Welcome back to the weekly Dividend Dollars portfolio review! This post is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $17,530 into the account the total value of all positions plus any cash on hand is $18,203.87. That’s a total gain of 3.84%. The account is up $76.72 for the week which is a 0.42% gain. We added $120 in cash to the account this week, trades made will be broken out below.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is up 0.19% which puts us 3.65% higher than the market!
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI decreased by $34 to $623, that’s due to sales of positions that have dropped off the chart below. So continue reading for the trade breakdown!
Dividends
Over the last week I received no dividends.
Dividends received for 2023: $323.97
Portfolio’s Lifetime Dividends: $734.37
Trades
This week we did our weekly $10 buys into our ETFs of $SPY, $SCHD, and $XYLG, started a new macro-focused swing position on $RCRUY (read this special short article for the logic of this trade), added to $TXN, all turtle trade stops were hit, and we took gains on $GABC. $TXN was an add for me as the recent analyst bearishness seems overplayed. The stock received massive institutional buys last quarter, pushing institutional ownership to 84%. Also, the divergence in price and on-balance volume is a bullish indicator. All good reasons to build the position!
Aside from that, we are now out of the $XLC & $COPX turtle trades and will keep our eyes open for a new entry into something else next week! If you’re interested in learning more about the turtle trading strategy that is built into my portfolio, I have published a full article on it which you can read here. The below table is a log of the trades taken under the strategy so far.
Below is a breakdown of the trades I made this week:
August 8th, 2023
Global X Copper Miners ETF ($COPX) – sold 21 share position at 38.65 for a 5.6% loss, turtle trade stop hit for a loss.
Schwab US Dividend Equity ETF ($SCHD) – weekly $10 buy for 0.134625 shares.
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock as well as the other socials using the links below! I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there! Thank you for reading! See you next week and stay safe!
Today, I added 50 shares of the ADR to Recruit Holding Co. at $6.65 and wanted to do this impromptu article to explain my reasoning.
$RCRUY Is the ADR for Japanese company Recruit Holdings Co. With Japan having a fundamental shift in macro conditions this year, their market is performing better than most as you can see in the chart below.
Analysts expect their GDP growth to outperform. Even with recent gains, Japanese valuations are still more attractive than most established economies and offer better opportunities for positions with yields and buy-backs at cheaper valuations.
My thinking for $RCRUY specifically is that working age populations are falling in many key markets, especially Japan. As Japan’s economy reopens and labor markets remain tight in key areas, HR solutions & tech that Recruit offers (Indeed, Glassdoor, etc.) will be very important.
But $RCRUY isn’t primarily tied to Japan, as their products are global and roughly 70% revenues come from outside the country. So why look for a Japanese company if it’s not even focused in the country? Having exposure to the trend in Japan and the trend in the labor market seems like a winning combination to me, that’s why!
Many Japanese companies are experiencing a sea change in how they manage and operate due to changing governance rules. Companies have been encouraged to pay more attention to their P/B, buybacks and attractive dividend yields are tools they can use to prop up valuations.
This is huge news, especially in a country that already has a strong investing culture. Capital inflows into Japan have been growing. Hell, it even caught Buffett’s eye! He’s been growing his Japanese positions substantially.
$RCRUY is positioned like a growth stock, so it’s valuations may be higher than what others are looking for when they stock pick in Japan. Though $RCRUY has higher valuations than most, their valuations are not close to average valuations they have seen prior to the pandemic. Volume and chart seems indicative of price appreciation and the marco trends should prove to be additional winds in their sails.
I will be swinging this around the 6-12 month time frame as macros progress. I am open to adding to the position on potential downsides.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Last week’s call of moderately bullish to neutral was a huge miss with the S&P 500 being down -1.60% for the week. However, we have said for two weeks in a row now that we would not be surprised to see a pullback.
Earnings season is winding down with approximately 84% of companies in the S&P 500 having reported so far. So far, they have beaten expectations on an EPS basis 80% of the time and on a revenue basis only 58% of the time.
On the economics front, this was a busy week for data. Employment figures continue to beat expectations while PMI, ISM, and construction figures are all worse than expected.
From a technical perspective, the key area of resistance that we have been watching (red channel) resulted in a strong rejection this week. Price action went under the 0.786 fib level and stayed under it for all of Thursday. Friday tested the level, but failed to get above it and ended the day in deep red. With the next fib level of 0.618 being nearly 4% away at $4,310, I’m looking closer for support. The white line at $4,450 will be my key level before determining if $4,310 is next.
The other chart that we have been eyeing has progressed interestingly this week. All the red this week has us closing perfectly on the bottom level of the ascending channel that the market has been in since the debt ceiling was resolved. I’ll be very interested to see if we get the continuation bounce next week that this channel is indicating.
Sentiment indicators adjustments were a little mixed this week, if not slightly bearish. VIX open interest change, VIX OI put call ratios, CBOE Equity volume put call ratios, and VIX levels all worsened. However, only VIX OI appears bearish, the rest all moved down to more neutral territories. Meanwhile, SPX OI change improved to moderately bullish, while CBOE VIX VCPR moved to neutral and OCC Equity VPCRs moved to volatile.
Overall, rising treasury rates throughout the week, with the exception of Friday, kept downward pressure on the markets. Volatility was enhanced by the US credit downgrade by Fitch on Tuesday and the technical resistance on equities. Tuesday was the largest daily decline on SPX since late April, while VIX jumped to a 3-week high. Market’s calmed down by week end as economic data came in, however, there’s more to come next week with a CPI reading on Thursday and PPI reading on Friday.
