POSITION: Short Financials (XLF)
Nothing has changed in either our Fundamental Research View (Growth and Inflation trends = Stagflation) or our Quantitative Risk Management view (price, volume, volatility signals are all broken TAILs at this point).
- Long-term TAIL resistance remains 1256
- Immediate-term TRADE line of support was 1172 this morning, now 1166 is resistance
- No immediate-term downside TRADE support to 1107
Stagflation, as we define it (we don’t do Keynesianism) is when Real-GDP Growth < Headline Inflation Growth. While this week’s PPI and CPI prints of +7.2% and +3.6% year-over-year growth are, to a degree, lagging indicators – it doesn’t change the economic reality that headline inflation growth is running significantly above real economic growth. Periods like this earn much lower SP500 multiples.
Keith R. McCullough
Chief Executive Officer