An Easy Way to Monitor Concerns About AI ROI

/in , /by

What’s in Today’s Report:

  • An Easy Way to Monitor Concerns About AI ROI
  • ISM Manufacturing PMI Takeaways

Futures are trading higher with tech leading after PLTR and Samsung both posted very strong Q4 earnings results while a stabilizing precious metals market and optimism Congress will pass a spending bill are bolstering sentiment.

Economically, French CPI fell to +0.3% Y/Y in January vs. (E) +0.7%, down from +0.8% in December which is easing concerns about higher-for-longer central bank policy rates.

Today, there was one important economic report due to be released: JOLTS (E: 7.245 million) but it will be delayed due to the government shutdown.

The only other potential macro catalysts are a 6-Week Treasury Bill auction at 11:30 a.m. ET and the Fed’s Barkin scheduled to speak before the open (8:00 a.m. ET) however, neither will likely move markets meaningfully with focus on the spending bill in Congress/government shutdown.

Finally, earnings season continues with quarterly reports due from PYPL ($1.29), PEP ($2.24), MRK ($2.03), AMGN ($4.75),  AMD ($1.11), and SMCI ($0.41) today.

 

Does the Warsh Nomination Jeopardize the Rally?

/in , /by

What’s in Today’s Report:

  • Does the Warsh Nomination Jeopardize the Rally?
  • Weekly Market Preview: Is the Goldilocks Economy Still Rolling?
  • Weekly Economic Cheat Sheet: “Big Three” Monthly Reports This Week (Including Jobs Friday)

Futures are moderately lower on momentum from Friday’s decline as markets digest the surprise Warsh nomination.

Geopolitical headlines were mixed as the government partially shutdown (but should be brief) while fears of a strike against Iran receded on positive Trump comments.

Economically, Chinese Feb. PMIs missed estimates and both the manufacturing and services PMIs fell below 50.

Today focus will be on the ISM Manufacturing PMI (E: 48.3) as that is the first of the big monthly economic reports, and the stronger the data, the better for stocks.

We also have one Fed speaker today, Bostic (12:30 p.m. ET), but he shouldn’t move markets (the market just wants to hear from Warsh now)

Earnings continue on, meanwhile, and some key reports today include: DIS ($1.57), PLTR ($0.17), NXPI ($2.93).

 

Market Based Inflation Expectations Post-Fed

/in , /by

What’s in Today’s Report:

  • Market Based Inflation Expectations Post-Fed

Futures are moderately lower on the news that President Trump will nominate Kevin Warsh as Fed Chair.

The Warsh nomination is a surprise (Waller and Rieder were the favorites) and he’s not the market’s first choice, as Warsh has been hawkish on the use of QE in the past.

Staying with politics, a deal apparently has been reached to avoid a government shutdown (which is a positive).

Today focus will be on the President’s Fed announcement and, again, while Warsh isn’t a negative for markets, it wasn’t the market’s first choice and that is why we’re seeing profit taking in gold and silver this morning (gold down 3%).

Outside of the Fed, we do get PPI (E: 0.2% m/m, 2.9% y/y) and some notable earnings from lenders/credit card companies: SOFI ($0.12) and AXP ($3.55).  Good commentary about consumer spending will be welcomed by the markets.

 

Another “Run Hot” Policy (Weaker Dollar)

/in , /by

What’s in Today’s Report:

  • Another “Run Hot” Policy (Weaker Dollar)
  • What the Fed Decision Means for Markets

Futures are modestly higher on better than expected mega-cap tech earnings and reduced shutdown risks.

Big tech earnings weren’t perfect but, on balance, were positive as META (up 10% pre-open) and TSLA (up 2% pre-open) beat while MSFT (down 7% pre-open) disappointed.

Shutdown risks fell on reports that President Trump and Senate Minority leader Schumer were close to a deal to extend government funding.

Focus today will be on Jobless Claims (E: 205K) and another round of important earnings.

Potentially market moving reports today include:  AAPL ($2.65), V ($3.14), MA ($4.20), SNDK ($3.31), CAT ($4.67), LMT ($6.24) and BX ($1.52).

 

FOMC Preview

/in , /by

What’s in Today’s Report:

  • FOMC Preview – Expected, Dovish-If, and Hawkish-If Scenarios
  • Chart – Silver Goes Parabolic, up 150%+ in Three Months

Futures are trading at record highs ahead of today’s Fed decision as ASML, a top supplier for the global semiconductor industry, posted strong earnings and optimistic guidance overnight, fueling a resurgence in mega-cap tech and growth stocks overnight.

Economically, the German GfK Consumer Climate Index edged up from -26.9 to -24.1 vs. (E) -25.5 but the release did not materially move markets.

There are no notable economic reports today which will leave investors focused on the Fed today with the FOMC Meeting Announcement at 2:00 p.m. ET and Fed Chair Powell’s Press Conference shortly after at 2:30 p.m. ET.

Beyond the Fed, the first mega-cap U.S. tech companies will release earnings today including MSFT ($3.88), META ($8.32), TSLA ($0.33), and IBM ($4.33). Other noteworthy names releasing quarterly earnings today include: GEV ($3.03), T ($0.46), and PGR ($4.44).

In order for stocks to continue higher, investors will be looking for a benign (dovish-leaning) Fed decision and strong tech earnings like we saw from ASML overnight which would have the potential to power the major indexes further into record territory.

