Republic Risk Letter: Inflation (A Love Story)

Get ready for the rousing, electrifying, "most important ever" government data report on inflation.

RED on the S&P 500 and RED on the Russell 2000

Each morning, we assess the total flows of the market by measuring statistical metrics on a very specific number of stocks to determine broader sentiment and the momentum trend. When these readings turn red, we focus on cash, trade positive sectors, or take inverse positions against indices.

Nothing has changed in the last 24 hours. There is reason to believe that the Fed is supporting the financial markets - but only support and not outright easing. Yesterday’s Big Tech earnings produced bad news on the cloud front for Alphabet (GOOG) and good news for Microsoft (MSFT). So, we’ll call it a draw and see if the market can hold above key support levels.

On the S&P 500, we’ve seen 16 stocks fall more than 10% in the last week, compared to just one that has moved up 10%. The Russell is 196, down 10%, compared to just 36, up 10% in a week. That’s a lot of capital flowing out of these equities.