Reminder of Market Risks

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What’s in Today’s Report:

  • Reminder of the (Many) Risks

Futures are higher with global equities while overseas bonds are stabilizing amid easing U.S.-EU trade tensions.

President Trump delayed the implementation date of proposed 50% tariffs on the EU, which were first threatened Friday morning, from June 1 to July 9 which is being well received by global investors and supporting broad risk-on money flows across asset classes.

There were no material or market-moving economic reports overnight but there are several key reports to watch in the U.S. today including Durable Goods Orders (E: -8.1%), the Case-Shiller Home Price Index (E: 0.3%), and Consumer Confidence (E: 87.3).

Additionally, there are two Fed speakers to watch: Barkin (9:30 a.m. ET), Williams (8:00 p.m. ET) as well as a 2-Yr Treasury Note auction at 1:00 p.m. ET, all of which could shed light on Fed policy expectations for the months ahead.

Finally, a few more late season earnings releases continue to trickle in with PDD ($2.25), AZO ($36.78), and BNS ($1.14) all reporting today but the market impact should be limited.

Volatility Update

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What’s in Today’s Report:

  • Volatility Update

Futures are slightly lower following a mostly quiet night of news ahead of the holiday weekend.

Politically, the Supreme Court issued a ruling overnight that implies the President does not have the authority to fire the Fed Chair and this is a general positive for markets (it mostly removes Trump firing Powell as a threat).

Economically, data was better than expected as UK retail sales and German GDP both beat estimates.

Today focus will be on New Home Sales (E: 700K) and there is one Fed speaker, Cook (12:00 p.m. ET).  But, given the looming holiday weekend, expect trading to be quiet barring any surprises.

What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

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What’s in Today’s Report:

  • What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

Futures are slightly higher as markets digest Wednesday’s yield driven selloff.

Economically, EU and UK flash PMIs disappointed.  The EU flash PMI badly missed expectations (49.5 vs. (E) 50.9) while the UK reading was a slight miss (49.4 vs. (E) 49.5).

Today focus will be on economic data as well as political progress.  Economically, the key reports today are the May Flash Manufacturing PMI (E: 49.8) and Flash Services PMI (E: 50.6) as well as Jobless Claims (E: 230K).  As has been the case, the stronger those numbers, the better as they will continue to push back on stagflation fears.  There is also one Fed speaker, Williams at 2:00 p.m. ET, but he’s unlikely to move markets.

Finally, on the political front, the deficit implications of the “Big Beautiful Bill” are pushing Treasury yields higher and if the bill advances out of the House and is viewed as deficit negative, it will send yields higher again and pressure stocks.

Sentiment Update: The Bulls Have Returned (Somewhat)

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What’s in Today’s Report:

  • Sentiment Update – The Bulls Have Returned (At Least Somewhat)
  • Chart: Sector Positioning Remains Cautious Despite Broad Market Rebound

Futures are lower as the rapid Q2 relief rally continues to be digested amid an ongoing sense of market uncertainty.

Economically, U.K. CPI spiked from 2.6% in March to 3.5% in April, topping estimates of 3.3% (y/y) which is putting upward pressure on bond yields as inflation concerns return.

There are no noteworthy economic releases to watch today but two Fed officials are scheduled to speak mid-day: Barkin & Bowman (12:15 p.m. ET), and there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET.

Strong demand for the T-Bonds and a more dovish tone out of the Fed speakers would be well received and likely to help stabilize equity markets today while weak demand metrics in the auction and/or hawkish Fed speak could further pressure stocks.

Earnings season continues to wind down, however there are some noteworthy companies reporting Q1 results today including: TGT ($1.65), TJX ($0.90), BIDU ($1.96), LOW ($2.88), SNOW (-$0.59). Investors will particularly like to see strength in the consumer names reporting today to quell worries of a slowdown in consumer spending in early 2025.

What the Moody’s Downgrade Means for Markets (Two Important Charts)

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What’s in Today’s Report:

  • What the Moody’s Downgrade Means for Markets
  • Two Important Charts: Interest Expense and Deficits

Futures are modestly lower this morning as the S&P 500’s six-day rally is being digested amid a steadying Treasury market after the Moody’s downgrade of the U.S. last week.

There were positive trade war headlines out of Japan, Vietnam, and India overnight helping global stocks rally while economically, German PPI favorably fell -0.9% vs. (E) -0.5%.

Looking into today’s session, there are no notable economic reports in the U.S., however the Treasury will hold a 6-week Bill auction at 11:30 a.m. ET which could shed light on the market’s near-term Fed policy expectations, but barring any big surprise, the auction is not likely to move markets.

There are a handful of Fed speakers today including: Barkin & Bostic just ahead of the bell (9:00 a.m. ET), and Musalem in the early afternoon (1:00 p.m. ET). A “higher-for-longer” shift in Fed policy outlook has been priced in recently, so any dovish commentary out of the Fed officials would be well received.

Finally, some late season earnings will continue to be released today including: HD ($3.59), PANW ($0.41), TOL ($2.86).

Are Markets Giving An “All Clear” Signal?

