Canadian Consumers Speaking With Their Loonies
1. Canadian retail sales dropped 1.1% in May compared to April (reported on July 24th). Early estimates for June suggest an increase—for now—but that’s based on like half the figures.
Here’s the thing: this figure was worse than expected, and core retail sales also declined. Third month in a row, if I’m not mistaken.
Canadian consumers are speaking with their loonies. There’s a big sentiment problem in Canada, and it’s showing up in their spending now. I seriously think wealth erosion and high debt have a lot to do with it.
ECB Holds Steady, U.S. Home Sales Cool
2. As expected, the ECB didn’t cut (from yesterday as well). Essentially because they see uncertainty over the U.S.-EU deal. I also think this is a similar reason why the BoC isn’t cutting.
If a deal follows between Canada and the U.S., I think BoC cuts too.
This morning though, Trump said there’s a 50-50 chance of a deal with the EU. So let’s see.
U.S. new home sales also came in cooler than expected (yesterday too). The annual pace is at 627,000 units. In 2021, it was around 1 million units.
Obviously, rates are a big problem—7%+ mortgage rate.
Gold: Levels, Seasonality & Sentiment
3. Watching gold very carefully.
I think $3,300 is a big level to watch, and a move below it could take the yellow metal lower.
Gold prices have been extremely choppy for months now, with massive resistance at $3,450. We only get real upside if gold is able to break above this resistance.
Seasonality-wise, August and September have been poor-performing months. September especially is a month where you’ve got to be careful. Buying opportunity usually comes in December.
Also, in case we see broad market selling, don’t be shocked to see gold getting sold hard.
S&P 500: Calm Before the Storm?
4. Take a look at the trading ranges on the S&P 500. Notice anything?
The index is in uncharted territory, but trading ranges are really shrinking. Between April and now, there’s been a serious collapse in the trading range—and it makes sense since April was super volatile.
But I think ignoring this could be a mistake. Is it happening because of summer months?
Also, remember: earnings season continues. Big weights will cause the index to move.
Trump vs. Powell: Fed Independence at Risk?
5. Did you catch that interaction between Trump and Powell today, where they talk about building costs, etc.?
I seriously think that could’ve been a scene from The Office. I can totally see that sort of exchange between Michael Scott and Oscar. And the guy standing beside Trump with no hard hat? That’s Dwight.
Anyway, keep in mind that Trump hired Powell. Also, if Trump can influence what happens to interest rates, that raises a big question about Fed independence.
That’s the key concern in all this drama between Trump and the Fed.