[Good Times are Back?] Inflation Cools Down, Lowest in 2 Years!

But don’t hold out hope for lower mortgage rates yet. Picks from the Editor SPONSORED (Newsletter Continues Below) [One Price Pattern has Dominated Every Market Phase](  Would you believe that a single price pattern that anyone can find on a chart has maintained an 80% historical win rate through every type of market condition? Learn how to spot this pattern in a free trading workshop.  [Discover this Pattern]( By clicking these above links, you agree to the Wealthpress [Privacy Policy]( [Discover it Now!]( Inflation Numbers: A Sugar-Coated Surprise with a Bitter Chocolate Pill  Hi Traders,  Remember that moment when you walk into a candy store as a kid, eyes wide as you behold the rows upon rows of sugary goodness?  That's the same to the feeling we experienced yesterday with the release of the softest Consumer Price Index (CPI) reading since March 2021. As you wipe away the imaginary drool, let's dive into the candy bowl of numbers, courtesy of CNBC.  June gifted us with the lowest annual inflation rate in over two years, which is somewhat of a sweet relief compared to when prices were hitting highs not seen for over 40 years.  The CPI increased by 3% from a year ago, marking a notable retreat to the March 2021 levels. In the monthly report, the increase was a gentle 0.2%, a tad softer than the Dow Jones' estimates.  To add some chocolate sprinkles to the mix, even the core CPI (the diet candy of the inflation world, excluding volatile food and energy prices), was lower than expected.  It rose by 4.8% for the year and 0.2% for the month, somewhat less than the 5% and 0.3% forecast, respectively. A treat indeed!  Now, before we break open the champagne (or soda pop), let's remember that the Producer Price Index is on the horizon. This number tends to follow its younger sibling, the CPI, but is typically not as well-behaved.  Here's where things get sticky, like a melted gummy bear on a hot summer's day. Even though we're giddy about these favorable inflation numbers, the big question is whether the Fed shares our sweet tooth.  The Fed's preferred measure of inflation is the Core Personal Consumption Expenditures (PCE) Index, and while the CPI has been on a sugar crash in recent months, Core PCE has been on a sugar high.  If we take a peek at the CME Group's FedWatch Tool, we see it's predicting a 94.9% likelihood of a quarter-point rate-hike from the Fed in a fortnight.  However, what the Fed plans to do in September (it's off in August, probably enjoying the last bits of summer), is a question as enticing as a secret chocolate stash.  As it stands, traders are assigning an 85.9% chance that the target rate will hit the 5.25%-5.50% range. If the Fed does hike rates in two weeks, it seems likely they will hit pause in September, like taking a breather after a sugar rush.  Awaiting tomorrow's Producer Price Index report feels as exciting as the countdown to opening presents on a birthday morning.  Let's pivot our sugar-coated discussion to another favorite topic, housing affordability. If you're still clutching onto hope for a return of 3% mortgages, perhaps it's time to put away your candy canes and face the cold milk.  The nostalgic low mortgage rates from the pandemic days are probably not making a comeback. I hate to be the one to tell you this, but Santa Claus isn't real.  On the home front, home prices are another beast. Like a candy bar that keeps getting smaller but costs the same, home prices are soaring while homebuyer's wallets are not. It's a bitter chocolate pill for prospective homebuyers who were hoping for a return of housing affordability.  Speaking of the elusive 3% mortgages, here's a fun fact.  Lawrence Yun, chief economist at the National Association of Realtors, doesn't see mortgage rates returning to the 3% range in his lifetime.  Yun isn't known for his jokes, but his sentiments are backed by hard data. From 1971 to the present day, the 30-year fixed rate mortgage has averaged 7.74%.  So, if you managed to lock in that 2.65% rate back in January of 2021, you've basically found the golden ticket in your chocolate bar.  For those eyeing the housing market today, the "new normal" is adjusting to mortgage rates that are almost three times that historic low.  As of recent data, the average rate of a 30-year fixed-rate mortgage stands at a teeth-clenching 7.22%.  All of this brings us to the nail-biting anticipation of the Q2 earnings season. Analysts have been acting like the tooth fairy, lowering estimates to make them easier to surpass.  FactSet tells us that the S&P 500 is expected to see an earnings decline of -7.2% for Q2 2023, the largest since Q2 2020 when the decline was a jaw-dropping -31.6%.  Looking ahead, the analyst community seems to be high on sugar, predicting an average increase of 9.3% in the S&P 500 over the next 12 months.  But the candy store is not equally filled with treats for all. If you're not invested in the "Magnificent Seven" tech companies, you might find your sweet tooth unsatisfied.  