Stock Market This Week: Inflation Matters More Than Trade

Inflation matters more than trade. PCE Price reports Friday. The CPI has been elevated tracking 3% annualized over the last few readings. If that keeps up that can force the Fed to raise, not cut.

If Inflation shows another .3 core or more, yields could get testy. Low yields have been supporting this market for a decade. If that changes, the stock market has more risk.

The Fed may be worried about that next inflation number. The Fed guided to expect no further rate cuts. We told subscribers the day ahead of the Fed decision we thought the market could sell off on that but that dip could be bought. That's what happened. The next day though I didn't like the action and we recommended to get back to flattish net exposure but hold on to our top ideas.

The latest round of trade tweets and news saw China calling trade talks "fragile" and President Trump appeared to back off from plans for an interim deal. He wants a "complete" deal.

So some tailwinds have turned to headwinds. I'm starting to get a little more cautious.

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