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What’s in Today’s Report:

  • Are Markets Giving An “All Clear” Signal?
  • Weekly Market Preview:  Can This Rebound Hold?
  • Weekly Economic Cheat Sheet:  The First National Numbers for May (This Thursday)

Futures are lower (down more than 1%) following the Moody’s downgrade of U.S. debt Friday afternoon.

The Moody’s downgrade wasn’t dramatic news (S&P and Fitch downgraded U.S. debt years ago) but it is pushing the 10 year yield higher and that’s weighing on futures.

Economically, Chinese economic data underwhelmed (Retail Sales and Industrial Production missed estimates).

Today focus will be on economic data and Fed speak.  Economically, Leading Indicators (E: -0.7%) is the most notable report while we have several Feds speakers including: Williams & Bostic (8:30 a.m. ET), Jefferson (9:45 a.m. ET) and Logan (1:15 p.m. ET).  If they echo Powell from last week and are somewhat dismissive of near-term rate cuts, that could add to the headwinds on stocks today.

Highlighting the Value of International Diversification

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What’s in Today’s Report:

  • Highlighting the Value of International Diversification

Futures are extending Thursday’s rally mostly on momentum, following a quiet night of news.

Economically, the only notable report was Italian CPI which, like other recent EU inflation metrics, was better than expected (2.0% vs. 2.1% y/y) and is helping EU shares extend the recent rally as well.

Today there are several economic reports including Housing Starts (1.362M), Import & Export Prices (E: -0.3% m/m, -0.3% m/m) and Consumer Sentiment (E: 53.0, 1-Yr Inflation Expectations: 6.6%).  But, the focus will really be on inflation as the cool CPI and PPI this week have been the most important positives for this market.  If the University of Michigan 5-Year Inflation Expectations don’t rise from last month (4.4% y/y), that will be an additional positive for stocks as it will further push back on inflation fears.

Finally, there are two Fed speakers today, Barkin (6:40 p.m. ET) and Daly (8:40 p.m. ET), but they shouldn’t move markets.

Understanding the New Bullish Argument

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What’s in Today’s Report:

  • Understanding the New Bullish Argument

Futures are moderately weaker on digestion of the recent rally following a mostly quiet night of news.

There were no notable trade headlines overnight but President Trump did say they were “close” to a nuclear deal with Iran and that is pressuring oil (down 3%). Today there is a lot of potentially important economic data including, in order of importance:   Retail Sales (E: 0.1%), Jobless Claims (E: 229K), PPI (E: 0.2% m/m, 2.4% y/y), Philly Fed (E: -10.0) and Empire Manufacturing (-7.5).  Put simply, the stronger the growth data the better for stocks (pushes back against recession fears) and the lower the PPI reading, the better for stocks (pushes back against inflation fears).

There are two Fed speakers today including Powell (8:40 a.m. ET) and Barr (2:05 p.m. ET) but they commentary is expected to focus on regulation so it shouldn’t move markets.

Finally, there are some notable retail earnings to watch today: WMT ($0.57), BABA ($1.48), DE ($5.68).

May MMT Chart

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What’s in Today’s Report:

  • May MMT Chart
  • CPI Takeaways

Futures are flat after a mostly quiet night of news that included benign inflation data overseas while traders digest the fastest recovery from YTD losses since the 1980s.

Economically, April inflation data was mixed overnight as Japanese PPI fell to 4.0% vs. (E) 3.8% y/y while German CPI met estimates at 2.1% y/y last month.

There are no notable economic reports today but two Fed officials are scheduled to speak: Jefferson (9:10 a.m. ET) and Daly (5:40 p.m. ET). Neither are likely to move markets, however Fed policy expectations have shifted more hawkish in recent weeks so any dovish leaning comments could support a continued move higher in equities today.

On that same vein, there is a 4-Month Treasury Bill auction at 11:30 a.m. ET. Those Bills will mature around the time of the September Fed meeting, so strong demand would be dovish for markets while weak demand could spark hawkish money flows and result in some profit taking in risk assets.

Finally, there are a few more late season earnings releases due out today including SONY ($0.12) and CSCO ($0.75) but given optimism for new AI-chip deals overseas, neither report should be able to derail this week’s rally.

May Market Multiple Table Update

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What’s in Today’s Report:

  • May Market Multiple Table Update

Stock futures are lower as traders digest yesterday’s sizeable risk-on rally but U.S. futures are off their overnight lows thanks to better than expected global economic data as market focus shifts to today’s CPI release in the U.S.

The Economic Sentiment Index of the German ZEW Survey jumped from -14.0 to +25.2 vs. (E) 0.0 while the U.S. NFIB Small Business Optimism Index came in at 95.8 vs. (E) 94.7.

Looking into today’s session, trader focus will be on inflation data with CPI (E: 0.3% m/m, 2.4% y/y) as well as the Core CPI figure (E: 0.3% m/m, 2.8% y/y) due to be released before the bell.

If the inflation report is inline with estimates or “cooler-than-feared,” expect yesterday’s big stock market gains to hold or for stocks to even extend the already sizeable WTD rally on bullish momentum.

Finally, a few noteworthy earnings releases today include: JD ($0.99), HMC ($0.72), and SE ($0.61), however the bulk of the Q1 reporting season is behind us and the market impact should be limited.