'Surprised' stocks moved higher despite bad economic news this week: Vital Knowledge's Crisafulli

Key Concepts:

• Market performance despite negative news flow
• Managed care and healthcare sector sentiment shift
• Geopolitical events (Trump-Putin meeting) and market impact
• Federal Reserve (Fed) policy and Powell's upcoming speech
• Inflation data and its implications
• Earnings reports and their influence on market trends

1. Market Performance and Surprising Resilience:

• Despite a week filled with predominantly negative news, the stock market reached record highs.
• Adam Crisafulli expresses surprise at the market's ability to absorb negative news flow and continue rallying.
• Negative news included hot CPI inflation data, disappointing earnings from Applied Materials, Deere, Coreweave, and Tapestry.

2. Healthcare Sector and UnitedHealthCare's Move:

• Managed care was the most hated group in the market, and healthcare in general was out of favor.
• UnitedHealthCare experienced a significant move upwards (21-22%), potentially signaling a sentiment shift in the healthcare sector.
• Berkshire Hathaway and other big firms taking stakes in UnitedHealthCare is a positive indicator.
• Regulatory uncertainty remains a concern for the healthcare group.

3. Geopolitical Events (Trump-Putin Meeting):

• The market has largely shrugged off geopolitical events.
• No seismic event is expected from the Trump-Putin meeting.
• Two tail events: a wholesale ceasefire (unlikely) or aggressive sanctions on Russia and, more importantly, secondary sanctions on China (also unlikely).
• Sanctions on China, a large buyer of Russian oil, would be a significant negative.
• India is already being subjected to sanctions tariffs.

4. Federal Reserve (Fed) and Powell's Speech:

• Powell's upcoming speech is the most important event of the next week.
• The Fed faces a difficult situation with disappointing employment numbers (July jobs report and revisions) and upside pressure on inflation (goods and services).
• Powell will likely acknowledge the jobs report, sounding dovish, but also address the inflation numbers, indicating an uncertain outlook.

5. Inflation Data:

• CPI data was better than feared, but PPI inflation data was very hot.
• Inflation pressure is not just in goods categories impacted by tariffs but also in services, which is concerning.

6. Earnings Reports:

• Disappointing earnings from Applied Materials, Deere, Coreweave, and Tapestry contributed to the negative news flow.

7. Sector Performance:

• Care and discretionary communication services and materials are the best performing sectors.

8. Logical Connections:

• The market's resilience is contrasted with the negative news flow, highlighting the potential for a sentiment shift.
• The discussion of the healthcare sector follows the market overview, providing a specific example of a potentially undervalued area.
• The geopolitical discussion is linked to the Fed's policy, as both influence market sentiment and economic outlook.
• Powell's speech is positioned as a crucial event that will address both employment and inflation concerns.

9. Notable Quotes:

• "Managed care was probably the single most hated group in the entire market."
• "I don't expect there will be any any real seismic event coming out of this meeting."

10. Synthesis/Conclusion:

The market's recent performance has been surprisingly resilient despite a backdrop of negative news, including disappointing earnings and concerning inflation data. The healthcare sector, particularly managed care, may be poised for a sentiment shift. Geopolitical events are unlikely to have a major impact unless significant sanctions are imposed on China. The focus now shifts to Powell's upcoming speech, where he will need to balance concerns about employment and inflation, providing clarity on the Fed's policy outlook.