TMAD Update: Positioning for SPY/QQQ and CPI Prep
$SPY $QQQ
Hi everyone,
Market still looks week. Better to stay on sidelines. We have PPI tomorrow at 8:30am ET.
Today data, May CPI was in line to slightly better than feared:
Headline: +0.5% m/m, +4.2% y/y (energy-driven, highest in ~3 years).
Core: +0.2% m/m (softer than 0.3% expected and April’s +0.4%), +2.9% y/y (in line).
It wasn’t “bad” on the core/services side. The hot headline was mostly obvious energy/geopolitical noise from the Iran situation. Markets initially pared losses on the softer core, but then sold off hard anyway (Dow –953 pts / ~1.9%, S&P –1.6%, Nasdaq –2%).
Why the market was weak despite “okay” CPI
War in Iran is escalating and some profitable AI names are being sold pre-SpaceX IPO. As we said, this week is better to stay away and caution recommended.
The CPI didn’t add extra hawkish pressure, but it also didn’t give a strong enough “all clear” to overcome the risk-off tone.
AI has proven far more of a cost center than a profit engine for most companies. The explosive rally and the sky-high valuations it produced have raised more than a few eyebrows. With multiples not seen since the dot-com bubble, there is still considerable downside risk in this market.
It can happen now or later this summer. As said, August is even more vulnerable.
PPI setup for tomorrow
Consensus (varies slightly by source):
Headline m/m: ~ +0.4% to +0.6% (big cooldown from April’s +1.4% spike).
Core m/m: ~ +0.3% to +0.4%.
YoY: Headline expected around 6.4% (vs 6.0% prior), core ~5.4%.
Let’s see the supply demand and GEX on indexes, and see SPX levels for tomorrow.
