Markets grind higher despite tariff shocks, weakening breadth, and rising political risk
All eyes now shift to CPI, earnings, and Trump’s Aug 1 “TACO” deadline. Here's your full macro breakdown, technical setups, and tactical trading guide.
Market Overview: SPX at Highs, but Cracks Are Forming Beneath
The S&P 500 hit a fresh ATH last Thursday but closed the week 0.33% lower at 6,259.75. While price action remains orderly, internals suggest we’re on thinner ice than many realise.
- 5-day breadth dropped sharply: 65.8% → 50.39%
- Net new highs collapsed: +178 to -87
- 200dma participation crawls up, but 50dma stagnates
- Nasdaq 100 down slightly (-0.21%), but propped up by mega-caps
- Retail buying peaked by July 4th while pros continue fading
Energy surged +3% on geopolitical catalysts and defence-led inflows. Semis and infrastructure also stayed firm, with NVIDIA achieving the first $4T valuation.
This isn’t a breakdown yet—but it’s not a breakout either. Traders are rotating, not chasing.
Macro & Policy Watch: CPI Flashpoint, Tariff Poker, and the Powell Pressure Cooker
CPI: Calm Surface, Hidden Risk
Tuesday’s CPI will offer the first real signal of tariff spillover into consumer prices. Bloomberg projects a soft print, but under the hood, there are offsetting forces.
Firming:
- Appliances
- Furniture
Weak:
- Airfares
- Used cars
- Shelter
Result: Likely benign headline, but a higher miss risk.
Markets expect CPI to land close to May's levels. But a beat could erase rate cut hopes and drive a repricing of September odds.
Tariffs: Aug 1st = TACO Deadline
Trump delayed his counter-tariff move to Aug 1st, marking a tactical pause in trade escalation. But the copper tariff (50%) is already impacting supply chains, and a proposed 200% pharma tariff hangs over Q3 like a sword.
Expect
- Positioning skews into Aug 1st
- Copper and pharma volatility to rise
- Global supply arbitrage (Hawaii/PR stockpiling) accelerating
Powell: Independence Under Fire
Behind the scenes, chatter of Powell being pushed out returned. Whether realistic or not, it reveals the growing politicisation of monetary policy. A divided Fed and persistent political noise will weigh on confidence in H2.
Technical & Sentiment Breakdown: Rotation, Mega-Cap Risk, and Sentiment Divergence
SPX – Breadth Breaks Down
The index is still near highs, but the internals tell a different story:
- Distribution rising in the lower index half
- 50dma breakouts stalled
- Momentum cools even as price stays elevated
Nasdaq – Mega-Caps Holding the Dam
Only 43.56% of Nasdaq 100 names are above their 5-day average, down from 79.2%. Yet the index held steady, thanks to the top 5 stocks propping it up. If those falter, expect a swift flush.
Crypto – Liquidity Tsunami
Bitcoin ripped through $120K after ETF flows overwhelmed daily supply. With U.S. institutions absorbing 10,389 BTC vs a daily supply of just 534, this is liquidity capture on steroids.
- Total crypto cap at $4T
- Institutional and Treasury flows are accelerating
- “Crypto Week” designation in Congress adds tailwind
Last Week’s Recap: Earnings Beats, Energy Surge, and Trade Shockers
Markets were macro-light but tariff-heavy last week.
- SPX hit ATHs but faded late week
- Defence names surged: Red Cat +25%, Kratos +11%, AeroVironment +10%
- Gold held 50dma support amid safe-haven demand
- Delta reinstated guidance (+13%), but United looms this week
- Crypto surged as ETF buying and M2 tailwinds aligned
- Retail sales held, but underlying consumption softened
- Brazil hit hard by copper tariffs; Real dropped, global stocks reacted
This wasn’t a quiet week—it was the calm before a potential policy storm.
The Week Ahead: CPI, China Data, and Earnings Roulette
This week is macro-loaded and earnings-heavy—Tuesday is the new Super Thursday.
Monday, July 14
- CNY Trade Balance, NZ Services Index
- CHF PPI, JPY Industrial Production
- Fed, ECB, and BOE speakers
Tuesday, July 15
- US CPI (June)
- JPM, CITI, WFC, BLK, STT earnings
- CNY GDP, Retail Sales, HPI, Unemployment
- German & EZ ZEW Surveys
- Spain & Canada CPI
- OPEC monthly report, API oil data
Wednesday, July 16
- GBP CPI, EZ Trade, US PPI, Beige Book
- Earnings: BoA, GS, ASML, UAL, Alcoa
Thursday, July 17
- US Retail Sales, Claims, Philly Fed
- Netflix, TSMC earnings
- AUD Employment, JPY Trade
- EZ CPI Final
Friday, July 18
- US Housing Starts, Michigan Sentiment
- AMEX, Charles Schwab earnings
- GER PPI, EZ Trade
Alpha Takeaway: Market Is Calm—But That’s the Risk
We are in a complacency pocket. But it’s a thin one.
- CPI surprise could unwind bullish bets
- Breadth deterioration warns of fragility
- Crypto and gold suggest macro stress is still alive
- Retail still buying dips—pros remain defensive
- Powell, tariffs, and China headlines are all unresolved
Our Playbook
- Stay long SPX above 6200, but tighten stops into CPI
- Add to crypto on dips, but trail aggressively
- Watch defensive sectors and gold—Q3 risk-off trade may emerge fast
- Earnings will matter more than usual: margins vs headline beats
