# Coiling before the next leg up?

_Or is the hard data pointing to recession?_

August 6, 2025 • Michael Nadeau

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# Coiling before the next leg up?

## Or is the hard data pointing to recession?

Michael Nadeau
 August 06, 2025

 Hello readers,

 The mini “altseason” we saw in June/July has lost some momentum due to a hawkish Fed and weakening labor market data.

 The critical question:

 Is this a healthy pullback before the next leg up? Or the start of a more structural shift in the market?

 This week, we break down the recent economic data and what it means moving forward.

 Topics covered:

- [Economic Data & Fed Policy](#economic-data-fed-policy)

- [Momentum Indicators](#momentum-indicators)

- [What to look for moving forward](#looking-forward)

- [Portfolio Management](#portfolio-management)

***Disclaimer:**** Views expressed are the author’s personal views and should not be relied upon as investment advice. *

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 Let’s go.

# Economic Data & Fed Policy

 Trump got what he wanted with the Big Beautiful Bill and the initial tariff deals. Now all eyes turn to the Fed and monetary policy.

##### Inflation

 Last week, we got the PCE data (the Fed’s preferred metric) for June. It came in at 2.8%, up .3% from May. The market was expecting 2.7%.

 It’s become clear that inflation is proving to be somewhat sticky. We can see below that the increase is coming mainly from *goods (*dark blue*) *— an indication that the *tariffs* are driving higher inflation.

 When Powell was asked last week about whether he was willing to “look through” tariff-related inflation as a one-time price adjustment, he responded that “by not *hiking *rates right now, we are already there.”

 Sounds like he’s still worried about inflation.

##### PMI Data

 We also received the June PMI data last week, which gives us a view into the sentiment of supply chain managers.

Data: MacroMicro

 The takeaway?

-  Manufacturing PMI (blue line) is still in *contraction* territory. The reading of 48 for June was weaker than the expected 49.5.

-  Services PMI (red line) is now in *expansion* territory. The reading of 50.8 was in line with the market expectation.

 We want to see *both* indices move firmly into expansion (above 50) to confirm a new business cycle, which historically coincides with “altseason.”

##### Labor Market

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