Consumer Sentiment Rules – by Justin Vaughn, Editor, Options Trading Report)

Solid early released earnings for the second quarter, along with an array of positive trade negotiations lifted the Nasdaq Composite and S&P 500 indexes to new levels. Early financials, artificial intelligence, chips and high-tech stocks announced earnings and volume results that have defied many analysts and economist expectations. The University of Michigan consumer survey was a positive one that exhibited strong sentiment for July, a good turn-around from previous months. The U.S. consumer has ‘paid-the-price’ for staples and big-ticket items, now feeling better about higher prices, U.S. quality, and the support of American manufacturing companies. While inflation edged up 0.3%, the year-over-year impact was minimal. For the week the Nasdaq and S&P 500 were up 1.5% and 0.6% respectively, while the Dow Jones Industrial Average was down 0.1%…near flatline. Continued snipping at Jerome Powell, the Fed chair, by President Trump for his removal also has contributed to a sense of market uneasiness. Gold futures perked up as popularity amongst investors has renewed, but ‘shakyness’ still persists in the equities markets. As trade negotiations continue, there’s a general feeling that portfolios should devote a smaller percentage to precious metals of gold, silver and even platinum. The 10 year Treasury yield climbed up to 4.432%. The dollar, “weighted against an assortment of world currencies” crept a bit higher, gaining back valuation lost the past several weeks. Oil was weak all week as the barrel price hovered near $65.55, while production giants complained that at current barrel prices profits are very shallow.

Heavy techs, including the magnificent 7 drove the Nasdaq and S & P 500 to yet another record high on Monday. While the Dow Jones flurried higher throughout the day it faltered near close just below flatline. Investors and traders are cautiously trying to unravel trade progress and the firmness of the August 1st President Trump deadline. 59 corporations have released 2nd quarter financial results with 86% beating Wall Street’s predictions, giving way to ‘pushing’ indexes higher. Gold has consistently edged higher over the past 5 weeks, trading in the $3,400.00 per troy ounce category. Crypto currencies sparked higher late Monday, with strong buying driving currencies higher. Tuesday’s session was again marked by President Trump’s successfully putting together an ‘agreeable trade alliance’ with Japan, a large trading partner. Hailed by President Trump, he proudly proclaimed: “We just completed a massive deal with Japan, perhaps the largest deal ever made.” As Tuesday’s market closed, indexes were flat, with investors on the sidelines looking for fresh news. Earnings reports continued to impress as heavy tech and AI stocks continued to release.

Gold surged to an all time high of $3,444.30 Wednesday as investors leaned into a “must-have” attitude as ‘basic-buying’ drove prices. Both the Nasdaq and the S&P 500 continued to climb to record highs, thanks to the Japanese trade agreement and the continuing 2nd quarter reporting, with a majority beating expectations. Wednesday’s Dow Jones gained 450 points. All three indexes finished Thursday’s session near flatline as the President investigated the $2.5 Billion Federal Reserve Headquarters renovation that he feels was over budget and too extravagant. After the inspection he seemed to back down, taking a more conciliatory stand. Even with a lackluster market the S&P 500 notched another record level.

Big news on the Soda Front… Coca Cola has officially announced the use of Cane Sugar in its premier drinks, Diet and Coke labels, starting in the Fall of 2025. High Fructose Corn Syrup will share Cane Sugar initially, with Cane Sugar eventually garnering the majority of production. CEO James Quincey said in an interview; “This is really an ‘and’ strategy and not an ‘or’ strategy.” The first Cane Sugar Coke retail will initiate in the U.S., then after production ramps up other larger countries will begin to be shipped. Ironically President Trump made a pre announcement that; “REAL Cane Sugar will be used in Coca Cola drinks.” At the time the company said “it appreciates the president’s enthusiasm for his suggestion for its drinks.” Coke revenues were higher for the quarter, up 1%. Price increases of about 6% helped to add volume, with earnings per share increasing from 56 cents to 88 cents a share, according to FactSet. Industry economists all agree that the ‘total’ switch to Cane Sugar would cripple the ‘sweetener equation’ in the short term by the immediate increase in demand. That would force heavy buying from leading sugar producers, Brazil and Mexico. (Targeted tariff countries) Presently 45% of cane sugar is grown in Louisiana with the balance coming from sugar beets grown in the Red River Valley of Minnesota and North Dakota.

RUMBLINGS ON THE STREET

Osterwels Capital Management, Barron’s – “The financial markets continue to be awash in liquidity … Money supply as measured by M2 stands at an all-time high. It jumped 4.5% year over year in May, marking its 19th consecutive monthly increase. It has now surpassed the previous all time high of $21.86 trillion.”

Brenden Buck, a former communications strategist for two prior GOP House Speakers, WSJ – “I think the question is how much of this bill- which is relatively unpopular is front of mind for voters, and I don’t think there’s much evidence that it is front of mind.” (referring to past history of voters not accepting large bills, commenting a few weeks after voters had a chance to digest it)

Joshua D. H.Sager, Vice President-Loan Officer, Old National Bank, Evansville–Indianapolis, Indiana, – “Commercial loan activity remains robust as companies big and small brace for ongoing tariff tumult. Working capital is king, thus many companies are ensuring they have a safety net, via line of credit or other short term working capital loans”