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 real economic news showed the economy was still in steady growth mode including solid job hirings. Treasury Bond yields declined for the month which affirmed that oil price inflation is indeed transient. The chaos in the headlines really had more to do with concerns over the profitability of the massive AI buildout and trying to support the last two months S&P 500 rally on the back of the AI trade. Overseas, despite the earlier concerns over oil and supply line disruptions associated with the Iran War, business activity surveys for May and June remained unchanged at mostly moderate to strong levels. The S&P 500 ended the month at -1.06% with Foreign Developed at 0.06% and Emerging Markets at -1.41%. In the US, Small Caps substantially outperformed..... (click for more)