Now Ware is seeing a higher open.
This does come on the heels of US stocks closing out last week higher by at least 1%.
Now the Nasdaq Composite hit a fresh record on Friday, surging 3.9% over the past five sessions, and the S&P 500 finished just shy of a record close, gaining 2.4% last week.
Also last week, Trump announced his pick to fill a vacancy on the Federal Reserve Board.
This week, all eyes on US inflation figures, especially in the Aftermath of downward non-farm payroll's revisions for June and May.
Now a recent survey from the Institute of Supply Management showed a notable jump in prices paid by service providers.
Joining me to weigh in as we kick off a new week is Chris Versace, CIO of Tamatica Research.
Chris, good morning.
Happy Monday to you.
All eyes are on inflation this week.
The Fed rate cut expectations are starting to kick in.
So what are you looking out for when it comes to consumer and producer figures this week?
Well, Remi, I think you hit the nail on the head, you know, over the last, you know, several days we've seen the market's expectations for a September rate cut, you know, move dramatically higher, and I believe coming into this morning, if you look at the CME Fedwatch tool, it shows potentially 3 cuts by the end of the year.
That's up from 2 that the market had.
Expecting and that the Fed telegraphed in their last update of economic projections.
So there's a lot of expectations going into this core CPI print for the month of July.
To the extent it comes in a little warmer than expected, that would give the Fed a little more firepower to say.
You know, the impact of tariffs, you know, is being felt.
We are seeing inflation creep higher.
Yes, there was a big revision in the July employment report, but when we look at the July employment figure, we still saw 73,000 jobs being added.
The economy, according to GDP expectations, you know, continues to be to 2.5% so far based on all the cumulative data.
Um, so I, I think that unless we see a dramatic drop in the core CPI figure, I think the Fed is going to continue the path it's on.
That could disrupt the market, Remy.
Yeah, and Chris, as we count down to the September Fed meeting, believe it or not, the Fed's annual economic policy symposium in Jackson Hole, Wyoming is only a few short weeks away.
That gathering will be held August 21st through the 23rd, and it is also one of the longest running central bank conferences in the world.
So what do you expect to hear from that gathering this year?
Well, I mean, obviously they're going to be talking about the items on the agenda as it relates to, you know, economic policy, not necessarily monetary policy, but we will be listening to see what Fed Chair Powell has to say when he gives his keynote address.
Sometimes, you know, Jackson Hole can be an event worth listening to from that perspective, sometimes not.
But what I think what's kind of interesting this time around, Remy, is the day before.
Or Powell speaks, we'll be getting the August flash PMI readings from S&P Global.
Obviously we'll want to see what they have to say about the pace of job creation and inflation pressures in the month of August if it's anything that's outsized, you know, better than expected job creation, or we continue to see inflation tech higher, that could sway the Fed chair in his comments in that keynote address.
And Chris, I do want to get to the gains that we're seeing for the major US stock averages.
We saw strong weekly gains last week for the Dow, the Nasdaq and the S&P 500.
So tell me about the gains as well as the drivers and what sectors you're keeping an eye on, especially as we kick off the weekend.
I do want to get your take on Nvidia and AMD agreeing to pay 15% on China AI chip sales in their US deal.
OK, so let, let's just talk about some of the earnings that we're getting this week and where the market is.
You know, we're bumping up against the, against all-time highs, you know, 6427.
Um, you know, the earnings expectations, you know, have been better than expected for the July, for the, sorry, for the June quarter.
Guidance continues to come down for the S&P 500 in the back.
Half of the year relative to the first half of the year from an earnings growth perspective.
So I think you're starting to see folks kind of question some things, including the market multiple.
But as you point out, there are areas of strength that I would argue, Remy, that the AI trade is very much intact.
We can take a look at July revenue reports last week from TSM.
Foxconn, even this morning with Micron increasing its guidance that tells us that the capital spending we heard all about the last few weeks from big tech is rolling through, demand remains very, very strong.
So obviously I continue to watch that area.
We're going to get some interesting data later this week on the consumer.
With July retail sales, my perspective is the consumer is bifurcated.
They are spending where they want to spend and cutting back where they can.
I think if we look at some of the comments last week from Expedia, as well as recent airline forecasts from the back half of the year, that kind of confirms the spending where they want to spend.
But we also take a look at July revenue report from Costco up big tells us that consumers are looking to cut back where they can.
So continuing to watch that and we'll look for a lot more confirmation on that later this week with earnings from tapestry, but in the coming weeks as well as the swath of retailers report.
Yeah, and speaking of which, and building on what you just said, Chris, it is back to school season, and American consumers are wondering how tariffs are actually going to play out.
Trump's reciprocal tariffs took effect at midnight last week, impacting imports from multiple countries, but for Americans out there who are wondering what are the long-term impacts here, what would you say to them?
Well, I would say first, I mean, when we think about the back to school spending, remember Amazon's Prime Day this year was not 2 days, it was a week, and I think we saw a lot of pull forward in that type of spending as well as competing spending, you know, sorry, computing, competing offerings from the likes of Walmart, Target, and a bunch of others, and I think we'll see that.
The non-store retail sales category on Friday's July employment report and you know the question on tariffs and incremental cost pressures either on companies and trying to push through higher prices, I do think that really speaks to this bifurcated consumer that we're talking about.
So if you're thinking about, you know, shopping for apparel back to school could very well be a strong driver for people shopping either, you know, at Costco, TJX, bras stores, and the like, you know, maybe looking for discount electronics where they can and other things.
So, you know, very interesting thing to watch, and I don't think we've seen the last of this play out.
OK, Chris, well, always great talking to you.
Thank you so much for joining me as we kick off a new trading week.
Thanks, Remy.