Given this, next week’s performance will largely be determined by the reception of those reports. Regardless of the reports, sentiment indicators report neutral on price action for next week, while nearby technical support levels could provide some upside. Given the overall mixed bag here, I am leaning neutral for next week.
Weekly Market Review
Monday: The market was mostly flat on the index levels, before eking out slim gains to end the day and the month. Many stocks took part in the late afternoon rise as the $RSP equal weight ETF was up +0.3% compared to the +0.1% $MGK growth ETF.
The timid action in the early hours seemed mostly to anticipation for the busy week of earnings and data in later in the week. Despite the hesitancy, market breadth was positive as winners beat losers by 5-to-2 at the NYSE and 5-to-3 at the Nasdaq.
Data for Monday included only the Chicago PMI report, which came in at 42.8. This is a beat on the prior reading of 41.5, but fell short compared to the expected 43.0.
Tuesday: The market experienced some selling pressure to begin August, though the downside moves were relatively modest. Selling interest was pushed by rising market rates and the feeling that a consolidation was overdue. With Tuesday’s losses, $SPX was still up 19.2% for the year. The 10-year treasury yield closed above 4.00%.
The Dow outperformed with +0.2% on the back of a big move higher from $CAT’s well received earnings report. Other notable earnings resulted in large sell offs for $NCLH, $UBER, and $ZI.
The US Manufacturing PMI rose to 49 in the July reading, up from 46.3 in June. Their chief business economist mentioned that producers are clearly shrugging off recession fears, but manufacturing continues to be a drag on the US economy. Lower demand and the shift in spending from goods to services has led to a drop in orders, however, the rate of decline in the order book is moderating.
The ISM Manufacturing Index rose to 46.4% in July, up from 46% in June but below the expected 46.8%. The line between contraction and expansion is 50%, making this reading the 9th straight month in contractionary area. The takeaway from the report is that there are more signs of employment reductions in the near term to better match the state of production. This is in line with the Fed’s thinking that rate hikes will lead to some softening of labor.
Total construction spending rose +0.5% MoM in June, compared to a +1.0% move in May and an expected +0.6% reading for this month. Total private construction was up +0.5% MoM and total public construction rose +0.3% MoM and +3.5% YoY. Residential spending continues to be powered by new single-family construction to meet the demand that the existing home market leaves unanswered for.
JOLTs job openings were at 9.58M in June, below the 9.61M estimate & down from 9.82M last month. Both the number of hires and separations decreased during the month.
Wednesday: Wednesday gave us a solid sell-off with mega caps and growth stocks pacing broad losses. Jump in yields on Wednesday gave investors an extra excuse to take risk off.
In the overnight, market rates had been moving lower despite the news that Fitch Ratings downgraded the US’s credit rating to AA+, down from AAA. The downgrade reflects an expected fiscal deterioration over the next few years, growing government debt, and erosion of geopolitical relationships.
Treasury yields immediately started to climb higher with the release of the ADP employment report. This jump sent the 10-year past its high from July to a level not seen since early November (4.126%). Yields backpedaled from the high of the day. Regardless, the rates did pressure equities as $MGK witnessed a -2.1% loss on the day.
The weekly MBA index showed that mortgage applications fell -3.0% with both purchase applications and refinance applications falling -3.0%.
The ADP employment change showed a 324k increase in private sector payrolls in July, compared to an expected 185k and a prior 455k in June. Annual pay was up +6.2% YoY. The economy is doing better than expected and a healthy labor market continues to support household spending, says ADP’s chief economist. They expect to continue to see a slowdown in pay growth without broad-based job losses. In line with the trends we’ve discussed from the PMI data, manufacturing and services job figures are down and up, respectively.
Thursday: The stock market had a mixed showing with mega caps driving a lot of the movement. Losses were large right out the gate, but they climbed back by midday. The day was largely a reaction to a lot of earnings that were released after hours on Wednesday, more movement in the treasury market, a rate hike by the BoE, and more discussion on the Fitch ratings downgrade.
Treasuries started to widen their losses after the releases of a better-than-expected report on productivity and unit labor costs. Weekly initial jobless claims grew slightly but are still at strong levels. Meanwhile, the ISM Non-Manufacturing index showed that services sector growth decelerated in July.
The Q2 productivity report came in at +3.7%, beating the expected +1.7% and the prior -1.2%. Q2 unit labor costs were at 1.6%, compared to an expected 2.7% and a prior 3.3%. The key here is that the pickup in productivity and deceleration in unit labor costs is a great combination for the soft-landing view.
The weekly initial claims report came in at 227k, up slightly from the expected 225k and the prior 221k. Continuing claims came in at 1.7M, compared to the prior 1.679M. Overall, employment levels are still strong, a key factor contributing to a positive economic outlook.
The June factory orders report came in at 2.3%, compared to an expected 2.0% and the prior 0.4%. Business spending was on the softer side in June.
The ISM Non-Manufacturing Index came in at 52.7%, compared to an expected 53% and the prior 53.9%. The services sector activity expanded in July, but at a slower pace than in Juna. The report said that the majority of respondents are cautiously optimistic about business conditions and the economy. Lastly, the S&P US Services PMI came in at 52.3, compared to the prior 54.4. Another decelerating reading.
Friday: Indices were choppy as investors reacted to earnings from $APPL and $AMAZN, the July employment report, and continued treasury moves.
Treasury rates had a pullback in response to the jobs report, which showed a slowdown in nonfarm payroll growth. That factor also had the markets consider more the idea that this may be enough for the Fed to hold rates. The 2-year note fell 12 basis points and the 10-year note fell 13 basis points.
