08/13/25
The CPI data was released before the opening bell on Tuesday and it was mixed with the Core CPI coming in a little warmer than expected, but the stock market seemed to like it and the odds of a Fed interest rate cut in September actually went higher, which is a little surprising. The strength in stocks is also surprising a lot of people, including myself, and like many other market timers, I find myself frustrated that I don't have more money in stocks, however I also don't feel comfortable buying at these current levels, so the frustration lingers.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
It's a good problem to have because I am making money - just not as much as I can be. Let's just say, the situation could be worse. If the situation changes and stocks start tumbling, I will lose money, but not as much as someone fully invested. But I digress -- for a minute.
The CPI report came in better than expected at 2.7% year over year, while the Core CPI (exclude food and energy) was worse than expected at 3.1% YOY.
July CPI (from briefing.com)
CPI
Actual: 0.2%
Briefing.com Consensus estimate: 0.2%
Prior: 0.3%
Core CPI
Actual: 0.3%
Briefing.com Consensus estimate: 0.3%
Prior: 0.2%
Because of the tariffs, the "whisper numbers" were much higher, so this was a relief to the market. One thing I don't hear any people talking about, so maybe I have this wrong, but tariffs are not an ongoing inflation concern. Once they are in place, they are in place so they become static - not rising each year. They will move in sync with the prices of the underlying goods. The question is whether the tariffs are being incorporated into the inflation data yet, or is that still to come?
Could inflation be better? Yes. Is it a problem like it was a couple of years ago?
It's a very interesting stock market right now. I have been a victim of being very convinced that stocks were going to fall in August (if not late July as well) and perhaps too many people felt the same way, and that is ammunition for a rally.
Rick Rieder of BlackRock said on CNBC yesterday that "this is the best investment environment ever." Listen here. He also said the CPI data gives Fed justification for a half-point cut in September. Half point? Wow.
I doubt the Fed will go 0.50%, but a 0.25% cut in September is almost a certainty based on the CME Group's Fed-Watch, which has the odds at 93%.
I noticed that guest after guest on CNBC yesterday were saying similar things - the market looks great but may be due for a pullback. There was a such a bullish sentiment that maybe now is the time to be concerned?
I know I have been in the camp of looking for a pullback for longer than I should have been, but at least I left some money in the stock market - something I learned the hard way over the years by getting too bearish when the momentum was still clearly on the bulls' side.
We keep getting these little warnings signs, but then something comes out, like yesterday's CPI data, that brings the buyers right back. While the market didn't rollover or correct, we did see the S&P 500 down 7 of the previous 10 trading days before yesterday, and here it is at an all-time high again.
I feel we have so much to ponder and consider regarding what it all really means. Stocks don't just go up because everyone is bullish. It's actually closer to the opposite of that. So the dilemma is whether to go against the bullish herd, or stay the course while many people remain under invested with record levels of cash on the side lines, i.e., money market accounts.
We have the S&P 500 at an all-time high. Bitcoin is hanging around its all time high. Ethereum is up 25% in the last week. Gold hit all time highs last week. Is this all a result of he declining dollar?
If that's the case, there are signs of the dollar bottoming, so could something be changing or was he late July rally in UUP a fake out?
Oil is one thing going down. Currently $63, oil is $16 off its 2025 highs in January (and retested in June) and that's a good thing for stocks. The ducks are lining up, but are there too many ducks?
The airlines stocks took flight yesterday helping Transportation Index, which had looked like it was in some trouble. Take a look at the move in American Airlines yesterday, and it wasn't the only airline stock to do this.
I mentioned yesterday that this Transportation Index chart may be the most concerning chart out there right now. A 3% gain is quite a move for a "boring" index like the Transports, and it did recapture the 50 and 200 days averages, but that still looks like a bear flag, although it could be a double bottom, like we saw a couple of times in recent months.
I can feel myself catching that FOMO disease, and that often means we're near some kind of a peak - whether short-term or something more serious. But it may not actually change until I do something that would likely be foolish -- capitulate and buy back in at these all time highs.
Correction! We'll get the PPI report (Producer Prices) on Thursday morning before the opening bell.
The S&P 500 (C-fund) broke out to a new high yesterday and it has now completely retraced that late July negative reversal day. That's impressive, but yesterday was an emotional trading day and the next two days may tell us more than we know now about whether this breakout is for real, or a technical retest of the last new high. If someone bought on July 31st when the index was making a new high, do you think they might be ecstatic to have gotten their money back? That's typically why we see double top pullbacks.
The DWCPF / S-fund was up big on Tuesday, and it is looking to test its recent highs, but there is still a double dose of resistance near 2400. I can't deny that the action looks good but I tend to be skeptical when everything looks perfect, especially in mid-August. I guess that's why I'm lagging this month.
ACWX (I-fund) is also testing its recent highs and again a 0.51% loss in the dollar helped push it along. Now what -- a double top pullback or a breakout to new highs?
