Relatively stronger  U.S. economic 'muddling' through the pandemic and even recovery belies the economic influences contributing inflation to our Country, even as much of the impetus was external (war of course part of it).

On Friday, the S&P digested what was reported as a 'stronger than expected' headline Non-farm Payroll number; and then recovered before new defensive action appeared.  I believe the 'official data' tried ignoring segment shifts, and particularly the number of people hold more than one job.

One more thing you don't hear much about: despite folks unwilling to work in a regular environment since Covid, there are millions of retiring 'Boomers'; so in a sense (unless AI really takes over the world quick, which it actually won't) you've got a probable fairly tight labor supply at least in the US for some time.

Some of this economic shifting might be reflected next week, when we'll look at subtleties in the latest Consumer Price Index. Although I expect a 'headline' number probably in the 8-9% annualized rate range, sectors where prices rise or fall might reinforce (or deny) my suspicion that some inflationary areas are fading already. If you get price declines in consumer durables it might suggest inventory 'glut' or surplus is replacing supply shortage (we know some of that is happening). But is it still merely in things like Appliances and TV's, or wider. I think wider but not severe yet; and of course not very much dip in Autos yet.

Some time back I mentioned insider buying was returning. Clearly it's almost a certainty that the insiders who did buy their own company's shares lost out for awhile; and wish they had waited for this Summer's far-better price levels.

However there's a 'silver lining' to other investors in such cases; as while they are as sour as the executives about the price declines, they might interpret it (where fundamentals haven't really changed) favorably that insiders were at it at prices above where we are. Hence those executives presumably saw value at the higher levels, and if they were doing that in the 2nd Quarter; they're for sure likely to have conservative 'guidance' for Q3; while likely viewing prices in their shares as too low. That might bode well later on, even as it takes time.

In sum: Friday's nuances of the Jobs number suggest it wasn't effectively so strong as a superficial glance suggests. The Wholesale Inventory numbers also support some sluggishness out there. The agreement to provide a 'valve' needed for the gas lines from Russia to Germany should ease that aspect (for sure not endorsing sending more money to Russia; just pointing it out); while the latest overflight into Taiwan's Air Identification Zone by Chinese fighters is concerning; because this was one of the rare times China crossed beyond the midpoint of that zone in the Taiwan/Formosa Straits; that's very provocative.

Also late Friday (around the time S&P faded, though impossible to correlate, if a factor) we heard Russia's Putin again threaten Ukraine 'as if' war has barely started (to use Putin's expression) if they refuse to make peace with Russia.

Bottom line: the market shuffled or consolidated in a satisfactory way Friday in response to a Jobs number that can be interpreted as preliminary slowing, given the multiple jobs aspect. Also Wholesale Inventories suggest slowing as well. I realize there are mixed views on this; but if CPI affirms a softening; that will breathe more life into the overall firming of the market.

Late Friday, Elon Musk terminated his deal to buy Twitter. The breaking point of what has been a drumbeat of chatter about Elon's unhappiness; was failure of Twitter to provide 'data' (presumably fake accounts) he stated considered in repeated messages as important 'to him'. Twitter might contest his claim that a paucity of information was provided; so Twitter could 'in theory' try to push it further (sure they wanted the $54.20 a share).

Is Musk basically trying to lower 'price' in this deal; as he's gotten advice from others saying he was offering 'too much' for Twitter. But Twitter says he got the information; waived due diligence, and is responsible to buy the Company. Possibly a drawn-out legal process or the parties arrive at a settlement / compromise. Nobody knows yet. Now, the 'real' Company of Musk, Tesla, was up over 26 Friday; so it's not negatively effected and might actually do better if the deal 'really' falls apart for good. Musk sold millions of shares of Tesla in a sense for this deal; hard to say terminating the deal causes him to buy back in TSLA; but given competition flowing over the year ahead; I doubt there's that much incentive for him to do that. But you never know with Elon.

Absent reactions to this and the impetuous Musk (who might just be negotiating in his particular style); the new week really will home in on the CPI. New developments in the world this weekend aside, we might consolidate more before just sort of range-bound or holding-pattern (can be similar) until the CPI.

More By This Author:

Market Briefing For Thursday, July 7, 2022
Market Briefing For Wednesday, July 6, 2022
Market Briefing For Tuesday, July 5, 2022