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THIS WEEK: 2nd Risk-ON week after two Risk-OFF weeks.
US Stocks UP Foreign Stocks MIXED, Bonds UP and Gold UP
#1 Asia-Pacific ex-Japan Tests Resistance—
AAXJ rose 2.5% this week, after gaining 0.8% last week. That left it bullish and ranked 1 globally and more attractive than cash. The index is up 1.2% for the quarter (13 weeks), and up 38.0% for the year (52 weeks).
#2 US Small-Cap Stocks Touch new Highs—
IWM rose 3.6% this week, after gaining 0.0% last week. That left it very bullish and ranked 2 globally and more attractive than cash. The index is up 7.0% for the quarter (13 weeks), and up 38.4% for the year (52 weeks).
#3 Japanese Stocks Rally After US Supports Yen—
EWJ rose 4.9% this week, after gaining 1.3% last week. That left it very bullish and ranked 3 globally and more attractive than cash. The index is up 9.2% for the quarter (13 weeks), and up 35.9% for the year (52 weeks).
#4 Latin America’s Advance Retrenches—
ILF fell 2.1% this week, after gaining 2.1% last week. That left it bullish and ranked 4 globally and more attractive than cash. The index is down 3.6% for the quarter (13 weeks), and up 43.7% for the year (52 weeks).
#5 European Large-Cap Stocks Continue to Soar—
IEV rose 2.0% this week, after gaining 2.4% last week. That left it very bullish and ranked 5 globally and more attractive than cash. The index is up 8.2% for the quarter (13 weeks), and up 25.2% for the year (52 weeks).
#6 US Large-Cap Stocks Post New Highs—
SPY rose 3.5% this week, after gaining 1.1% last week. That left it very bullish and ranked 6 globally and more attractive than cash. The index is up 7.1% for the quarter (13 weeks), and up 22.8% for the year (52 weeks).
#7 US Cash Yield Rises—
The three-month T-Bill yield is 3.71%, up 3 ticks from last week. The cash yield is above the Fed overnight rate (3.625%) following the 7/29 FOMC meeting at which no changes in rate policy were made. Meanwhile, the two-year Treasury is yielding 4.21%, a 50 basis-point premium to cash
#8 Gold Bullion Spikes Higher—
GLD rose 7.2% this week, after losing 0.1% last week. That left it bearish and ranked 8 globally and less attractive than cash. The index is down 4.7% for the quarter (13 weeks), and up 27.3% for the year (52 weeks).
#9 US Long Treasury Bonds Rally Off Lows—
EDV rose 1.5% this week, after losing 2.3% last week. That left it very bearish and ranked #9 globally and less attractive than cash. Long bonds are down 3.5% for the quarter (13 weeks) and down 3.7% for the year (52 weeks) as yields have risen.
Commodities Sink With Oil—
A neutral CRB fell 1.8% this week after losing 2.2% last week. That left commodity prices down 7.0% for the quarter (13 weeks), and up 32.8% for the year (52 weeks).
Crude Oil Below $80—
The broader oil complex (USO) fell 8.7% this week, following last week's loss of 5.5% and currently neutral. That leaves US oil prices down 19.8% for the quarter (13 weeks), and up 59.9% for the year (52 weeks).
US Dollar Weakens—
UUP fell 0.4% this week, after losing 1.4% last week. It is currently very bullish—up 2.1% for the quarter (13 weeks), and up 2.4% in the last year (52 weeks).
SEE MOOSECALLS PDF FOR CHARTS AND DETAILS
THIS WEEK the 2nd Risk-OFF week after two MIXED-Risk weeks.
US Stocks DOWN, Foreign Stocks MIXED, Bonds DOWN and Gold UP
Asia-Pacific ex-Japan leads in regional global momentum since 6/3/2026 but triggered a stop-loss 7/13/2026. EEM also triggered a stop-loss in the index model. Both were replaced by IWM which also a triggered a stop-loss that was not unconfirmed— (PMO still positive, 50-day still rising, closing price above 50-day in 5 of last 7 days and above initial stop-loss seven of seven days, before breaking higher.
The best regional alternative this week is IEV with the highest positive, improving PMO. It gave a buy-stop 7/31 and is rallying on lower oil prices since. Japan is also benefitting from last week’s joint foreign exchange intervention with the US to smooth out “disorderly Yen movements
(SEE PDF FOR REGIONAL GLOBAL ASSET CHARTS AND WEEKLY PERFORMANCE NOTES)
Below we rank 27 major US equity sectors according to their momentum and technicals. We also identify what sectors are working now and have been for awhile. There is no specific sector model to time the group as the ETFs involved may be thinly traded, extremely volatile, and require daily monitoring to avoid disasters. The rankings are more useful for longer term swing trade investors.