BND (bonds / F-fund) was flat after an early sell off got bought, and it closed at the highs of the day. That old April peak has been doing a great job as holding up as support.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
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Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
The CPI data was released before the opening bell on Tuesday and it was mixed with the Core CPI coming in a little warmer than expected, but the stock market seemed to like it and the odds of a Fed interest rate cut in September actually went higher, which is a little surprising. The strength in stocks is also surprising a lot of people, including myself, and like many other market timers, I find myself frustrated that I don't have more money in stocks, however I also don't feel comfortable buying at these current levels, so the frustration lingers.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
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It's a good problem to have because I am making money - just not as much as I can be. Let's just say, the situation could be worse. If the situation changes and stocks start tumbling, I will lose money, but not as much as someone fully invested. But I digress -- for a minute.
The CPI report came in better than expected at 2.7% year over year, while the Core CPI (exclude food and energy) was worse than expected at 3.1% YOY.
July CPI (from briefing.com)
CPI
Actual: 0.2%
Briefing.com Consensus estimate: 0.2%
Prior: 0.3%
Core CPI
Actual: 0.3%
Briefing.com Consensus estimate: 0.3%
Prior: 0.2%
Because of the tariffs, the "whisper numbers" were much higher, so this was a relief to the market. One thing I don't hear any people talking about, so maybe I have this wrong, but tariffs are not an ongoing inflation concern. Once they are in place, they are in place so they become static - not rising each year. They will move in sync with the prices of the underlying goods. The question is whether the tariffs are being incorporated into the inflation data yet, or is that still to come?
Could inflation be better? Yes. Is it a problem like it was a couple of years ago?
It's a very interesting stock market right now. I have been a victim of being very convinced that stocks were going to fall in August (if not late July as well) and perhaps too many people felt the same way, and that is ammunition for a rally.
Rick Rieder of BlackRock said on CNBC yesterday that "this is the best investment environment ever." Listen here. He also said the CPI data gives Fed justification for a half-point cut in September. Half point? Wow.
I doubt the Fed will go 0.50%, but a 0.25% cut in September is almost a certainty based on the CME Group's Fed-Watch, which has the odds at 93%.
I noticed that guest after guest on CNBC yesterday were saying similar things - the market looks great but may be due for a pullback. There was a such a bullish sentiment that maybe now is the time to be concerned?
I know I have been in the camp of looking for a pullback for longer than I should have been, but at least I left some money in the stock market - something I learned the hard way over the years by getting too bearish when the momentum was still clearly on the bulls' side.
We keep getting these little warnings signs, but then something comes out, like yesterday's CPI data, that brings the buyers right back. While the market didn't rollover or correct, we did see the S&P 500 down 7 of the previous 10 trading days before yesterday, and here it is at an all-time high again.
I feel we have so much to ponder and consider regarding what it all really means. Stocks don't just go up because everyone is bullish. It's actually closer to the opposite of that. So the dilemma is whether to go against the bullish herd, or stay the course while many people remain under invested with record levels of cash on the side lines, i.e., money market accounts.
We have the S&P 500 at an all-time high. Bitcoin is hanging around its all time high. Ethereum is up 25% in the last week. Gold hit all time highs last week. Is this all a result of he declining dollar?
If that's the case, there are signs of the dollar bottoming, so could something be changing or was he late July rally in UUP a fake out?
Oil is one thing going down. Currently $63, oil is $16 off its 2025 highs in January (and retested in June) and that's a good thing for stocks. The ducks are lining up, but are there too many ducks?
The airlines stocks took flight yesterday helping Transportation Index, which had looked like it was in some trouble. Take a look at the move in American Airlines yesterday, and it wasn't the only airline stock to do this.
I mentioned yesterday that this Transportation Index chart may be the most concerning chart out there right now. A 3% gain is quite a move for a "boring" index like the Transports, and it did recapture the 50 and 200 days averages, but that still looks like a bear flag, although it could be a double bottom, like we saw a couple of times in recent months.
I can feel myself catching that FOMO disease, and that often means we're near some kind of a peak - whether short-term or something more serious. But it may not actually change until I do something that would likely be foolish -- capitulate and buy back in at these all time highs.
Correction! We'll get the PPI report (Producer Prices) on Thursday morning before the opening bell.
The S&P 500 (C-fund) broke out to a new high yesterday and it has now completely retraced that late July negative reversal day. That's impressive, but yesterday was an emotional trading day and the next two days may tell us more than we know now about whether this breakout is for real, or a technical retest of the last new high. If someone bought on July 31st when the index was making a new high, do you think they might be ecstatic to have gotten their money back? That's typically why we see double top pullbacks.
The DWCPF / S-fund was up big on Tuesday, and it is looking to test its recent highs, but there is still a double dose of resistance near 2400. I can't deny that the action looks good but I tend to be skeptical when everything looks perfect, especially in mid-August. I guess that's why I'm lagging this month.
ACWX (I-fund) is also testing its recent highs and again a 0.51% loss in the dollar helped push it along. Now what -- a double top pullback or a breakout to new highs?
BND (bonds / F-fund) was flat after an early sell off got bought, and it closed at the highs of the day. That old April peak has been doing a great job as holding up as support.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
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