Stocks found some upside momentum on the backs of those items, after bouncing off of the 4,500 level. Indices were trading up until selling in the afternoon hit. There was no specific catalyst for the sell off, but profit taking was likely the cause. Ultimately, indices closed near their lows of the day.
Economic data was only the Employment Situation Report. Nonfarm payrolls rose by 187k, a bit lower than the expected 200k but a bit higher than the prior 185k. Nonfarm private payrolls rose 172k, under the expected 175k and beating the prior 128k. Average hourly earnings rose by 0.4%, just higher than the expected 0.3%. The unemployment rate fell to 3.5%, beating expectations by 0.1%. The key in the report is that labor supply continues to be tight, making it difficult to achieve a more Fed-pleasing moderation in wage growth. That might not translate to another rate hike, but it does fit the notion that the Fed may be inclined to keep the policy rate higher for longer.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week. I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you there!
Welcome back to the weekly Dividend Dollars portfolio review! This post is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $17,410 into the account the total value of all positions plus any cash on hand is $18,021.38. That’s a total gain of 3.51%. The account is down $458.42 for the week which is a 2.48% loss. We added $120 in cash to the account this week, trades made will be broken out below.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is up 0.51% which puts us 3.01% higher than the market!
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased $25 to $657.
Dividends
Over the last week I received three dividends: $1.69 from $SPY, $3.43 from $XYLG, and $31.95 from $T.
Dividends received for 2023: $323.97
Portfolio’s Lifetime Dividends: $734.37
Trades
This week we did our weekly $10 buys into our ETFs of $SPY, $SCHD, and $XYLG, had three dividend reinvestments, one turtle trade add, and one new use of cash in the portfolio. The use of cash is the new position in $AGG. As you read in my article yesterday, with futures expecting that the July rate hike was the last of the cycle, this benefits bond prices over the coming year or two. Therefore, I’ve elected to hold my cash in $AGG and will add and subtract to it as I normally manage my portfolio. Read that article here for more information on this macro-play.
Aside from that, our turtle trades are still alive. $XLC still has not hit its stop and $COPX is hovering right above its stop after pushing higher for an add early this week! If you’re interested in learning more about the turtle trading strategy that is built into my portfolio, I have published a full article on it which you can read here. The below table is a log of the trades taken under the strategy so far.
Below is a breakdown of the trades I made this week:
July 31st, 2023
Global X Copper Miners ETF ($COPX) – added 8 shares at $41.52, turtle trade unit 2 add.
$SPY dividend reinvested.
August 1st, 2023
Schwab US Dividend Equity ETF ($SCHD) – weekly $10 buy for 0.132943 shares.
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock as well as the other socials using the links below! I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there! Thank you for reading! See you next week and stay safe!
This post by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases, crypto, and even transcripts of company events! The charts you can make are incredible (as you’ll see here). Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
On July 26th, 2023, the Fed hiked rates another 25 basis points after pausing the hikes one month prior. This hike constituted 11 rate increases in the last 12 Fed meetings, moving rates from near 0 to 5.50% in roughly a year and a half. Absolutely bonkers jump in rates!Many economists and forecasters are expecting that July’s hike may be the last. According to the CME FedWatch Tool, there is a less than 35% chance of another hike occurring through the end of this year and a less than 20% of another hike occurring at all in the next year.
So with rates potentially hitting a peak here, what does that mean for interest rate sensitive assets like bonds? Well, history has shown that there is on average a ~1% drop in bond yields over the next 12 months following an interest rate pause. Regardless of whether the July hike was the last one or not, that means that there is a fairly good chance that we will see lower bond yields within the next year. This is particularly true given the fact that the 10-year treasury yield is nearing heavy resistance as it approaches its recent highs in this cycle.
If the rate rejects new highs and the Fed is in fact paused (or approaching a pause), the 10-year yield should drop if historical actions have any say in the matter. This will be good bonds, particularly intermediate term bonds.So I started to look around for some bond ETFs to back test this theory. I found $LQD, $BND, $AGG, and $BIV all had decent gains over the 12-24 months the pauses in the two rate hike cycles that they have experienced. View the charts below.
After seeing this, I determined that it might be throwing a bond ETF into my portfolio for the next 12-24 months to gain some exposure to this phenomenon. Just yesterday, I added $AGG to my portfolio with a starting position of 5 shares. I decided to write this article to deeper explain the reasoning than you would read in my weekly portfolio updates. I also wanted the readers to get this information as soon as possible!
I’ve decided to keep my spare cash in the position and will not hesitate to pull it out and put it to use within my core holdings. But in the meantime, I am hoping to catch this less risky appreciation and cash flow from the yield of this fund! Truth be told, I have very little experience with bonds, but the logic here seems too sound to pass up!That’s it for this post! I am about to go live on the Games N Gains twitch stream to discuss the $APD and $CMI earnings calls and play some games. So pop in and hang out right here: https://www.twitch.tv/gamesngain.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Last week’s call of moderately bullish to neutral was pretty spot on. The market was mostly bullish for the week, except for the steep sell-off on Thursday that nearly brought $SPY back to break even for the week.
Earnings season has reached its peak this week, with many big tech names reporting. 262 of the 500 S&P companies have reported, roughly 81% have beat EPS expectations and 58% beat sales expectations. The theme for this earnings season seems to be “better than feared” as YoY growth in earnings is down -1.8% versus an expected -6.8%. Revenues are actually 2.0% higher YoY.
