U.S. personal income, PCE and durable orders top estimates

Dangerous Choice For Investors Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (NYSE: SPY ) which represents the benchmark stock market index S&P 500 (SPX).

Note the following: The chart shows the stock market is pulling back slightly after a slew of economic data.

To the momo crowd’s dismay, the chart shows that since the breakout above zone 1 (support now but previous resistance), the stock market has not rocketed higher.

Instead, the stock market has pulled back.

Prudent investors should carefully watch if the stock market bounces off to make new highs after bouncing from the top band of zone 1 or the stock market breaks below the top band of zone 1.

RSI on the chart shows the stock market is oversold.

Oversold markets are susceptible to a bounce.

A slew of economic data released this morning shows the AI boom is colliding with inflation.

In our analysis, the Fed faces a dangerous choice for investors.

Based on the hard data, the right thing for the Fed to do would be to raise interest rates.

However, if the Fed were to raise interest rates aggressively, the momo-driven stock market could crash.

In our analysis, the probability of the Fed doing the right thing is low.

The Fed is under tremendous pressure from President Trump to lower interest rates.

Also, the U.S.

Treasury’s latest buyback plan puts the Treasury on a collision course with the Fed if the Fed were to do the right thing.

In our analysis, the actionable item for prudent investors is to be positioned to profit from the AI upside and simultaneously protect their portfolios.

The U.S. economy is 70% consumer based.

For this reason, prudent investors pay attention to personal income and personal spending.

Just released personal income and spending data shows why inflation is rising.

Here are the details of the new personal income and spending data: Personal income came at 0.4% vs.

0.2% consensus.

Personal spending came at 0.2% vs.

0.2% consensus.

PCE is the Fed’s favorite inflation gauge.

PCE came hotter than expected.

Here are the details: PCE came at 0.2% vs.

0.1% consensus.

Core PCE came at 0.2% vs.

0.2% consensus.

Durable orders data is stronger than expected.

Here are the details: Durable orders came in at 1.1% vs 0.5% consensus.

Durable orders ex-transportation came at 0.4% vs 0.5% consensus.

GDP data is inline with expectations.

Here are the details: Q2 GDP Second Estimate came at 1.5% vs.

1.5 consensus.

Q2 GDP Deflator Second Estimate came at 6.4% vs.