Earnings to the rescue?
Will big company earnings provide support this week?
Quick summary:
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CPI came in slightly hot, showing early signs of tariff-related inflation, while PPI remained steady as expected.
SPX is diverging from positioning flows, increasing the risk of a short-term pullback over the next few weeks.
However, earnings are also in focus this week: Google and Tesla report on Wed. Also this week: T-Mobile, Verizon, Coca-Cola, GM, BlackStone, IBM, etc.
The competition
The window of weakness just opened, and the leaderboard’s holding steady—for now. CPI is heating up, positioning is changing, and this week could quietly set the tone for what’s next.
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Last week’s performance
Last week brought a slightly hotter CPI on Tuesday and a more in-line PPI on Wednesday. That CPI print is starting to reflect early tariff effects, especially in categories like household furnishings and recreation goods, which just posted their strongest price growth since COVID. PPI didn’t show it, but that’s expected since tariffs are excluded from PPI calculations. Transportation remains untouched for now, but it’s the sector to watch next. So far, the impact on overall inflation is muted, which is probably why the Fed still isn’t in a rush to cut.
Meanwhile, we’re seeing a growing divergence between SPX and institutional positioning, specifically momentum-to-value flows, which often signals a pullback 3 to 5 weeks out. With vixperation now behind us and markets technically overbought, the odds of a short-term pullback are rising, especially if we don’t get clarity on the August 1 tariffs or the Treasury’s expected long-end issuance cuts.
This week’s data drops start tomorrow, with June existing home sales on Wednesday and new home sales Thursday. Last month’s existing sales came in at 4 million annualized, still stuck near record lows. Jobless claims and durable goods orders close out the week. Powell and Bowman are speaking today at a Fed event, but with the blackout period in effect, don’t expect anything market-moving. Focus stays on tariffs, rates, and Treasury’s next move.
And of course, earnings. Last week kicked off well, and this week we get our first two of the Mag7: Google and Tesla, both on Wednesday. Along with some other big names. There might be some weakness in this market, but earnings will provide the final verdict.
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