The S&P 500 finished Monday in the red, even though more than half the stocks in the index finished green on the day.

The day’s losses can be chalked up to rocky trading for a couple super-sized tech names — including Nvidia, which reports earnings Wednesday.

Before we preview Nvidia’s big day, let’s check on the sausage recession indicator.

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More cheap meat

I’m aware that eating more sausage can be bad news for your waistline, but I had no idea that it was also a harbinger for a recession.

Apparently that is the case, according to a new survey from the Dallas Federal Reserve.

Texas business executives from across the food and manufacturing sector spoke of weakening agriculture businesses, elevated costs, and a looming economic downturn.

One respondent mentioned “modest growth” for dinner sausage:

“This category tends to grow when the economy weakens, as sausage is a good protein substitute for higher-priced proteins and can ‘stretch’ consumers’ food budgets.”

Higher demand for cheaper breakfast meats underscores how Americans are responding to high inflation.

Indeed, the Producer Price Index category for sausage and deli meats has climbed roughly 33% since the start of 2020. 

To that point, you may have seen policymakers, journalists and politicians recently touting how inflation has cooled from a multi-decade high of 9% to just under 3% since 2022. 

That is technically true.

But remember, cooling inflation doesn’t mean things are getting less expensive. 

They are still getting more expensive, just at a slower pace. 

In fact, since February 2020, consumer prices have increased a cumulative 20.9%, according to Bankrate.

That’s more than the entire decade from 2010 to 2020. 

With that context, the call-out on sausage demand in the Fed survey makes sense. Consumers are pulling back on spending and more people are looking for budget-friendly options. 

Two more telling anecdotes from survey respondents who work in manufacturing:

• “We are getting more resistance to higher prices from our customers. We are also seeing orders reduced or delayed from a few of the more price-sensitive ones.”

• “Our business usually has seasonal decreases in the summer months, but the decrease this summer is more significant than usual. We are now not so sure about the future.”

Feedback or thoughts? Hit reply to this email or let me know on X @philrosenn.

Elsewhere:

🏠️ Housing data incoming. The S&P/Case-Shiller Home Price Index for June is set to release at 9 a.m. ET Tuesday. That will give us one more data point to the ongoing housing affordability story. Meanwhile, economists expect the Conference Board to report slightly higher consumer confidence in August compared to one month earlier.

📉 Chip stocks took a tumble. Nvidia, Broadcom, Super Micro Computer, and other related names all took a dive Monday. That’s no coincidence — investors are jittery for Nvidia’s earnings report Wednesday, which could dictate what direction the entire market moves. Nvidia itself dropped more than 2% on the day. (Barron’s)

🚀 Goldman Sachs expects record stock prices this week. Scott Rubner, the firm’s managing director for global markets, says strong flows from corporate buybacks should help the S&P 500 hit new highs before Friday. He thinks systematic funds will also contribute: “We estimate $17 billion of unemotional demand between robots and corporates every day this week.” (Bloomberg)

Rapid-fire:

• US crude oil prices climbed more than 3% as Libya announced it would shutter production (CNBC)

• Canada will impose 100% tariff on imports of Chinese-made electric vehicles, matching the US (AP)

• BHP, the world’s largest listed miner, reported a 2% rise in annual profits and record iron ore output for the second year in a row (Reuters)

• Apple named company insider Kevin Parekh as its new CFO, replacing veteran Luca Maestri who will exit at the start of 2025 (Apple)

• Billionaire Ken Griffin has revealed plans for Citadel’s glitzy new Miami headquarters (WSJ)

• The former top economist for Obama does not think Kamala Harris’ price gouging policies are “sensible” (Benzinga)

Last thing:

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