This week was heavy with economic data, most of which either exceeded or were close to expectations. Initial Jobless Claims came in low, with its smallest reading since February of 2018. The first estimate for Q2 GDP came in at +2.4%, well above most estimates. The Q2 GDP price index (a figure that is similar to CPI) helped show the impact of continued inflation. Inflation is still weighing on nominal GDP growth, which came in at +4.6% QoQ, but when adjusting for inflation we end up with only +2.4% real GDP. Plus we had the Fed rate hike decision on Wednesday, which resulted in another 25 bps hike.
For the technical analysis this week, let’s remind ourselves some of what we said last week. Part of that was I wouldn’t be surprised to see a pullback at some point, and Thursday looked as if it was going to be beginning of that pullback. Technical resistance at the 4,600 level and a Treasury yield spike caused by the Bank of Japan announcing yield curve control policies, triggered the sharp fall that day. However, also like I said before, bullish momentum is strong, and we got a terrific bounce back on Friday.
The run up this week had prices get close to the top of the green ascending channel in the above chart. Thursday brought us a strong rejection, but prices recovered very well on Friday. Prior to the Thursday flush, prices pushed into 4,580 – 4,630 range that we called out last week as the next level of resistance, that range is the blue channel in the below chart. What I really like to see about this flush is the fact that prices came back down perfectly to the 0.786 fib level near 4,535 and bounced perfectly. That tells me that the support in that area has solidified and is strong, especially if it stopped a rug pull candle like Thursday.
Sentiment indicators mostly improved this week. Vix open interest change, VIX open interest put call ratio, equity volume put call ratio, and vix futures all improved to bullish/moderately bullish levels. ETF open interest changes and indices volume put call ratios both worsened to moderately bearish levels.
Overall, economic data was decent this week. The economy is still growing at a stable pace, labor markets are still strong, and consumers are still spending. The Fed has removed recessions from their forecasts. All these things, plus a decent earnings season, and a mild week for economic data next week may limit the downside risk. However, technical resistance here could prove to be strong. For that reason, I’m keeping my outlook as moderately bullish to neutral, a pullback seems less likely next week than it was this week, but I think the market still feels one creeping around the corner.
Weekly Market Review
Monday: Markets inched higher on Monday as the $DIA hit its 11th consecutive day of gains. There was low volume on the day where winners outpaced losers.
Treasuries started the day with gains after discouraging PMI readings came out of the eurozone. However, the US PMIs reading were a little better with mixed results. We showed improvements in manufacturing while services activity slowed.
Yields ended up closing near their highs for the day as investors digested an okay 2-year note auction and prepped for the $43B 5-year note auction on Tuesday. The 2-year yield rose to 4.88% and the 10-year yield rose to 3.86% on the day.
The flash July reading of the S&P CoreLogic Manufacturing PMI rose more than expected to a reading of 49.0, up from 46.3. A reading below 50 represents contraction in the sector, so we are trending in a direction that will get us out of that concerning area. The Services PMI fell to a reading of 52.4, a slightly bigger decline than expected.
Tuesday: The indices closed with gains today after the S&P 500 and the DIA hit new 52-week highs. The DJIA also hit its 12th straight day of wins. Mega cap strength helped to boost this performance.
Blue chips dominated the earnings calendar in yesterday’s after-hours and today’s early-hours. Most received positive reactions and added support for the market. $PKG, $MMM, $DOW, $GE, $NUE, and $SHW were among the standouts. The July Consumer Confidence report also added to the market support as it came in at the highest reading since July 2021.
The industrial sector was the laggard as it was heavily weighed down by $RTX, who lowered the FCF guidance for the year due to a need to inspect a portion of the PW1100G-JM engine fleet after finding a powdered metal used in production had a contaminant. In other corporate news, $UPS and the International Brotherhood of Teamsters reached a 5-year collective bargaining agreement and $BANC is in discussions to buy $PACW.
The FHFA index rose +0.7% MoM in May following a +0.7% increase April. The Case-Shiller 20-city composite index fell -1.7% YoY in May compared to an expected -1.9% and following a -1.7% move in April.
The consumer confidence index jumped to 117 in July, beating an expected 11.1.5 and a prior 110.1 in June. This time last year the index was at 95.3. The uptick in confidence was driven by a pickup in views about current conditions and the outlook, which are an offshoot of better feelings about inflation falling and labor market resilience.
Wednesday: Wednesday was a bit mixed as investors reacted to a heavy batch of earnings, the latest Fed meeting, and Powell’s commentary. The reaction to the 25 basis point rate hike was fairly quite as most of us looked forward to Powell’s press conference. His position was mainly one of none-commitment to any direction for the next move.
Expectations for a second hike at any of the next meetings this year did not really change. According to the CME FedWatch tool, the probability of a second hike for each of the following meetings are all under 30%.
For earnings, $GOOG and $MSFT had the largest influence as there were some mixed receptions, same with $BA, $KO, $T, and $V. The broader market held up fairly well with a 0.2% gain on the $RSP while the major indices closed closer to flat.
Mortgage applications fell by -1.8% this week, with a surprise drop in purchase applications of -3%. Refinancing activity remained flat.
New home sales fell by -2.5% MoM in June to an annual rate of 697,000 units. This is compared to an expected 722,000 and a prior reading of 715,000 in May. On a YoY basis, new home sales were up 23.8%. New home sales activity, which is measured in signed contracts, was pressured in June by rising mortgage rates that created affordability pressures.
