An Important Week for Two Pillars of the Rally

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What’s in Today’s Report:

  • An Important Week for Two Pillars of the Rally
  • Weekly Market Preview: Does Fed Policy and AI News Fuel Push Markets to New Highs?
  • Weekly Economic Cheat Sheet: More Labor Market Updates (Is It Stable?)

Futures are little changed following a generally quiet weekend of news and as investors look forward to important Fed and AI events later this week.

Investor focus, as we start the week, is on Wednesday’s Fed decision, ORCL/AVGO earnings and a Chat GPT update.

Economically, foreign data was better than expected as Chinese exports beat estimates (rising 5.9% vs. (E) 4.0%) as did German Industrial Production (1.8% vs. (E) 0.1%).

This week will be a busy one but today should be relatively quiet in the markets as there are no notable economic reports and just one earnings report after the close, TOL ($4.87).

 

Sevens Report – Technical Targets: Santa Rally vs. Grinch Selloff

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What’s in Today’s Report:

  • Technical Targets: Santa Rally vs. Grinch Selloff

Futures are slightly higher mostly on momentum following a generally quiet night of news.

Japanese stocks declined 1% and gave back some of Thursday’s rally on more hawkish chatter, as a rate hike later this month remains a distinct possibility.

Economic data was mixed as Japanese Household Spending fell more than expected (-3.% vs. (E) 1.5%) while German Manufacturers’ Orders beat estimates (1.5% vs. E) 0.5%).

Today focus will be on economic data and the most important report will be the September Core PCE Price Index (E: 0.3% m/m, 2.9% y/y).  This is a delayed report from the government shutdown and it’s “old” data at this point, but it’s also the first major inflation report markets have seen in months and for this rally to continue, we’ll need to see in-line data that does not hint at any sudden rise in inflation (which could jeopardize another Fed rate cut).

Other economic reports today include Consumer Sentiment (E: 52.0) and Consumer Credit (E: $9.4B), but unless there’s a major surprise, that shouldn’t move markets.

 

Why Kevin Hassett as Fed Chair Isn’t Automatically Bullish

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What’s in Today’s Report:

  • Why Kevin Hassett as Fed Chair Isn’t Automatically Bullish (Hint: Bond Yields)

Futures are little changed despite more solid tech earnings and positive news for the yen carry trade.

Salesforce (CRM) posted stronger than expected results and continued the run of strong tech earnings this week.

In Japan, yen carry trade worries eased slightly after a strong 30-year JGB auction, which sent the Nikkei sharply higher (up more than 2%).

Today focus will be on labor market data via Jobless Claims (E: 225K) and Challenger Job Cuts (Last 153k).  Slightly underwhelming data will be again welcomed by markets as that will further boost rate cut chances (although very weak readings may stoke economic concerns).

Earnings also continue today and some reports to watch include: DG ($0.92), DOCU ($0.33) and HPE ($0.49).

 

Why Gemini Could Weigh on AI Enthusiasm

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What’s in Today’s Report:

  • Why Google’s Gemini Update Could Further Pressure AI Enthusiasm

Futures are higher on strong earnings and guidance from MRVL after the close yesterday (shares +10% premarket this morning) ahead of the release of a slew of key economic data today.

Overnight, global Composite PMI data was solid as Chinese, U.K., and Eurozone releases all topped estimates with headlines in expansion territory.

Today, there is a long list of data due out in the U.S. including the ADP Employment Report (E: 20K), Import & Export Prices (E: -0.2% m/m, 0.0% m/m), Industrial Production (E: 0.1%), and the ISM Services PMI (E: 52.1).

There are no Fed officials scheduled to speak today however there is a mid-duration Treasury Bill auction (for 4-Month securities) that could shed light on current Fed policy expectations; the more dovish the outcome/stronger the demand for the Bills, the better.

Finally, Q3 earnings continue today with results due from DLTR ($1.09), M ($-0.13), RY ($2.52), CRM ($2.15), SNOW ($-0.58), and AI ($-0.75), and investors will be looking for more strong results, particularly from the tech companies reporting today.

 

Why Is Bitcoin Still Falling?

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What’s in Today’s Report:

  • Why Is Bitcoin Still Falling?
  • ISM Manufacturing PMI Takeaways

U.S. equity futures are higher thanks to the combination of a strong Japanese government bond auction and largely as-expected EU inflation data which are both helping yields stabilize after a sharp rise to start December yesterday.

Economically, the Eurozone’s Narrow Core HICP (Core CPI equivalent) held steady at 2.4% vs. (E) 2.5% in November.

Looking into today’s session, we will get data on domestic Motor Vehicle Sales (E: 15.4 million) which likely won’t have a material impact on markets unless there is a significant drop signaling a potential slowdown in consumer spending.

Additionally, there is one Fed speaker: Bowman (10:00 a.m. ET), and the Treasury will hold a 6-Week Bill auction at 11:30 a.m. ET. Markets are looking for dovish signals via strong demand for short-duration Treasuries and fresh support for a December Fed rate cut.

Finally, there are a few potentially market moving earnings releases today from some AI-sensitive companies including: MRVL ($0.58), CRWD ($0.07), and OKTA ($0.20).

