Weekly Macro Note: September FOMC First Look, CPI Week, Homebuilder & Transportation Update, and More

In this brief Weekly Macro Note - we discuss the upcoming FOMC projections, take a look at the pending CPI data, discuss the cyclical macro components, and more. Stay tuned for more this week.

Don Johnson (@DonMiami3), Chief Economist

Good Sunday evening MacroEdge Readers & Community,

This evening since, I am starting the Weekly Macro Note considerably later than usual due to my laptop croaking while on the move, this update will be slightly more brief than anticipated. That’s actually an okay thing - since there is going to be no shortage of things to discuss this week, with reports coming Tuesday, Wednesday, Thursday, Saturday, and Sunday. If you missed the Welcome Note from our new MacroEdge Oil and Gas Research team, make sure to catch up on that. The link to Oil and Gas Research is below:

In the Redeye Macro Note we discussed, briefly, some of the geopolitical events that have transpired over the weekend. The Administration is seeing an internal rift between those that want to continue the war in Iran and those who continue to seek out an offramp. Iran has been emboldened to the point of making their own demands, and it’s getting increasingly unlikely that the Strait of Hormuz reopens to pre-war traffic levels for at least the remainder of the year.

(Bloomberg - Renegade Resources)

The Houthis are also growing increasingly bold, striking Aramco facilities at will - and with midterms three months out now - I expect that the Trump Administration will try to navigate a tightrope with the situation to avoid an immediate spike in energy prices. The structural setup continues to look quite positive for oil - and as I’ve stated numerous times over the past several weeks - this bull thesis will require patience through October to start clicking into place now:

The tightening range should be positive for E&P names, and $79/bbl is really a sweet spot balance between consumers not getting crushed (yes - spreads are crazy) and producers doing very well. Keep an eye on the close for XLE this week:

Outside of the spin cycle continuing for the war - the macro-data continues to be overweighted by those on X and Substack for the time being - I do not think it’s going to be particularly important until midterms now. Oil and the bond market are going to play a much higher level of importance than the former items - and with data quality in the absolute tubes - I’m not sure why we’re obsessing over these releases like they’re a sports draft. The CPI reading should show those negative MoM base effects rolling off from the June print & same goes for PPI. Look for any signs of real retail sales slowing down - though I do not think this shows up until August/September data based on early signals I am seeing. Some of these datapoints will shift the September odds - and CPI will play a role in a possible September hike. If the Fed doesn’t hike in September, the bond market will do the work for them going into midterms.

This evening we’ll take a look at the macro week ahead - looking at data releases and earnings, discuss the homebuilder situation update, take a look at the transportation sector, and highlight the bulls that we see back over their skis - as gauges like the BofA sentiment reading hit all-time highs and we’re seeing deli-shop workers and salespeople quit their jobs to trade and sell courses full-time.

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Report Schedule for the Week

• (Tuesday) War Note

• (Wednesday) Oil and Gas Research Note - Portfolio Strategy Briefing #1

• (Thursday) Midweek Macro Note

• (Saturday) Oil and Gas Research Note - Macro Briefing, Ozone - Redeye Note

• (Sunday) Weekly Macro Note

Macro Week Ahead

• Wednesday - CPI

• Thursday - PPI

• Friday - Retail Sales, UMich Prelim - watch the inflation reading signals here, if for anything

Earnings >$300bn market cap: CSCO, AMAT

Homebuilder Situation Update

Builders popped last week but they’re sitting on near-record unsold inventory.

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