TLDR
Growth is improving this month, and inflation is cooling off. Add a positive TLI and oversold markets, and it sounds like a good entry point to buy the dip.
What does the TOGGLE Market Checklist have to say?
The Good: PMIs and low inflation surprises? I’ll take that!
PMIs were a relief last week when new orders – the earliest gauge of economic growth – rebounded from their negative dip back into expansion territory above 51%. As a reminder, PMIs are considered negative when they are < 50%.
To compound the good news, Citi Inflation Surprises took a nosedive back towards 0. Whilst still high, retracing inflation surprises show us that a) inflation is cooling and b) the market has priced in a good degree of the current inflation trend.
And the TLI is making new highs – check out tomorrow’s Daily Brief!
The Bad: expensive valuations, seasonal trends
SPX P/E remains stubbornly above 16x and seasonal trends are mixed from September.
Upcoming: CPI next Tuesday
CPI comes out on Sep 13th and it will be followed by FOMC on Sep 21st (where Powell will try to qualify his Jackson hole comments).
In conclusion?
Good growth, falling inflation, a positive TLI and an oversold market. Sounds to us like a good recipe to buy a dip.
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Originally Posted September 8, 2022 – Good news
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