2H sentiment bullish runaway brightens: markets baking in a potential Trump win, Fed rate cuts and look to financial conditions easing. But inflation will rise again. WATCH OIL!

o And we're seeing betting platforms implying a Trump win too. The Trump payout is $1.53 to a dollar. Vs a Biden win paying out $6.50 to a $1. * (see SportsBet odds below)

Secondly - there are increasing bets of Fed rate cuts. Overnight, we saw the Federal Reserve Chair Jerome Powell bolster expectations of a cut this year, saying the US is getting back on ‘disinflationary path’ with the risks between price pressures and the labor market coming into better balance. We see that the data. Inflation is slowing and job growth is slowing. So, now there is a 62% probability of a cut in September. Earlier in the week, markets only priced in a 58% chance of a cut in Sept.

Thirdly – we have financial conditions easing. From this month the Fed is allowing its balance sheet to run off. And this is coming at a time when July is traditionally reallocation month and the best month for equities with the S&P500 rising 2.6% on average over the last 20 years

Fourth - Inflation will rise AGAIN. This might cause a shock to markets. Here is what you need to consinder. Hurricane Beryl is threatening to enter Gulf of Mexico. It's not good. The oil price price is now up 14% from May. It's up 10% from the last PCE / CPI read. It will probably rise again.

The US Hurricane Center warns of life-threatening winds and storm damage upon its expected arrival tomorrow. Beryl is the earliest Cat' 4 storm EVER recorded in the Atlantic. This comes at a time when there is risk of war between Israel and Hezbollah. OPEC's embarked on new supply cuts, but oil demand is rising amid booming travel US crude inventories fell by 9.2 million barrels last week, while gasoline supplies increased. Rystad cut its forecasts of oil output growth in the Permian Basin.

See my X thread