Core PCE turn

S&P 500 went sideways into core PCE, rose following the figure being in line, and didn‘t recover from the opening session‘s selling. Nasdaq cracked, but Russell 2000 didn‘t – at least relatively speaking. Change the perspective to 5-day basis evaluation, and the picture changes to indecision. What‘s though impossible to miss, is XLU down -2% over the week on slowing AI trade (data centers) flattening frowth projections, pointing to sideways at best weeks ahead in this universe.

Consumer discretionaries fared poorly, but staples even worse – it was just energy and financials pulling up. Not even real estate, which would be part of the reasonable expectation for outperformers in a rate cutting environment that we‘re heading into. Let‘s review whether the economy is facing recession or meaningful slowdown prospects – the answer is not really, signs of it expanding still outweigh those of contraction, and job market signs are mixed.

Looking at the volatility metrics would have one think that we‘re merely seeing healthy rotations.