The ECI number today confirms what the last nonfarm payrolls report showed: there is no wage growth. Without wage growth, there is no wage-push inflation, and you get a monster bid in bonds and a rocket higher in the euro. It is getting clearer by the day that the Fed missed their window to raise rates in this cycle. If they start raising rates now, they will guarantee a recession.
The stock market is loving the new strength in bonds and a new view that Fed is going to have to remain dovish for longer. I see more slow summer time trading for equities. We are very close to a generational top in equities but timing the top is always difficult. Short term, I still see more risk on portfolio adjustments after the heavy derisking in early July. It will be a low vol slog for the next couple of weeks. China is a nonissue, but will become an issue later on after the global market gets more toppy.
There are few opportunities right now, you may get one good opportunity in a day with this kind of market. If you miss it, move on and don't force a trade here. There will be much better opportunities in the fall.
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