The stock market is a bit overbought near-term, so do not be surprised if it backs and fills a bit. We still have many great stocks announcing earnings this week, like Super Micro Computer ().
The biggest news this week is expected to be the July Consumer Price Index () on Wednesday and Producer Price Index () on Thursday. Economists are expecting a 0.1% increase in the CPI and a 0.2% increase in the PPI. If inflation comes in lower than expected, it will likely cause Treasury yields to meander lower and take further pressure off the Fed to raise key interest rates.
Despite a deal between Oman and Iran being “close,” the Strait of Hormuz remains largely closed, so prices are meandering higher. All my energy stocks are performing well due to the chaos surrounding the Strait of Hormuz, since a U.S. Navy blockade remains in place. Iran’s top security official has resigned and been replaced by another IRCG official. Whether this leadership change is significant remains uncertain, but clearly who is in charge of Iran remains in flux. In the meantime, the U.S. remains an oasis and is largely not impacted by the bottlenecks surrounding the Strait of Hormuz.
I will be in Monterey County this week, and it is very sad that lettuce farmers have plowed their fields after deciding to not harvest their crops. The drop in lettuce sales due to the cyclospora parasite in iceberg lettuce from Mexico. The same Mexican farm that iceberg lettuce came from has also triggered a recall of chiles. This is not the first time that the food America imports from Mexico have had a problem, since there was a problem with green chiles a few years ago. In the meantime, the salad chain, SweetGreen () has performed poorly, so it will be interesting when the crisis surrounding the cyclospora parasite ends.