Hello Guys,
Welcome back to “Charts that matter”, where you can see the hottest charts of the week.
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Let’s see some good chart!
CPI: Hot but less than one month ago
The MoM CPI heatmap is very useful to understan better the inflation path: CPI could have peaked in June (0.9% vs 0.47% in July). That data could fuel the “transitory” narrative highly sponsored by Powell.
Tons of liquidity? Maybe not!
The Marshallian K is the ratio of money supply to nominal GDP, or the inverse of “Velocity of money”. It recently turned negative for U.S., that means that GDP is rising faster than money supply (Leuthold Group’s CIO commented the data saying “Put another way, the recovering economy is now drinking from a punch bowl that the stock market once had all to itself “).
In the Post-Great-Financial-Crisis-World this could be a warning signal: two other times the ratio became negatives and both times it was followed by a market correction (highlighted in yellow).
VIX close to new lows
Last CPI data have eased the biggest investor fear, and now VIX is going down, close to July lows. Now everything looks fine, but maybe it could be useful to evaluate any possible hedging, you never know…
Stocks with an interesting setup
Yields are not going up, but banks did!
Here you can see the charts of two of the biggest U.S. Banks: Goldman and Wells Fargo. Despite a fall in 10 years Treasury yield, bank stocks are delivering great performance and they just broke-out a big resistance. This is a bullish signal, but be careful: both are a bit oversold (a small consolidation could happen before to go up again).
Las Vegas Sands: Going to casino? Apparently not a lot! The company that owns big casinos in Vegas, Macao and the Marina Bay Sands at Singapore, is facing hard times due to the travel restrictions, that are hurting tourism in U.S., China and Singapore. Last quarterly results have been disappointing and the stock is in free-fall, close to March 2020 lows. The pain could not be over, and in the short term the stocks could go down more, but if the vaccines will do their job, and the new Covid outbreak will be controlled, this is a pure reopening play, with lot of potential upside for the long term.
Heineken: The beermaker had a good second quarter, above expectations, but the guidance for the rest of the year has been weak, still behind 2019 numbers. The market reaction has been negative and the new Covid waves around the world are weighting on the stock, that is now approaching a first interesting area: 90-92€. Long term investors could start to look at that level as a first entry point (obviously if Covid situation does not get much worse).
Have a great weekend guys!
Market Radar
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