This week’s US equity sector momentum contracts but remains broadly positive -- 81% of our sectors are buy or hold (L81%) with BUYS up at 48% (L44%) and HOLDS down to 33% (L37%). Avoids are steady at 19% (L19%). Top performers this week: Gold Miners, Semiconductors, Software, Internet, Home Construction, Technology, Biotech, Defense. Week’s Worst: Oil & Gas Production, Utilities, (Performance *working off a stop-loss, **working off a buy-stop.)
Below we show the top 10 US stock sectors by year-to-date return. We also identify what sectors are working in the last 2, 13, 26,, 39 and 52 weeks, and over 3 years. Ranking is based on momentum over about six months (26 weeks). It is necessary to monitor more recent returns to make sure a high momentum reading does not mask a sudden weakness in price.
Indications stay positive (3 of 4) for the global economy.
An international shipping measure and proxy for current global trade, the Baltic Dry Index is at 3089 this week, up from 2732 last week and 4% higher after 13 weeks, a positivesignal. (After opening 2026 at 1882, BDI is still well below its 2010 peak @4640.)
Meanwhile, another proxy for world activity, WTI oil price is at 78.18 this week, down 18% in the latest quarter, a negative economic signal. (Oil remains below its 2022 peak ($130), but well above the 2020 Covid low ($10).)
Our proxy for global construction, copper is 6.59 this week, and up 5% this quarter, a positive signal.
Domestically, the 10Y US bond yield is at 4.66% this week, a 30 basis-point rise over the past 13 weeks, and a positive bet on the largest world economy.
US ECONOMY: AUG.07.2026:
OVERALL: JOBS DOWN, MANUFACTURING UP
PRODUCTION: Manufacturing & Services Expanding
(-) WEEKLY EIA Crude Oil Inventories (+2.48M) build results as WTIC oil prices retreat to $78.
(-) JUN Industrial Production (+0.1%) in line with prior but below consensus.
(-) JUN Capacity Utilization (76.1) in line with previous but below expectations.
(+) JUL S&P Global U.S. Manufacturing PMI – (53.9) expanding, UP from previous.
(+) JUL S&P Global U.S. Services PMI – (54.6) expanding, UP from previous.
(+) JUL ISM Manufacturing Index (55.6) expanding, above prior and consensus.
(+) JUL ISM Services Index (54.1) expanding, up from prior but less than expected.
CONSTRUCTION: Disappointment
(+) JUN Housing Starts (1427K) above consensus and previous.
(-) JUN Building Permits (1367K) below consensus and prior.
(+) MAY Existing Home Sales (4.17M) beat previous and consensus.
(+) JUN New Home Sales (628K) beat prior and forecasts.
(-) JUN Construction Spending (-0.1%) below prior and expectations.
INFLATION: JUNE PCE PRICES COOL
(+) JUN CPI (-0.4%) cooler than prior and consensus. (+3.5% y-o-y)
(+) JUN Core CPI (0.0%) cooler than prior and forecasts. (+2.6% y-o-y)
(+) JUN PPI:(-0.3%) cooler than prior and consensus. (+5.5% y-o-y)
(+) JUN Core PPI (+0.2%) cooler than prior and forecasts. (+4.7% y-o-y)
(-) JUN Import Prices (+0.3%) hot and up but cooler than prior. (+7.1% y-o-y)
(+) JUN Export Prices (-0.6%) down, hot but cooing. (+10.2% y-o-y)
(+) JUN PCE Prices (-0.1%) cooler than prior and expected. (1yr 3.7% up.)
(+) JUN PCE Prices – Core (+0.1%) cooler than prior and expected (1yr 3.3% up.)
JOBS: PAYROLLS DATA WEAK
(+) Weekly initial Claims (199K) in line with previous, beating expectations.
(-) Weekly Continuing Claims (1801K) above previous this week.
(-) JUL ADP Private Payrolls (44K) Down from previous more than expected.
(-) JUL Nonfarm Payrolls (-23K) unexpectedly contracted from prior; well below consensus.
(+)JUL Unemployment rate (+4.1%) down a tick due to shrinking labor force participation.
