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40-Year Highs…of the wrong kind

Well folks, it’s hump day and over the hump, we are not yet as the slew of material shifts that have hit the market over the last couple of weeks is only being further compounded today. A leading contributor is this morning’s inflation print of 1.3% for the month of June, this has brought inflation to 9.1% for the trailing 12-month period → read on for a detailed breakdown of what has driven this continued increase in prices.


“Let us not take ourselves too seriously, none of us have a monopoly on wisdom” - Queen Elizabeth II


Market Talk

Given the red hot inflation numbers surfacing at 8:30 today, the market has been posturing for a bloody open as the S&P 500 is down over 125bps in the premarket - this comes as the market traded down again yesterday mainly on the turmoil within Sri Lanka following the people’s coup against the incumbent government as well as the increasing possibility of a Chinese invasion of the Philippines with the US sending a destroyer into the South China Sea to reaffirm their intention of defending the ally should push come to shove (read more here).

Panning back to inflation, the US Bureau of Labor Statistics above, it’s depicted that energy was again the main culprit in contributing to this 1.3% increase as the energy index rose 7.5% over June. A far second and third were other commodities (less energy) and food prices respectively getting 1% and 0.8% more expensive.


Short: Conagra Brands, Inc (CAG-NYSE) | Timeline: 3-4 days

Conagra Brands, Inc, which operates through Grocery & Snacks, Refrigerated & Frozen, and Foodservice segments across North America, are set to report earnings tomorrow - and in light of the recent inflation report, premium grocery items are bound to suffer due to lower margins and less demand, leaving Conagra suffering through this upcoming earnings season. Taking a look at the chart, technicals coincide with the red hot inflation narrative as bulls have exhausted the MACD to its upper level of +0.50, and is now pointing downwards, and price action has formed a rising wedge - a trading pattern that you have probably seen us capitalize on quite a bit now, as it is a very reliable reversal pattern.


Chart of the Day

The Eurozone’s trade surplus has been completely wiped out by the energy crisis and this has been a primary driver in the USD/EUR pair reaching parity.

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