The economy continues to show resilience despite the back and forth Iran War headlines. Manufacturing is reporting increasing strength in July, which is contributing to a similar increase in business sentiment. The consumer sentiment is steady as reflected in strong June Retail Sales. While energy prices continue to whipsaw headline inflation, the June “core” CPI came in at 0.0% versus 0.2% versus the prior month and 2.6% versus 2.9% year over year versus the prior month, which is allowing financial markets to look through the headline numbers. Overseas, the were no changes in the relative data. The S&P 500 was dragged down -1.55% by a large selloff in semiconductor stocks in reaction to a surprise release of a new AI model by China. That just.... (click for more)

The Memorandum of Understanding (MOU) was apparently not well understood. Iran went back to harassing shipping in the Strait of Hormuz, the US resumed military strikes in Iran and oil prices predictably spiked. That led Treasury Bond yields to rise which hammered US Interest sensitive Bonds and popped the bubble on the AI trade. Yet the economic news remained quite bullish with manufacturing holding its solid growth rebound, the services sector moved to higher levels of solid growth and employers holding on tightly to current employees. Therefore, it is not surprising that the main business and consumer sentiment indexes have remained moderately positive, despite the headlines. While housing is still sluggish,...... (click for more)