(-) JUL Average Hourly Earnings (+0.1%) weaker than previous, and below expectations.
(-) JUL Average workweek (34.3) unchanged.
(-) JUN JOLTS Job openings (7.359) DOWN from prior below revision lower.
JOLTS Separations
CONSUMPTION: TRADE DEFICIT SHRINKS
(-) JUL Consumer Confidence (90.8) DOWN from prior and below consensus.
(+) JUN Durable Orders (+0.3%) beat prior, but well below consensus.
(-) JUN Personal Income (+0.2%), below consensus and prior.
(-) JUN Personal Spending (+0.3%) below consensus and prior.
(+) JUL Michigan Consumer Sentiment (55.2) growing, above consensus and prior.
(+) JUN NFIB Small Business Optimism (97.4) strong and above prior (95.3).
(+) JUN Trade Deficit (-$73.3) beat prior in line with consensus.
(+) JUN Federal Budget (-$120.3B) still in deficit but improved from May (-$292.6B).
GDP & RELATED DATA: Productivity Weaker than Expected
(+) Q2 GDP - Prelim (+1.5%) below previous and consensus.
(-) Q2 GDP Deflator - Prelim (+6.3 %) hotter than previous and forecasts.
Q2 Employment Cost Index (+0.9%) hotter than consensus and previous.
(-) Q2 Productivity – (+0.3%) revised weaker than prior and consensus
(-) Q2 Unit Labor Costs – Warm (+1.3%) in line with previous but below consensus. Cooler than inflation.
(-) Q1 Current Account Balance (-$226.8) deficit greater than previous quarter and consensus forecast.
US ECONOMY: FEDERAL RESERVE
Week of AUG.07.2026
RECESSION THREAT: MINIMAL, FALLING
US recession chances one year out:15.19% (JULY 2027) per NY Fed. The Fed model’s chance of recession has been below 30% (the threshold signaling a recession one year out) and falling since 2025. It reached a recent low of 15 in MAY 2026. The risk of recession was the highest in 40 years in May 2024, but it was avoided amid three years of massive Federal deficit spending and historic data falsification at the Bureau of Labor Statistics.
ATLANTA FED: US Q3 GDP NOW at 5.8%
Atlanta Fed Current GDP Model (08/06/2026): Q3 Annualized 5.8% (Last week: Q3 Annualized +5.0%)
US ECONOMY: FEDERAL RESERVE
FED BALANCE SHEET ($6.75T); FFR @ (3.50-3.75%)
Currently, the Fed’s balance sheet is 6.75T, (UP +.01T) in the latest week (7/29/2026). The Fed Funds Rate was lowered 25 BPS to 3.50-3.75% at the DEC10 FOMC meeting. No change since at the January, March, April, June or July FOMC meetings.
The next FOMC meeting is September 16. Kevin Warsh is the new chairman since May 22 and chaired his first FOMC meeting June 17. No near-term rate hikes were expected, but a more hawkish tone suggests supply-side inflation pressures brought on by the war with Iran may eventually force two rate hikes by year-end. The odds are 56% that rates will be unchanged at the September meeting.
The Fed Check at 87% turned hawkish as of 1/30/2026 (tighter monetary policy needed to combat global inflation pressures.) The US 2-Year yield at 4.21%, however, is now 59 bps HIGHER (and rising) than the Fed overnight rate (3.625%), implying near-term US domestic conditions make a Fed rate hike increasingly likely.
The 3m-10y yield curve flattened to a slope of 95 bps this week, as the 10-year US Treasury yield fell to 4.66%, and the 3-month cash yield rose to 3.71%. Intermediate term the curve is positive and steepening. (The curve was inverted from 11/22 through 12/24 but has been positive since.) The 30d-10y median yield (4.19%) is above its 200-day (3.96%). A rising median yield and a steepening yield curve are both bullish for stocks.
3-month SOFR yield at 3.65% is steady this week, while the 3-month T-bill at 3.71% is up 3 ticks. That puts the SOFR/T-Bill (SOF-T) spread at -6 basis points, below its 200-day average of +6 bps. A falling SOF-T spread signals a safer, more confident financial system.
FED OVERALL THIS WEEK: NEUTRAL
FED CHECK: TIGHTENING INDICATED
RATE POSTURE: STEADY
BALANCE SHEET: STEADY
FED SPEAK: HAWKISH
Latest FOMC Assessment (2026.7.29) The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote: The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability. (Next Meeting: 9/16/2026)
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