 

Year-End Rally or Not? Three Events to Watch

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What’s in Today’s Report:

  • Year-End Rally or Not? Three Events to Watch
  • Weekly Market Preview: Can the Rebound Continue?
  • Weekly Economic Cheat Sheet: Two of the “Big Three” Monthly Economic Reports This Week

Futures are moderately lower following a sharp drop in cryptocurrencies, hawkish Bank of Japan commentary and underwhelming Chinese economic data.

Bitcoin fell 5% as pressure on the crypto space increased, although there was no specific reason for the declines.

BOJ Governor Ueda told markets the BOJ would strongly consider a rate hike at its next meeting, pressuring stocks.

Economically, the Chinese non-manufacturing PMI fell to 49.5 vs. (E) 50.1, the lowest reading in three years.

Today focus will be on the November ISM Manufacturing PMI (E: 49.0) and the key here is stability, specifically that we do not see the PMI “fall away” from 50 and badly miss expectations (if it does, it could be signaling sudden deterioration in the manufacturing sector, which would be a negative economic surprise).

 

Mixed Messages from Jobless Claims Data

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What’s in Today’s Report:

  • Economic Update: Mixed Messages from Jobless Claims Data

U.S. futures are unavailable after a “cooling issue” caused a failure at a CME data center.

Despite the lack of U.S. futures, global markets are mostly little changed and U.S. futures would likely be also, given the quiet Thanksgiving holiday.

Economically, Japanese economic data was better than expected on Thursday (Industrial Production rose 1.5% vs. (E) -0.5% and Retail Sales gained 1.7% vs. (E) 1.1%), boosting chances for a rate hike.

Today should be a typically quiet post-Thanksgiving trading day, even despite the futures issues.  U.S. markets close at 1:00 p.m.

 

A Chart for Clients: “Buying the Rip” Pays Over Time

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What’s in Today’s Report:

  • Interesting Chart for Clients – “Buying the Rip” Pays Off Over Time
  • PPI & Retail Sales Takeaways

Stock futures are higher, signaling equities are poised to extend this week’s solid advance, albeit in light holiday trading, as dovish bets for a December Fed rate cut continue to build, supporting risk-on money flows.

There were no market-moving economic reports or noteworthy financial news headlines overnight.

Today should be quiet giving the looming Thanksgiving holiday break tomorrow however there are three economic reports to watch that could impact markets including Durable Goods Orders (E: 0.1%), Jobless Claims (E: 225K), and the Chicago PMI (E: 44.3).

There are no Fed speakers today however there are multiple short-term Treasury Bill auctions this morning and a critical 7-Yr Note auction at 1:00 p.m. ET that could move yields and subsequently impact equities and other asset classes (the stronger the demand, the better).

Finally, there are two earnings reports due out today from DE ($3.96) and LI ($0.04), but given the thin volumes and light attendance ahead of Thanksgiving, it is unlikely that either release materially moves markets.

 

New ETFs for Your Watchlist

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What’s in Today’s Report:

  • Is Japan Having a “Liz Truss” Moment?
  • New ETFs for Your Watchlist

Stock futures are modestly lower as yesterday’s robust relief rally is digested ahead of the release of a slew of delayed economic reports.

Economically, German GDP met estimates of +0.3% Y/Y but steadied in Q/Q terms, up from -0.2% to 0.0% in Q3.

Looking into today’s session, there is a long list of economic data due to be released including PPI (E: 0.3% m/m, 2.6% y/y), Retail Sales (E: -0.4%), Case-Shiller Home Price Index (E: 0.1%), FHFA House Price Index (E: 0.1%), Consumer Confidence (E: 93.3), Pending Home Sales (E: -0.4), and Business Inventories (E: 0.2%).

No Fed officials are scheduled to speak (although some last-minute media interviews are possible), however there is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could move yields and impact stocks, and the stronger the demand, the better for stocks (dovish money flows).

Finally, Q3 earnings continue to be released and noteworthy companies reporting today include BABA ($0.49), BBY ($1.31), ANF ($2.14), DELL ($2.26), WDAY ($0.90), and AMBA ($-0.40).

Bottom line, in order for yesterday’s relief rally to continue in thin holiday-week trading, markets will be looking for Goldilocks-to-strong economic data (not too strong to derail December rate cut bets, though) and stable to well-bid bond markets as a rebound in yields or resurgence in recession worries would pour cold water on yesterday’s risk-on money flows.

 

How Much Has the Bullish Case Deteriorated?

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What’s in Today’s Report:

  • How Much Has the Bullish Case Deteriorated?
  • Weekly Market Preview: Can AI Enthusiasm Stabilize?
  • Weekly Economic Cheat Sheet: Important Growth Data Despite the Short Week

Futures are slightly higher as investors digest last week’s volatility following a generally quiet weekend of news.

Most global markets are higher on momentum from Friday’s U.S. rally, except Japanese shares which fell sharply (down more than 2%) after unions negotiated more pay increases, boosting chances for a rate hike.

Economically, the only report was German IFO Business Expectations which missed expectations (90.6 vs. (E) 91.4).

This is a holiday shortened week but the “catch up” in economic data from the government shutdown will continue despite only three and a half trading days.  As a general rule, the more Goldilocks the data (so basically at expectations) the better as it’ll keep growth expectations stable but boost rate cut chances.

Economic reports we’re watching today include the Chicago Fed National Activity Index (E: -0.12) and Industrial Production (E: 0.1%).