The market was hit with two body blows today, the first was the hotter than expected CPI Print which came in at 8.6% on expectations of 8.3%. The second blow was the lowest reading for the University of Michigan consumer sentiment index, ever. Yes, you heard that right. Those who took heart at Bostic’s comments that the Fed could pause in September have had their hopes dashed. No doves will be taking flight any time soon and 75 bps is back on the table for next meeting.

My work continues to flag that the combination of a hawkish Fed/tightening policy, elevated inflation, slowing growth, rising interest rates, strong USD, continued geopolitical tensions, and my expected analyst profit cutting cycle are creating significant headwinds for the US equity markets.  With risk premiums also rising, I am reiterating my unfavorable view on equities, and with a definitive downside price break of 4000 for the S&P 500, it looks quite clear that the late May lows will be tested, and my work expects it to be breached.  Thus, I am still targeting my next downside target of 3600-3500.  Also, notice my subtle inclusion of the word “next”.  I am getting concerned that my target zone may not be the final stop, but I don’t have enough evidence yet to considerably r...

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