E Market Briefing For Monday, June 28

A step-up in growth is essential for next year, if current big-cap prices have a chance of being maintained. That's also where monetary policy and Covid fit into the picture. However, growth and tech must participate for S&P advance.

We are well past the peak strength and enthusiasm for our 15-month rally that dates from not just my 'bottom' call; but what I believed to be a 'cycle low' that March 23rd of last year. Yes S&P overdue for more corrective action but most are leaning that way; balanced their holdings; hence the limited disruptions.

That's so far of course. Every now and then we get a shot to the S&P or NDX which serves not so much a wake-up call for a trend reversal; but a warning of potential volatiity as many of these hedge managers use similar algorithms.

The leadership you know; much has been jammed into 'consumer related' or home-related stocks; and that's something that might run out of steam just for now. What matters is whether things pick up here and in Europe late this year.

Whether the 'reconciliation bill' has tax increases and/or spending increases is not known; but also isn't the core push behind this market. Again, the Fed. But it is not bad for stocks 'if' these bills go thru. That doesn't mean I view what all this does with respect to Debt favorably (I don't); I'm just reflecting reaction we expect from the market.

Some believe there is more to this market than the Fed; but watching 'actions' in response to anything any Fed-head says, substantiates their dominant role. Relative to the history of monetary policy, any tapering or even rate hike will of course be minor to say the least; however it's the signal Wall St. cares about.

Commodities are high; some like lumber are coming down as I expected; but a slew of other factors make this very slow going; and as I've suggested, view inflation as 'mostly' enduring going forward, rather than 'transitory'; although it is possible to get enough consumer frustration to actually see some slowing of demand; but there's really no sign of that (other than Univ. of Michigan that shows in the Sentiment cards the prospect that this spending spree is limited).

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William K. 3 months ago Member's comment

As for that collapsing High Rise: There is a Biblical caution about building on sands, and so the clear warning was delivered a long while back. It should be clear to all that at least some of those folks building on sand consider that they are building TEMPORARY structures. And very likely those pilings do not go nearly deep enough.

As for the inflation concern, "transitory" only means not permanent. No mention of duration, just that it is shorter than "forever."