Stocks Rise On July 1, And I Will Be Taking Some Time Off

Stocks Finish Flat On July 1, And I Get Ready To Take Some Time Off

Stocks finished the day mixed with the S&P 500 grinding higher and the Nasdaq 100 finishing flat. It was another one of those extraordinary rotate-around days. But it was also the first day of the quarter and the month, which means it was an inflow day. I’m not sure how much of that had to do with today’s rally or not, but tomorrow will be a fairly important day with the BLS jobs report.

Today’s ISM report suggests that the payroll report may not be as strong as some think; given the employment, the index fell into contraction in June. But the BLS job report has been nearly impossible to get right since the pandemic began, so it’s anyone’s guess how the results will turn out. Estimates are for 700,000 jobs created in June and an unemployment rate of 5.7%.

The ISM report also showed that prices paid reached their highest levels in around 40 years. Yet, yields hardly even reacted, with the 10-year holding around 1.46%. I still believe that inflation will be transitory as the dollar pushes higher, pressuring commodity prices lower and likely slowing global growth. It is why the 10-year rates have been stubbornly moving lower and are likely to continue to move lower.

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Meanwhile, the dollar continues to push higher and is getting very close to a big resistance level at 93.19. If that level falls, it could have a rather big move up from here, potentially to around 95.

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Despite that, the reflation trade showed some life today, but I can’t imagine it will last. Because lower interest rates and a stronger dollar are exactly the opposite of what is good for the reflation trade, in fact, it should put more downward pressure on these sectors.

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Micron MU fell sharply today, nearly 6%, after reporting results yesterday. They didn’t look bad, but clearly, the expectations were big given the stock move higher. There is no surprise the stock fell; now it would be even better if it fell more, because after all, I was looking for lower prices, and I still am; nothing changes in my book. But it is good to know I can still read the options market.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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