Thursday: Thursday started in full rally mode. $META had terrific gains after its pleasing earnings report and outlook, pushing further buying interest in mega caps.
Stocks started to roll over in the afternoon due to a number of catalysts. One was an announcement that the Bank of Japan is discussing possible changes to its yield curve control policy at their Friday meeting. This created concerns for a possible unwinding of carry trades that have been supportive of asset prices.
That news hit around the same time that the $35B 7-year note auction was met with lackluster demand. Coincidentally, the S&P 500 hit resistance at the test of the 4,600 level. This all occurred around the same time and caused a meaningful rejection as money was taken off the table.
At the NYSE, losers were beating winners by a 7-to-2 margin and a 5-to-2 margin at the Nasdaq. Then, the ECB followed the FOMC with their own 25 basis point hike. However, language on the decision drove some speculation that they may be close to done with raising rates.
Initial jobless claims for the week of July 22nd fell by 7,000 to 221,000, better than the expected 233,000. This is the lowest level seen since February. Continuing claims for the week of July 15th fell by 59,000 to 1.69M, also the lowest level since February. The low level of initial claims, a leading indicator, reflects continued job demand strength, so much so that employers are reluctant to give up employees in a tight labor market.
The Advanced Q2 GDP report showed that real GDP grew at an annual rate of +2.4%, beating an expected +1.6% and a prior +2.0% in Q1. Consumer spending slowed to an annual rate of +1.6%, down from a +4.2% in Q1. The GDP Price Deflator dropped to +2.2% from a prior +4.1%. The economy seems to be a long way away from a recession in Q2.
June durable goods orders grew +4.7% MoM in June, compared to an expected +1.0% and a prior +2.0% in May. Excluding transportation, orders grew +0.6% MoM, beating the expected +0.2% but just short of the prior +0.7% in May. New orders were up across most durable goods categories, reflecting resilient demand for an economy that refuses to stop growing.
The June Advanced International Trade in Goods deficit narrowed to $87.1B from $91.1B. Advanced whole sale inventories fell by -0.3% and advanced retail inventories grew by +0.7%.
Pending home sales grew by +0.3% in June, the first gain since February. This figure was expected to fall by -0.5%.
Friday: The market bounced back from Thursday’s sell off, sticking to the winning play of buying weakness. Mega caps favored in that respect, hitting nice gains and propping up the indices. Many other stocks participated in the rally though.
Notable stocks that report earnings included $PG, $INTC, and $ROKU. Also, the personal income and spending report was supportive of a soft landing narrative, which was another source of support. The Bank of Japan surprised markets when it voted to manage its yield curve control policy with more flexibility, saying it will maintain a 0.5% target rate while also offering to purchase 10-year JGBs at 1%. The yen rallied on the news but lost steam as the dollar rallied back.
Personal incomes grew by +0.3% MoM in June, compared to an expected +0.5% and +0.5% prior reading. Personal spending grew +0.5% MoM, compared to an expected +0.3% and prior +0.2% in May. The PCE Price Index and Core PCE were both up +0.2%, in line with expectations. The takeaway form this report is a combination of solid spending and ongoing disinflation.
The Q2 employment cost index showed compensations increase by +1.0% for the three month period ending in June. This is compared to an expected +1.1% and a +1.2% prior reading for March. The key here is that we are seeing a deceleration in employment costs, which should be comforting for the market and the Fed as a reassurance that a price/wage spiral is not occurring.
The July Consumer Sentiment Index came in at 71.6, compared to an expected 72.6 and prior reading at 64.4. Last July the reading was at 51.5, putting us at a vast improvement in just a year. Outlooks have greatly improved with the slowdown in inflation and the ongoing stability of the labor market.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week. I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there!
Welcome back to the weekly Dividend Dollars portfolio review! This post is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $17,290 into the account the total value of all positions plus any cash on hand is $18,372.62. That’s a total gain of 6.26%. The account is up $237.89 for the week which is a 1.31% gain. We added $120 in cash to the account this week, trades made will be broken out below.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is up 2.84% which puts us 3.42% higher than the market!
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased $1 to $632.
Dividends
Over the last week I received two dividends: $7.17 from $SMHB and $5.34 from $CMCSA.
Dividends received for 2023: $286.91
Portfolio’s Lifetime Dividends: $684.80
Trades
This week was a calm one. We did our weekly $10 buys into our ETFs of $SPY, $SCHD, and $XYLG (I have had these turned off for a while, fixed that this week), and had two dividend reinvestments. Aside from that, our turtle trades are still alive. $XLC is doing well at nearly $200 gain and $COPX has recovered a bit! If you’re interested in learning more about the turtle trading strategy that is built into my portfolio, I have published a full article on it which you can read here. The below table is a log of the trades taken under the strategy so far.
Below is a breakdown of the trades I made this week:
July 24th, 2023
ETRACS 2x Monthly Pay Levered US Small Cap High Dividend ETN ($SMHB) – dividend reinvested
July 25th, 2023
Schwab US Dividend Equity ETF ($SCHD) – weekly $10 buy for 0.132502 shares
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock as well as the other socials using the links below! I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Last week, we expected the market to be fairly bullish and anticipated some hesitancy in price action due to the approaching Fed meeting. This was spot on as the market made fair games at +0.7% this week.
59 companies of the S&P 500 reported their Q2 earnings. 48 of them beat EPS expectations. So far, reporting companies have beat EPS 79% of the time and revenue beats 55% of the time. This, paired with positive June retail sales report and continued low unemployment statistics spurred positive price action in the first few days, some of those gains were later given up on Thursday.