 

Two Reasons Markets Have Been So Resilient YTD

/in , /by

What’s in Today’s Report:

  • Two Reasons Markets Have Been So Resilient YTD
  • Weekly Market Preview: Focus on the Fed (Will They Hint at Rate Cuts Later in the Year?)
  • Weekly Economic Cheat Sheet: More Growth and Inflation Updates

Futures are modestly weaker but have rebounded from steep overnight declines, as more political/policy volatility is weighing on futures.

Government shutdown risks spiked over the weekend following another incident with ICE, while separately, President Trump threatened 100% tariffs on Canada.

Economically, the only report was German Ifo Business Expectations and it slightly missed estimates.

Today focus will be on Washington via rising government shutdown risks and the tariff threats on Canada.  Any headlines that make a shutdown seem more likely or that tariff threats will actually go through will weigh on markets, while deescalation on both will help fuel a rebound.

Outside of Washington political volatility, there is one economic report today, Durable Goods (E: 3.1%) and some earnings, STLD ($1.72), BKR ($0.67), NUE ($1.82), but they shouldn’t move markets.

 

Why YTD Sector Performance Implies Inflation Risks

/in , /by

What’s in Today’s Report:

  • Why YTD Sector Performance Implies Inflation Risks

Futures are little changed on mixed tech news and as the Bank of Japan decision met expectations.

Tech earnings/news was mixed as Intel missed (INTC down 13% pre-market) but a positive Bloomberg article on Nvidia (NVDA) chip sales to China is offsetting the INTC results.

The Bank of Japan held rates steady but signaled more hikes are coming, as expected (and that kept JGB’s calm).

Focus today will be on economic data and specifically the Flash Manufacturing PMI (E: 52.0) and Flash Services PMI (E: 52.8), which are the first national data points for January.  Stability in the data will be welcomed by markets as another reminder of the Goldilocks economy (which is stock positive).

We also get Consumer Sentiment (E: 54.0) and some earnings reports (SLB ($0.74), ERIC ($0.23), BAH ($1.26)) but they shouldn’t move markets.

 

What’s Next from a Policy Standpoint

/in , /by

What’s in Today’s Report:

  • What’s Next from a Policy Standpoint
  • Monthly Bitcoin Update

Futures are moderately higher on continued positive momentum from the “deal” announced on Greenland by President Trump on Wednesday afternoon.

There were no new geopolitical headlines overnight and that’s allowing stocks to extend the rebound as markets celebrate no new tariffs and deescalation on Greenland. Today markets will want to see no backtracking on the Greenland “deal” and continued calm in JGB yields and if we get both, stocks should hold these early gains.

Looking at the calendar, there is some notable economic data via Jobless Claims (E: 205K) and two delayed reports from the government shutdown: Final Q3 GDP (E: 4.3%) and Nov. Core PCE Price Inde (E: 0.2% m/m, 2.8% y/y).  However, barring a major surprise, none of those numbers should move markets.

On earnings, they’ve taken a back seat given all the geo-political drama but the season is heating up and some results we’re watching today include: PG ($1.87), GE ($1.44), FCX ($0.28), INTC (-$0.02), ABT ($1.50), ISRG ($1.83), COF ($4.12), AA ($0.84).

 

Why “JGBs” and a “Run-Hot” Economy Matter to Your Clients

/in , /by

What’s in Today’s Report:

  • Why a Spike in Japanese Bond Yields Hit Stocks
  • Implications of the Administration’s Policies: A Run-Hot Economy (and What Might Come Next)

Stock futures bounced overnight amid stabilizing global bond yields as traders digested Tuesday’s volatile start to the short trading week before Trump’s speech in Davos.

Economically, the U.K.’s December CPI report was “warm” with the headline rising +0.2% to 3.4% vs. (E) 3.3% which saw yields come off their overnight lows in pre-market trading.

There are no economic reports due to be released today and no Fed officials are scheduled to speak. However, President Trump is scheduled to deliver an address at the World Economic Forum in Davos at 8:30 a.m. ET, and any commentary on Greenland could roil markets in what has already been a volatile week.

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET. Yesterday’s Treasury auctions saw weak demand across durations which added upside pressure to bond yields, and if we see more of the same in today’s auctions, rising yields could reignite volatility.

Finally, earnings season remains in full swing with a handful of noteworthy companies reporting today including: JNJ ($2.49), SCHW ($1.37), and KMI ($0.36).

 

What Greenland Headlines Mean for Markets

/in , /by

What’s in Today’s Report:

  • What the Greenland Headlines Mean for Markets
  • Weekly Economic Outlook – Core PCE in Focus

Global markets are “risk-off” thanks to geopolitical tensions between the U.S. and Europe surrounding Greenland and a sharp rise in bond yields due to Japanese fiscal worries.

Economically, Germany’s ZEW Survey topped estimates with Economic Sentiment firming to 59.6 vs. (E) 50.0 but the data is being overshadowed by the sharp rise in JGB yields and geopolitical turmoil.

There are no economic reports today, however, the Treasury will hold auctions for 3-Month and 6-Month Bills at 11:30 a.m.

ET and 6-Week and 52-Week Bills at 1:00 p.m. ET. Strong demand (dovish) should help stocks stabilize as we start the week.

There are no Fed officials scheduled to speak today which will leave traders watching earnings closely with FITB ($1.01), MMM ($1.82), DHI ($1.96), USB ($1.19), NFLX ($0.55), IBKR ($0.51), and UAL ($2.98) all reporting Q4 results today.