3 Things… 

1. Trends/Bonds: S&P500 is only 4.5% below its 200-day MA, momentum to the upside/downtrend fading; NASDAQ is now only 6.6% below its 200-day MA, momentum vigorously to the upside/downtrend  continues to weaken; 73% of the S&P 500 and 67% of the NASDAQ, respectively, are above their 50-Days; Bulls31:Bears39; VIX 21.32; [1] The yield on the benchmark 10-year Treasury note rose 16 basis points higher at 2.842%, and the yield on the 30-year Treasury bond rose nearly 12 basis points to 3.087%. Yields move inversely to prices and 1 basis point is equal to 0.01%. [2]
2. Sectors: Best 3-month sectors: Utilities (+3.84); Tech (+3.32); Consumer Discretionary (+3.06%); Crypto/Bitcoin $23,10.32; [3]
3. Structured Note Values
   1. KRE Redeemed at 100% Par in August
   2. XLE/XOP Lowest, XLE Pricing Value 3/25/22: 78.75, Current: 73.30, Delta -6.92%; XOP Pricing Value 3/25/22: 138.60, Current Value: 130.01, Delta -6.20%
   3. Lower of GDX/GDXJ; GDX Pricing Value: 4/29/22: 34.99, Current: 25.93 Delta -25.89%; GDXJ Pricing Value 4/29/22: 42.95, Current: 33.16 Delta -22.79%
   4. Lower of GDX/GDXJ; GDX Pricing Value: 5/26/22: 32.39, Current: 25.93 Delta -19.94%; GDXJ Pricing Value 5/26/22: 39.67, Current: 33.16, Delta -16.41%
   5. ARKK Pricing Value 6/15/22: 39.42, Current: 49.39, Delta +13.57
   6. ARKK Pricing Value 7/15/22: 44.11, Current: 49.39, Delta +11.97%
   7. SPX Pricing Value 7/18/22: 3863.16, Current 4127.31, Delta +6.84%
   8. RTY Pricing Value 7/18/22: 1744.37, Current: 1910.78, Delta +9.54%
   9. NDX Pricing Value 7/18/22: 11,452.42, Current: 12596.95, Delta 9.99% [4]

This Week’s Quotable

“One the one hand, [the jaw-dropping Payroll Report of 528,000 new jobs) gives the Fed more confidence that it can tighten monetary policy without leading to a widespread rise in unemployment. But it also shows that the labor market isn’t cooling, or at least wasn’t cooling as fast as anticipated. … At the very least, even though it’s a surprise, I think the Fed is still on track to continue tightening monetary policy. Daniel Zhao, lead economist for job review site Glassdoor. Reported by CNBC’s “Economy” Friday August 5, 2022. [5]

Recent Highlights

• Nonfarm Payrolls increased 528,000 (08/05)
• Average Workweek remained 34.6 (08/05)
• Average Hourly Earnings increased 0.5% (08/05)
• Unemployment Rate decreased to 3.5% (08/05)

In the Markets

Wall Street witnessed a mixed session on Thursday, dragged down primarily by energy stocks. Treasury yields and oil prices fell as the Bank of England raised interest rates to a historic high and provided a gloomy economic outlook. Weekly jobless claims came in a bit higher than expected. Two of the three major stock indexes ended in the red, while one ended in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.3% or 85.68 points to close at 32,726.82. Twenty components of the 30-stock index ended in red, while nine ended in green and one remained unchanged.

The tech-heavy Nasdaq Composite finished at 12,720.58, gaining 0.4% or 52.42 points to a fresh three-month high.

The S&P 500 lost 0.1% or 3.23 points to end at 4,151.94. Seven of the 11 broad sectors of the index closed in the green. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) gained 0.5%, 0.4% and 0.4%, respectively, while the Energy Select Sector SPDR (XLE) dropped 3.7%.

The fear-gauge CBOE Volatility Index (VIX) was down 2.3% to 21.44. A total of 11.38 billion shares were traded Thursday, higher than the last 20-session average of 10.76 billion. Advancers outnumbered decliners on the NYSE by a 1.02-to-1 ratio. On Nasdaq, a 1.40-to-1 ratio favored advancing issues.

The Bank of England Raises Interest Rate and Inflation Outlook

On Thursday, The Bank of England raised interest rates by the most since 1995 in an attempt to pull down surging inflation, which they now say is on track to top 13%. The 50-basis-point rise catapults the interest rate to 1.75%, its highest since late 2008, even as they forewarned that recession is imminent.

This new forecast by the nation’s central bank is even worse than recent projections by the International Monetary Fund, which has said Britain will have the slowest growth and the highest inflation in 2023 among the G7 economies. Britain has been reeling from a surge in energy prices due to the Ukraine War, and a wide-spread cost-of-living crisis in recent months.

Coupled with signals coming in from Fed officials that there were no planned rate cuts in the immediate future, this gloomy outlook from yet another major central bank pushed investors to the safer shores of the bond market as treasury yields went down. The U.S 10-year treasury yield slipped in early trade before pulling back to 2.685%, a 6.3 basis point decline for the day.

Crude Oil sank in apprehension of a global economic downturn to levels last seen before Russia’s invasion of Ukraine. Brent crude settled down $2.66 at $94.12, the lowest since Feb 18. WTI crude settled down $2.34 at $88.54, the lowest since Feb 2. Energy stocks, thus, became the biggest drag on the markets.

Consequently, shares of Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) lost 4.2% and 2.7%, respectively.

Economic Data

The Labor Department said on Thursday that initial jobless claims came in at 260,000, increasing 6,000 for the week ending Jul 30. The previous week’s level was revised down by 2,000 from 256,000 to 254,000. The four-week moving average came in at 254,750, an increase of 6,000 from the previous week’s revised average of 248,750.

Continuing claims came in at 1,416,000, increasing 48,000 from previous week’s revised level. The previous week’s numbers were revised up by 9,000 from 1,359,000 to 1,368,000. The 4-week moving average came in at 1,375,250, an increase of 11,000 from the previous week’s revised average. [6]

Sources: [1][3][4] Stockcharts.com; [2] CNBC.com; [5] https://www.cnbc.com/2022/08/05/jobs-report-july-2022-528000.html; (cnbc.com); [6] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday July 29, 2022;