From a technical stand point, equities were kept down in April and May (white box) by the regional banking issues and debt ceiling battle. As banking worries subsided and a debt ceiling deal was reached, market breadth began to expand and a week later the +20% mark was reached, triggering the start of a new bull market. The bullishness in the market (green box) began the same day the debt ceiling deal was announced. It also coincides with June 1st being only the second day that the VIX closed below 16. It has closed below that every day since.
Price action this week had us push above my .786 fib level, we came back on tested it on Thursday and bounced higher on Friday. A good confirmation of support at that level in my opinion. Next area of resistance will be in the blue 4,580 – 4,630 range created by the peak in price last March. I expect heavy resistance here, because after that is cleared, new all time highs are the next logical target, yet there are still uncertainties for equities and the economy that has the potential to rear its head and change sentiment. If there’s potential for a 5-10% correction, the time for it to occur may be getting close.
Market sentiment indicators mostly deteriorated this week. SPX open interest change, VIX and SPX open interest put call ratios, VIX volume put call ratio, equity VPCR, and VIX futures all changed negatively this week, half of them deteriorated from moderately bullish levels to neutral levels while the other have went from neutral to moderately bearish levels.
Data is softening and earnings results are heading back towards longer-term trends. The bottom line is that economic data was most disappointing this week and earnings kicking off, bullish momentum appears to have moderated, but still hasn’t disappeared. Technically speaking, a pause in the rally next week seems to be evident in the chart and indicators. Any pause may only be temporary, depending on the reception of the FOMC rate decision on Wednesday and GDP for Q2 estimate on Thursday. I’m leaning moderately bullish to neutral for the next week in the market.
Weekly Market Review
Summary: The market brought us another winning week this week! Buying interest was broad as mega-caps underperformed due to profit taking and valuation angst ahead of mega-cap earning reports. $MGK fell 1% this week while the $RSP gained 1.4%.
Tesla and Netflix were laggards with some consolidation in price action after their better-than-expected earnings. Taiwan Semiconductor was another loser after warning about inventory adjustments due to slowing market demand, they did still report better than expected results though.
Bank stocks outperformed as the heavy schedule of earnings and commentary brought up no concerns of economic headwinds. $BAC, $NTRS, $MTB, $WAL, and $USB all hit nice gains after their reports.
These results and the week’s data corroborated the view that a soft landing is possible. Initial jobless claims show continued strength in the job market. Housing and retail data were a little softer, but still didn’t sound any alarms. With the soft-landing idea intact, traders were inclined to fade the mega caps this week and buy non-tech and value stocks as evident in a number of value indices outperforming.
8 of the 11 S&P 500 sectors had gains this week. Communications and Consumer Discretionary were the standout losers while Energy and Healthcare were neck and neck for the #1 spot.
Monday: Markets had a solid day on Monday, with a spattering of tickers hitting 52-week highs. There weren’t any meaningful drivers behind the positive price action, it was really just investors forging ahead on the hopeful notion that the US economy will avoid a recessions and that the Fed is close to done raising rates.
Telecoms took a large hit amid concerns about potential liabilities related to the industry’s historical use of lead sheathed cables as noted in WSJ article that came out over the weekend. Afterwards, both companies received a number of downgrades.
Data for the day was only the July Empire State Manufacturing Survey. The survey came in at 1.1, down from the previous reading but higher than expected. The price paid index within the survey fell to 16.7, a continued sign of price moderation.
Tuesday: Tuesday started a bit mixed, but ended with solid gains after several mega caps recovered from early losses. $MSFT was down 1% at its low and surged higher after making a handful announcements, the largest of which is an expanded AI partnership with $META.
Gains for the broader market were driven, again, by hopefulness of a strong US economy. The data for the day helped corroborate this. Bank gains also helped with a number of strong earnings.
June retail sales rose 0.2%, the 3rd straight monthly increase, but less than the 0.5% forecasted. Excluding gas and autos, sales were up 0.3% for the month. The control group of sales, which most closely resembles the consumer spending component of GDP, increased 0.6%, doubling expectations. That last figure is the key takeaway, a solid 0.6% reading is far above levels of an economy in recessionary distress.
Industrial production fell 0.5% in June, the 2nd straight monthly decline, versus expectations of remaining flat. Production still rose 0.7% during the 2nd quarter. Manufacturing was down 0.3% during June. Capacity utilization slid to 78.9%, down from 79.4% in May. The takeaway here is that most major market groups posted declined in June, showing a softening demand that has hurt the manufacturing side of the economy more than other sectors.
Lastly, the NAHB Housing Market Index came in at 56 in July, matching expectations. The previous reading was 55. Current sales and prospective buyers were higher, while expected sales were lower.
Wednesday: Markets opened slightly higher and had choppy action all day, but still managed to get some gains. There was no strength in any selling interest, despite some calls for a pullback after this big market run.
Apple made the news with a report that the company is internally testing AI tools. Goldman Sachs outperformed despite missing on their Q2 earnings. Several other banks were also notable winners on the day. Data for Wednesday included the MBA mortgage application index and Housing starts.
The MBA mortgage application index rose 1.1% after a 0.9% last week. Refinance applications were up 7% and purchase applications down 1%.
Total housing starts fell 8% MoM to an annual rate of 1.434M compared to an expected 1.475M. Single family starts were down in all regions expect the West. Building permits fell 3.7% MoM to a rate of 1.44M compared to an expected 1.472M. Permits for single family units were flat to positive in all regions. The higher financing costs of the market are creating headwinds for builders and preventing activity from being stronger in a supply-constrained housing market.
