levels, buyers are eyeing new opportunities. Will CSCO find support and surge higher? We’ll dive into the technicals to give you the full picture.
And that’s not all! Stay tuned for Market Moving News and perhaps a fun bit of trivia to keep you on your toes. Today’s update is packed with insights to help you keep track of the latest market movers and the strategies that can position you well in this volatile environment. |
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Inflation Data Looms as Markets Tread Carefully
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The major U.S. indexes staged a cautious ascent for the second consecutive day, even as concerns about economic growth and the looming inflation data kept investors on high alert. The S&P 500's positive finish masks a near 3% decline this month, with mega-cap stocks facing challenges. Several indicators point to a subdued outlook: U.S. Crude Oil futures plummeting to three-year lows, 2-year Treasury note yields reaching a new 52-week low, and Bitcoin lingering below its summer highs. Furthermore, recent jobs data hints at a slowdown in the labor market. The combination of these factors, coupled with bearish seasonality, has cast a near-term shadow over stocks. Despite the prevailing caution, the market held its ground, potentially bolstered by robust demand for a $58 billion 3-year Treasury note auction and the anticipation of tomorrow's August Consumer Price Index (CPI) release. The late-day rally might also suggest strategic maneuvering ahead of the CPI announcement, which has historically influenced market sentiment. Analysts project a 0.2% month-over-month increase for both core and headline CPI, mirroring July's figures and potentially supporting a Federal Reserve rate cut next week.
While financial stocks typically respond strongly to Fed policy, today's banking sector challenges weren't Fed-driven. Instead, JPMorgan Chase's unexpected 5% drop, triggered by CEO Jamie Dimon's cautious remarks about the company's future prospects, sent ripples through the industry.
Notably, investors displayed a preference for fixed income, traditionally a defensive haven. Treasury yields retreated, partly due to the successful auction, with a 10-year note auction scheduled for later today. The solid participation from non-dealers in today's auction signals healthy demand, potentially easing concerns about rising yields that could impact stocks.
From a technical standpoint, the 5,500 level, slightly above today's SPX close, seems to act as resistance. The SPX's ability to finish near its intraday highs could create positive momentum for tomorrow's trading session. Strategies: -
Monitor CPI Closely: Keep a close watch on tomorrow's CPI report. A reading significantly above expectations could trigger market volatility.
- Consider Fixed Income: The prevailing uncertainty favors fixed-income investments. Stay informed about Treasury yields and consider integrating bonds into your portfolio.
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Maintain a Balanced Perspective: While the market outlook is cautiously optimistic, be ready for potential pullbacks, particularly if economic data disappoints.
- Prioritize Fundamentals: Concentrate on companies with strong fundamentals and promising earnings potential. Avoid chasing high-flying stocks without a clear path to profitability.
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When CEOs Spill the Beans |
Why did Jamie Dimon's comments cause JPMorgan Chase's stock to plummet?
It seems even the most seasoned CEOs can accidentally let the cat out of the bag. Dimon's candid remarks about potentially over-optimistic earnings projections sent investors scrambling, proving that transparency isn't always rewarded on Wall Street. It's a reminder that even the most successful companies can face challenges, and sometimes, a dose of reality can be a bitter pill to swallow. So, the next time you hear a CEO speak, remember: It's not just what they say, but how they say it that can move the markets. |
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Cisco's High-Wire Act - Will it Stick the Landing? |
Cisco's chart is a thrilling spectacle, showcasing a powerful surge followed by a nail-biting retreat. The initial bullish gap after stellar earnings was a sight to behold, even with the announcement of workforce reductions. But the real question now is: can Cisco maintain its newfound altitude? Key Observations: - The stock recently tested its prior breakout level, hinting at potential support.
- A daring attempt to conquer the 200-day moving average is underway.
- The breakout above the falling trendline suggests a shift in sentiment.
- Oversold stochastics signal a possible bounce
The Verdict:
Cisco is at a crossroads. Will it continue its upward trajectory, or will it succumb to profit-taking? The chart suggests a potential buying opportunity for those with a taste for calculated risk. Keep a close eye on the 200-day moving average and the newly established support level. If Cisco can hold its ground, the sky's the limit. But remember, in the market, as in life, there are no guarantees. |
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Harris vs. Trump: Economic Sparks from the Debate Stage
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In last night’s Harris-Trump debate, the spotlight was firmly on economic policy, and both candidates didn’t hold back. The debate touched on tariffs, fracking, tax cuts, but surprisingly Social Security was barely mentioned.
First, Trump’s tariff plan—he proposed imposing a 10% to 20% tariff on all imports. Harris labeled it "Trump’s sales tax," warning it could cost American families up to $4,000 annually. Trump disagreed, asserting that the tariffs would be paid by foreign nations. However, PolitiFact noted that this claim is misleading, as tariffs are ultimately paid by consumers. Fracking was another flashpoint. Harris defended her administration’s record on increasing domestic oil production, while Trump warned that electing Harris would result in an immediate ban on fracking in Pennsylvania. Harris, however, clarified her shift in stance, stating she stopped supporting a ban in 2020.
