September Bitcoin Update and Outlook
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How ORCL Earnings Explain the Opportunities and Risks in AI
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- How ORCL Earnings Explain the Opportunities and Risks in AI
Futures are slightly higher following a mostly quiet night of news as investors digested the better than expected PPI report and looked ahead to today’s all-important CPI.
Economically, the only notable number was Japanese PPI which was better than expected, rising 2.7% y/y vs. (E ) 2.8% y/y. Japanese stocks rallied 1% in response.
Today brings the highlight of the week, CPI, and expectations are as follows: 0.3% m/m, 2.9% y/y. A better-than-expected headline will solidify rate cut expectations and push back on stagflation concerns and that should be a solid market positive. A “hot” number, however, will put three rate cuts before year-end in doubt and almost certainly pressure stocks.
Other events today include an ECB Rate Decision (E: No Changed), Jobless Claims (E: 234K) and some notable earnings reports: KR ($1.00), ADBE ($4.21), RH ($3.20).
Understanding Where the “Bubble” Is in AI
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- Understanding Where the “Bubble” Is in AI
- Weekly Market Preview: Does the Fed Start a New Rate Cutting Cycle?
- Weekly Economic Cheat Sheet: Fed is Key, but There’s Important Growth Data This Week, Too
Futures are slightly higher following a mostly quiet weekend and despite negative tech news and economic data from China.
China declared that NVDA had broken anti-monopoly news, escalating existing tech tensions between China and the U.S. (although this move isn’t a total surprise).
Economically, Chinese data underwhelmed as Retail Sales rose 3.4% vs. (E) 3.8% while Industrial Production gained 5.2% vs. (E) 5.6%.
Focus today will be on the first economic reading of September, the Empire Manufacturing Index (4.3) and markets will want to see stability to further push back on slowdown concerns.
Market Multiple Levels: S&P 500 Chart
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- MMT Levels S&P 500 Chart – September Update
Futures are solidly higher this morning thanks to strong tech earnings as traders await key U.S. inflation data.
ORCL shares are surging 30%+ in the pre-market as a measure of future revenue jumped $455B or 359% Y/Y in Q2 thanks to new AI-related cloud contracts.
Economically, Chinese CPI fell -0.4% vs. (E) -0.2% which is helping ease worries about a global resurgence in price pressures due to the trade war.
Today, trader focus will be on inflation data early with the August PPI report due out ahead of the bell (E: 0.3% m/m, 3.3% y/y).
After the open, the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 10-Yr Note auction at 1:00 p.m. ET and investors will want to see ongoing signs of strong demand for Treasuries to shore up increasingly dovish Fed expectations.
Finally, earnings season continues to wind down but there is one notable company reporting quarterly results today: CHWY ($0.14).
September Market Multiple Table Update
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- Market Multiple Table Update – What’s Changed Since August?
Futures are slightly higher while overseas equity markets were mixed overnight amid quiet newswires as the global bond rally stalls and investor focus turns to inflation data due later in the week.
Economically, the NFIB Small Business Optimism Index rose to 100.8 vs. (E) 100.5 in August.
There are no additional economic reports in the U.S. today, and no Fed officials are scheduled to speak.
The Treasury will hold a 6-Week Bill auction at 11:30 a.m. ET and a 3-Yr Note auction at 1:00 p.m. ET, and both have the potential to impact fixed income markets which could reverberate through equity markets (the stronger the demand, the better).
Finally some late season earnings to watch include: SAIL ($0.04), ORCL ($1.15), GME ($0.19), SNPS ($2.76), AVAV ($0.34), however, with the PPI and CPI reports due out tomorrow and Thursday, respectively, markets will more than likely remain quiet today.
What Does A Bad Labor Market Look Like and What Does It Mean for Markets?
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- What Does A Bad Labor Market Look Like and What Does It Mean for Markets?
- Weekly Market Preview: Do Stagflation Fears Rise Further?
- Weekly Economic Cheat Sheet: CPI on Wednesday the Key Report This Week
Futures are slightly higher as markets bounce from Friday’s post-jobs report declines, as investors look ahead to key inflation data this week.
Economically, data was mixed as Chinese and German exports (4.4% vs. (E) 5.5% and –0.6% vs. (E) 0.1% respectively) missed estimates, but German Industrial Production beat expectations (1.3% vs. (E ) 1.0%).
Geopolitically, Japanese stocks rallied hard (more than 1%) as PM Ishiba resigned (although it wasn’t a surprise).
This will be another important week because the PPI and CPI reports (Tuesday and Wednesday respectively) will either increase stagflation concerns (negative for stocks/bonds) or further pushback on them (positive for stocks and bonds). But, today should be mostly quiet as there are no notable economic reports nor any Fed speakers.