Thursday: Stocks were mixed today as concerns of being in overbought territory came up. Mega caps were weak with poor performance in $TSLA, $NFLX, and $TSM in response to their earnings reports. However, the broader market was resilient. $RSP was down only 0.1% compared to 0.7% for $SPY.
Initial claims for the week decreased by 9,000 to 228,000 (consensus 240,000). That is the lowest level of initial claims since mid-May when the S&P 500 was around 4,100 or 11.4% lower than where it is today. Continuing jobless claims for the week ending July 8th increased 33,000 to 1.754 million. Still, employment levels remain well above recessionary levels.
Existing home sales fell 3.3% MoM in June to a seasonally adjusted annual rate of 4.16 million (consensus 4.25 million) from an unrevised 4.30 million in May. Sales were down 18.9% from the same period a year ago. The takeaway in the report is that the inventory of existing homes for sale is still tight. This is due to a strong labor market, ability to work remotely, and the jump in mortgage rates that are deterring existing homeowner’s from moving. Because there’s a lack of transacting, existing home sales are crimped by limited supply more than by weak demand.
Friday: Friday closed as a mixed day. There wasn’t outsized selling interest, but there wasn’t much buying interest either. The market felt as if we were all waiting and looking ahead to the busy earnings next week and the FOMC meeting.
Still, the broader market held up well as the $RSP was up 0.1% and $MGK was down 0.2%. There was no data for the day.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week. I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there!
Welcome back to the weekly Dividend Dollars portfolio review! This post is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $17,170 into the account the total value of all positions plus any cash on hand is $18,013.43. That’s a total gain of 4.91%. The account is up $323.10 for the week which is a 1.83% gain. We added $120 in cash to the account this week, trades made will be broken out below.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is up 1.81% which puts us 4.91% higher than the market!
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased $12 to $631.
Dividends
Over the last week I received no dividends. WOMP WOMP.
Dividends received for 2023: $274.40
Portfolio’s Lifetime Dividends: $684.80
Trades
This week was a calm one. We only had one buy ($T) and one dividend reinvestment ($O which was received on Friday of last week). Aside from that, our turtle trades are still alive. $XLC is doing well and $COPX is nearing its stop. If you’re interested in learning more about the turtle trading strategy that is built into my portfolio, I have published a full article on it which you can read here. The below table is a log of the trades taken under the strategy so far.
Below is a breakdown of the trades I made this week:
July 17th, 2023
AT&T ($T) – added 10 shares at $13.67
Summary
That is it for the update this week. Keep your eyes open for the next market recap and outlook that will come out later this weekend!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock as well as the other socials using the links below! I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Last week, I gave a neutral outlook saying to watch my red channel in the chart below for a breakout in either direction. We got the breakout to the upside this week and closed comfortable above it at 4,505 for SPX.
The strength was evident this week. Not only did we have better than expected CPI, PPI, sentiment, and job claims readings, but earnings season also kicked off with a bang! About 6% of the S&P 500 companies have reported, with 82% beating their EPS estimates and 64% beating their revenue estimates.
The two key inflation reports, CPI and PPI, both showed significant easing, though they are still above the 2% target. The CPI fell to +3% year over year compared to the +4% that was seen in May. This beat the 3.1% expectation. The PPI figure came in at just +0.1%, significantly lower than the +1.1% reading in the prior month. Both have been falling steadily for 12 consecutive months.
The lower inflation numbers triggered another rally in stocks this week. The SPC closed a new high for this bull market on Wednesday at 4,510. Based on this new high, the -10% correction line moves up to 4,059 and the -20% bear market line moves up to 3,608.
Again, SPX is reaching a technically overbought area based on the RSI, however it’s difficult to find a future catalyst that could cause any modest pullback. The bulls seem fully in control again. Price action got us to barely touch the 0.786 fib level at 4,528. This level may serve as a potential spot of resistance, but if its able to be cleared, it seems likely that there could be a path to reaching all-time highs again.
There were more sentiment indicator upgrades than downgrades this week. SPX open interest change, SPX OI put call ratio, VIX VPCR, and VIX levels in general improved while equity only equity OI change was slightly worse. With inflation coming down faster than expected, early earnings doing well, high consumer optimism, and relatively mild economics schedule for next week, my outlook for next week fairly bullish. There may be hesitancy in price action as we get closer to the next Fed meeting, but aside from that, I am expecting mostly bullishness.
Weekly Market Review
Summary: The market had a very good week with undeniable bias. CPI, PPI, Import-Index, and employment reports all corroborated the growing notion that the economy will avoid a hard landing.
The CPI report was the headliner for the week with a smaller than expected 0.2% increase. Treasury yields rushed down, and stock prices jumped higher. The 2 year note yield fell 21 basis points to 4.73% this week while the 10 year note fell 23 basis points to 3.82%.
The broader market overcame a weak start for the mega caps on Monday, which aligned with Nasdaq’s announcement that there will be a special rebalancing of the Nasdaq 100 on 7/24/23 to address overconcentration. This will be the first rebalancing since 2011. Mega caps picked up pace throughout the week and outperformed.
All 11 of the S&P 500 sectors made gains this week that ranged from 3.8% for communications (YAY $XLC) to 0.8% for energy. Q2 earnings season went underway and didn’t slow progress in any of the sectors. Delta Airlines, PepsiCo, JPMorgan Chase, Wells Fargo, Citigroup, and UnitedHealth all beat expectations.