Now, there's a lot to chew on, but remember, too many sweets and you might get a toothache.  Keep on keeping up!  John @ Traders on Trend  (In the next article: So, are the banking crisis finally over? Find out below! 👇) Sponsored [You Can’t Escape Inflation So Profit From It Here]( “Inflation is bad” – yeah we all get it. There’s nothing you can do to stop it though. If you can’t beat ‘em – join ‘em. That means learning to leverage inflation to build your wealth instead of devaluing it.[Claim Your Copy Of Our Research Report FREE]( By clicking this link you are subscribing to Conservative Investor News’s Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy [Privacy Policy/Disclosures]( Check the Free Presentation Today ☝ SPONSORED Tuning Up or Down? The Melody of Q2 Banking Results  The maestros of the industry - the financial institutions - are readying themselves to present their financial symphonies this Friday.  The compositions they'll play are expected to be more minor key than the vibrant melodies we've been accustomed to, with a predicted drop in performance of around 7% compared to the same period in the previous year, a gloomy prediction according to the talented musicians at Keefe, Bruyette & Woods.  This performance will feature solo parts from the likes of JPMorgan Chase, Wells Fargo, and Citigroup, premiering on Friday.  They'll be followed by Morgan Stanley and Bank of America with their Tuesday solos and Goldman Sachs to crescendo on Wednesday.  The ensemble will be rounded out by regional banks, including Zions, Citizens Financial, and Comerica, stepping into the limelight next week.  As it goes in any symphony, some musicians hit their notes with finesse while others might stumble a bit.  Case in point: JPMorgan Chase, which, being the virtuoso of US banking, seamlessly managed the downturn by acquiring the out-of-tune First Republic Bank when it missed a beat back in May.  However, the smaller institutions, our unsung heroes, might need to exert more effort to keep in harmony.  Like music fans opting for the newest, most eclectic beats, customers have been lured towards the enticing rhythm of higher-yielding money-market funds, causing banks to dish out a higher interest encore to keep their audience from leaving mid-performance.  This might dampen the tune of net interest income.  (article continues below) Sponsored [Maximize Your Returns with the Best Stock of 2023]( We are excited to present you with an incredible investment opportunity that promises resilience and substantial growth in the years to come. Our dedicated research team has awarded this recession-proof company with our highest rating, making it a valuable addition to any portfolio.[Go HERE to Learn More]( By clicking this link you are subscribing to The Daily Stock Watcher Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy [Privacy Policy/Disclosures]( SPONSORED  🔼 Pay attention, this is worth your time! ☝  (article continues)  Now, let's hit the low notes. As the harmony becomes more complex, some banks have tuned to pricier deposits, brokered through third parties, in an attempt to keep the rhythm steady.  Our friends at PacWest and Western Alliance, for example, have seen their stock melodies hitting a sour note recently.  Brokered deposits at these regional banks have jumped to almost a fifth of all deposits, a significant increase from their previous quieter presence.  But wait, the composition takes a sharp turn! Some assets are gradually losing their luster. With rising interest rates, lower-rate securities and loans are falling flat.  If we take a peek at the score sheet, we'll find that banks had over $500 billion in unrealized losses at the end of March. Yikes, talk about a plot twist in the third act!  On a brighter note, our beloved financial maestros are ready for a rainy day. Banks are saving up to safeguard against the sour notes of potential loan defaults.  Moreover, they're closely examining potential losses in their commercial real estate portfolios.  Shifting from the grand orchestra to the trading floors of Wall Street, the scene has been rather placid in Q2, making trading volumes dip like a slow waltz.  Goldman Sachs, for instance, is bracing for a drop of 25% from last year. That's like skipping a beat in their usually vibrant trading melody!  In the end, much like an uncertain concertgoer, many investors and analysts are hesitant to join the banking music festival. There's the impending fear of a recession hitting the wrong notes, and new capital rules playing a somber background tune.  Smaller banks, perceived to be weaker, are akin to fledgling artists on the brink of their first big concert – facing unpredictable crowd reactions.  In the end, who can resist the allure of an unfolding financial drama interspersed with the suspense of quarterly results?  Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. Please visit tradersontrend.com/terms for our full Terms and Conditions.   [UNSUBSCRIBEÂ]( TradersOnTrend.com  COE MEDIA.   1126 S Federal Hwy Unit #827   Fort Lauderdale, FL 33316Â