Jobs Day
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- Abbreviated Jobs Report Preview
Futures are modestly higher ahead of the jobs report and following solid tech earnings overnight.
Semiconductor company Broadcom (AVGO) beat estimates and offered bullish guidance and the stock is up 9% pre-market and that’s helping to lift futures.
Economically, German Manufacturers’ Orders missed estimates, felling –2.9% vs. (E) 0.5%.
Focus today will be on the jobs report and expectations are as follows: E: 77K Job-Adds, 4.3% Unemployment Rate, 3.8% Wage Growth. Any job adds number in the mid to low 100k range would be ideal for stocks as it would keep rate cut expectations high but also signal a stable labor market. Conversely, if job adds drop close to zero (or even go negative even with revisions) it’ll increase concerns the labor market is cooling, boost slowdown fears and likely hit stocks.
Jobs Report Preview
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- Jobs Report Preview
Futures are slightly higher despite underwhelming earnings and mixed economic data overnight.
Salesforce (CRM) guidance was underwhelming and the stock is down –7% pre-market, adding to pressure on tech.
Economically, UK retail sales missed estimates (-0.5% vs. (E) -0.1%) but that’s not moving markets.
Today focus will be on two of the three remaining important events of the week: The ISM Services PMI (E: 50.5) and Broadcom (AVGO) earnings after the close. Ideally, markets will want to see the ISM Services PMI move higher and not drop below 50, while strong AVGO earnings ($1.35) and guidance will help push back on some of the recent tech sector weakness that’s been a headwind for the S&P 500.
Other notable events today include ADP Employment (E: 68K), Jobless Claims (E: 232K) and two Fed speakers: Williams (12:05 p.m. ET) and Goolsbee (7:00 p.m. ET). Broadly speaking, the stronger the two employment reports and the more dovish the Fed speakers, the better for this market.
Finally, other earnings today include LULU ($2.84) and DOCU ($0.23).
How the “Degenerate Economy” Can Help Us Navigate This Market
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- How the Degenerate Economy Can Help Us Navigate This Market
- ISM Manufacturing PMI Takeaways
U.S. stock futures are solidly higher this morning, led by tech shares with GOOGL up 6%+ after a favorable court ruling saw the company avoid severe antitrust penalties while international stocks were mixed as bonds steadied in the wake of an early week spike in yields.
Economically, the final Eurozone Composite PMI fell to 51.0 vs. (E) 51.1 in August due to a weak Services index revision but the data is not materially moving markets focused on renewed tech sector strength this morning.
Today, focus will be on economic data early as jobs week kicks off the July JOLTS report (E: 7.375 million) while Factory Orders data from July will also be released mid-morning (E: -1.4%).
There are two Fed speakers today: Musalem (9:00 a.m. ET) and Kashkari (1:30 p.m. ET). As far as stocks are concerned the more dovish their tone, the better as investors are pricing in a September rate cut with a high degree of certainty.
Finally, late seasons earnings continue to be released with quarterly reports from DLTR ($0.38), HPE ($0.36), M ($0.19), CPB ($0.57), CRM ($2.12), AEO ($0.20), and AI (-$0.81) all due out today.
Three Key Market Variables to Watch
/in Daily Report, Investing/by Tom EssayeWhat’s in Today’s Report:
- Three Key Market Variables to Watch
- Thoughts on the Appellate Court Decision (Why It’s Not a Positive for Stocks)
- Weekly Economic Preview: “The Big Three” Reports Are Due This Week
U.S. stock futures are tracking global equity markets lower this morning as bond yields rise and gold hit fresh record highs amid a fresh sense of macroeconomic uncertainty.
Economically, the EU’s Narrow Core HICP Flash (CPI equivalent) held steady at 2.3% vs. (E) 2.2% in August which was not a big “miss” but is continuing to keep inflation worries elevated.
Looking into today’s session, there are no Fed officials scheduled to speak but two economic reports to watch with the ISM Manufacturing PMI (E: 48.7) and Construction Spending (E: +0.1%) data both due to be released.
Additionally, the Treasury will hold 6-Week, 3-Month, 6-Month and 52-Week Bill auctions simultaneously at 11:30 a.m. ET. The wide range of Bill durations being auctions could shed fresh light on the market’s outlook for Fed policy between now and yearend as well as H1’26.
Finally, some late season earnings continue to be released with quarterly reports due from both ZS (-$0.02 and SIG ($1.21) today.
Bottom line, if economic data is “Goldilocks” and supports the case for a soft-landing and Treasury auctions go smoothly (healthy demand), pointing to a September Fed rate cut, equities could recover early losses as focus turns to labor market data due out later in the week. If not, we could see a volatile start to September today, but follow-through selling is unlikely ahead of the key jobs report Friday.