Both candidates also made big promises on tax cuts. Trump pledged a deep cut to the corporate tax rate, particularly for companies manufacturing in the U.S., while Harris highlighted her plan to expand the Child Tax Credit to $6,000 for families and increase incentives for small businesses.
Notably absent was any significant discussion on Social Security—despite its importance to millions of Americans. As the debate unfolded, Bitcoin slipped, ending the night below $56,800, reflecting some uncertainty in the cryptocurrency market amid the political sparring. Harris gained slight ground in betting markets, though both candidates left plenty of questions unanswered on key economic policies. |
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Market Movers and Rate Cut Anticipation
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Corporate Highlights -
Southwest Airlines (LUV): A board shake-up, including the upcoming retirement of executive chairman Gary Kelly, sent shares down.
- Ally Financial (ALLY): Concerns about consumer financial health, shared by the CFO, led to a significant drop in stock price.
- Oracle (ORCL): Surpassing earnings expectations and a strategic partnership with Amazon fueled an 11% surge.
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PHLX Semiconductor Index (SOX): Led by Broadcom, AMD, and Nvidia, the index saw a second consecutive day of gains.
- Mission Produce (AVO): Strong earnings, driven by higher avocado prices, resulted in a 21.52% rally.
CPI and the Fed -
Analysts anticipate a moderate CPI report, with both headline and core monthly CPI expected at 0.2%.
- The Fed appears to be prioritizing the labor market, suggesting a rate cut is likely even if CPI data is slightly higher than expected.
- Futures trading indicates a high probability of significant rate cuts by year-end, although the Fed maintains a data-dependent approach.
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The European Central Bank and the Bank of Canada have already initiated rate cuts, setting the stage for potential further easing by central banks globally.
Looking Ahead -
The U.S. August Producer Price Index (PPI) and the weekly initial jobless claims report will be released on Thursday.
- The University of Michigan preliminary September Consumer Sentiment data will be released on Friday.
- Despite upcoming economic data, a 25-basis-point rate cut at the FOMC meeting on September 17-18 seems highly likely.
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MARKET MUSINGS & TIME CAPSULE |
Random Musings Avocados have joined the stock market chat. Who would’ve thought your guacamole could fuel a 21% stock rally? It’s a reminder that sometimes, what’s in your grocery cart can impact your portfolio. Tariffs are the gift that keeps on taxing. The Harris-Trump debate brought tariffs back into the spotlight, but here’s the kicker: while they argue about who pays, consumers often foot the bill.
Is tech too cool to care about inflation? With all eyes on tomorrow's CPI, tech stocks like Cisco and Oracle are marching to their own beat. Seems like the digital world prefers to stay a step ahead of economic realities.
Bitcoin slips again. Once hailed as the inflation hedge of the future, Bitcoin didn’t get the memo. As it drops below $56,800 during the debate, it leaves crypto enthusiasts scratching their heads.
Fracking in politics: Fracking has always been a contentious issue, but Harris and Trump reignited the debate. It’s a classic case of “what's more important, energy independence or the environment?” On this day in history, September 11 September 11, 2001: The world watched in horror as the tragic events of 9/11 unfolded. Global markets were deeply impacted, with U.S. exchanges closing for several days. The attacks reshaped not just geopolitics but also the financial world. September 11, 1973: Chile’s government, led by President Salvador Allende, was overthrown in a military coup. This event marked a dramatic shift in Chile’s economy, paving the way for market-friendly reforms under General Pinochet.
September 11, 1789: Alexander Hamilton was appointed the first Secretary of the Treasury. His policies laid the foundation for the modern financial system in the U.S., from national debt management to the establishment of the country’s first bank.
September 11, 1985: Pete Rose broke Ty Cobb’s all-time hits record in Major League Baseball. While not market-related, Rose’s achievement reminds us that, much like investing, consistency often beats flash.
September 11, 2015: Apple introduced the iPhone 6s and 6s Plus, continuing to dominate the smartphone market. A reminder that even small innovations can have a big impact on stock prices and market sentiment. |
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Debates, Data, and Dollars |
As we wrap up today’s newsletter, it’s clear that both markets and political debates can be full of twists and turns. But one thing remains constant: staying adaptable and paying attention to the key signals. Here’s a less common gem from Humphrey Neill, known as the father of contrarian thinking: "When everybody thinks alike, everyone is likely to be wrong." It’s a reminder that following the herd—whether in politics or the market—often leads to missed opportunities.
With tariffs, tax policies, and today’s CPI report all in the spotlight, there’s no shortage of noise to cut through. The real challenge is keeping a clear mind and spotting those moments when the crowd is missing something important.
As the markets react to debate fallout and inflation data, there’s likely to be opportunity for those who think differently. Until next time, stay focused on the bigger picture and don’t be afraid to take the contrarian path when the signals are there. |
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