Speaking of expectation, the fed funds futures market seemed to be friendly with the CPI report on Wednesday and seemed to cap out prospects of any additional rate hikes after the July meeting. There is a 93% chance of a 25 basis point hike in July, yet the odds of a second hike in the following meetings through the end of the year sit at11%, 53%, and 19.2% according to the CME FedWatch Tool. Several members of the Fed aren’t ready to shut out the prospects of future hikes, regardless the odds show a one and done approach moving forward.
That perspective had some tangible effects on the USD and other central banks. The ECB and BOE are expected to have further to go with their rate hike efforts. The USD index dropped by 2.4%. This move and the soft-landing view led to a jump in commodity prices this week including oil and copper (let’s go $COPX) which rose despite weaker data out of China that sparked calls for policy stimulus.
Monday: We had a strong start to the week. Even though $SPY was only up 0.2%, the broad-based $RSP was up 0.9% and gainers beat losers 2 to 1. Mega caps kept the major indices down as they were slow to start with $AAPL, $GOOG, and $MSFT registering losses.
Their losses followed the news that there will be special rebalance of the Nasdaq 100 ($QQQ) due to concerns of over concentration. This will occur before the open on July 24th.
Even with lagging mega caps, the broader market did well. Small caps, banks, energy, and chips all outperformed.
Economic data for the day was only the May Wholesale Inventories Report. It came in at 0.0% compared to an expected -0.1%. Inventory to sales ratios grew to 1.41 from 1.30.
Tuesday: The market had another good day. Again, mega caps lagged and the broader market performed. However, by mid-day mega caps started to gain momentum and contribute.
There was strong positive bias in the price action as gainers beat loses 3 to 1 at NYSE and 2 to 1 at Nasdaq. Volume was a little low, but that didn’t stop $SPY from gaining 0.7%.
Economic data for the day was only the NFIB Small Business Optimism Survey. Results rose to 91, up from 89.4. It was the highest level in 7 months and the biggest monthly gain since August 2022. Sales expectations were higher though inflation and labor shortages continue to be an issue for small businesses.
Wednesday: Today, the market reacted positively to the CPI reading, leading $SPY and $QQQ to hit new 52-week highs. They pulled back before the close, but still finished with decent gains.
Treasury yields took a plunge in response to the data, acting as another support factor for the market. Expectations for further rate hikes after the July meeting declined in response to the report.
Wednesday’s rally was broad, but mega caps really shined as they had been lagging in the prior few sessions.
The Consumer Price Index for June was up 0.2% MoM, beating the expected 0.3%. Shelter accounted for 70% of the increase. Core CPI was also up 0.2% MoM, again beating the 0.3% expectation. This was the smallest MoM change since August 2021. On a YoY basis, CPI slowed to 3% from 4% in May, marking the smallest increase since March 2021. Core CPI closed to 4.7% from 5.3%. There is clear evidence of promising disinflation for both total and core CPI that should temper worries about the Fed raising rates beyond its July meeting. Even a hike in July seems to be unnecessary in my opinion.
Thursday: Thursday was another strong day as the S&P closed above 4,500 and Nasdaq Composite settled near its high of the day. Mega caps boosted the indices, but many stocks participated in the rally. The positive was driven by the belief that the economy can pull off a soft landing and that the Fed is nearing the end of rate hikes.
That belief was supported by the better than expected PPI report after yesterday’s CPI report. Positive sentiment was also helped by some Q2 earnings surprises and guidance from $DAL, $PEP, and the $XOM acquisition news. Bank stocks also participated in the rally in anticipation of tomorrow’s earning reports from $JPM, $WFC, and $C, pushing banking ETFs to outperform on the day.
The PPI for final demand increased 0.1% MoM, lower than the expected 0.2%. Core PPI also increased 0.1% MoM, beating the expected 0.2%. On a YoY basis, PPI was up just 0.1% while core PPI was up 2.4%. Wholesale inflation pressures are clearly moderating, which should be a boon for profit margins for companies able to retain pricing power. Strong progress in PPI is usually an indicator of further progress on CPI, as the former leads into the latter.
Initial jobless claims for the week fell by 12k to 237k, beating the expected 247k. Continuing claims grew by 11k to 1.729M. Initial jobless claims continue to come in at well below any levels seen in prior recessions. This reflects a continue strong state for the labor market and is supportive of consumer spending growth and a soft landing.
Friday: There was good earnings news for the day from $UNH, $V, $JPM, and $WFC. Good economic news also rolled in from consumer sentiment and import/export prices. Also, positive rating actions for $MSFT and $NVDA occurred.
Despite all the positivity, the market had a meh day. Profit taking seemed to be occurring at the end of the big run this week. 8 of the 11 S&P 500 sectors closed with a loss. Decliners beat advancers by 3 to 1 on the NYSE and 2 to 1 at the Nasdaq.
The consumer sentiment index came in at 72.6, strongly beating the expected 65.6 and the prior 64.4. This time last year, the index sat at 51.5, nearly a 40% improvement. The takeaway here is that sentiment about the economy has improved with the slowdown of inflation and the ongoing stability in the workforce.
For June, import prices fell 0.2% in June and prices were down 6.1% YoY, the largest annual decrease since May 2020. Excluding fuel, import prices were down 0.4% for the month and 1.4% YoY. Export prices dropped 0.9% for the month and 12.0% YoY, the biggest annual decline EVER recorded.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week. I have also started a Twitch Channel called Games N Gains! Every Thursday at 6PM MST I go live to hang out, play games, and chat with y’all about stocks, charts, fundamentals, and anything else you like! I hope to see you in there!
