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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). 

  1. Long-term TAIL resistance remains 1256
  2. Immediate-term TRADE line of support was 1172 this morning, now 1166 is resistance
  3. 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.

KM

Keith R. McCullough
Chief Executive Officer

Bearish: SP500 Levels, Refreshed - SPX