This two-day rally in the market is mostly built on the premise that the Fed may ‘pause’ rate hikes after the two 50-bps adjustments this summer…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly higher following a night of mixed earnings and continued reopening in China.
Shanghai continued to reopen and Beijing is still avoiding the most draconian lockdowns and that’s helping broader market sentiment.
Economic data was sparse as the only notable report was Euro Zone M3 (6.2% vs. (E) 6.3%) but that’s not moving markets.
Today the key report is the Core PCE Price Index (E: 0.3%, 4.9%) and if it underwhelms vs. expectations and furthers the idea that inflation has peaked, look for a continuation of this week’s rally. We also get Consumer Sentiment (E: 59.1) and the key there will be the five-year inflation expectations. If they drop below 3.0%, that’ll be an additional positive for stocks today.
What’s in Today’s Report:
Futures are slightly higher as incrementally positive macro news offset more disappointing tech earnings.
Nvidia earnings underwhelmed and the stock fell 5% after hours, and that is weighing on tech this morning.
But, not as hawkish as feared in FOMC minutes and the continued reopening of Shanghai offset the soft NVDA earnings.
Today’s focus will be on economic data via the Revised Q1 GDP (-1.4%), Jobless Claims (E: 208K), and Pending Home Sales (E: -1.3%). Given the recent weakness in other economic data, the market will want to see stability in the numbers to continue to push back on stagflation concerns.
What’s in Today’s Report:
Stock futures are little changed this morning, well off the overnight highs after a mostly quiet night of news as investors look ahead to the release of the latest Fed meeting minutes.
Economically, the German GfK Consumer Climate Index met expectations of -26.0 while German GDP came in at 3.8% vs. (E) 3.7% but today’s data is not materially impacting markets.
Looking into today’s session, there is one economic report to watch early: Durable Goods Orders (E: 0.5%) and the Treasury will hold an auction for 5-Year Notes at 1:00 p.m. ET. Markets will want to see data that shows healthy demand and steady trade in fixed income markets if stocks are to stabilize further.
As far as the Fed goes, Vice-Chair Brainard is scheduled to speak at 12:15 p.m. ET before the day’s main event, the release of the FOMC Meeting Minutes will hit at 2:00 p.m. ET. If Brainard and the minutes are less hawkish that could support a continuation of the latest attempt at a relief rally. At the same time, any more-hawkish leaning rhetoric or verbiage could lead to a resurgence in volatility as news flow has been decidedly negative over the last week.
What’s in Today’s Report:
Stock futures are down more than 1% this morning following more negative earnings news in the tech sector.
SNAP is down 30% this morning after issuing a profit warning late yesterday, citing a quickly deteriorating macroeconomic environment that is weighing on tech broadly.
Economically, Composite Flash PMI data slightly missed estimates in Europe overnight, but notably remained comfortably in expansion territory, easing some concerns about a looming recession.
Looking into today’s session, focus will be on economic data early with the PMI Composite Flash (E: 55.5) and New Home Sales (E: 748K) due to be released and the market will be looking for fresh signs that the economy is in good shape and not significantly losing momentum right now. There is also a 2-Yr Treasury Note auction at 1:00 p.m. ET today which could move yields on the short end of the curve, and in turn, impact equity trading.
Focus will turn to monetary policy midday with Fed Chair Powell scheduled to speak at 12:20 p.m. ET. Any hints at a less aggressive approach to policy tightening in the months ahead will be welcomed by investors and could help the latest attempt at a relief rally regain its footing. However, the combination of soft data in the morning and a hawkish-leaning Powell could send stocks lower.
What’s in Today’s Report:
Futures are moderately higher mostly on momentum from Friday’s rebound following a generally quiet weekend.
COVID news from China remains mixed as Shanghai continues to relax lockdowns although Beijing is seeing a continued increase in cases (keeping the threat of more lockdowns alive).
The dollar is down one percent after ECB President Lagarde signaled two rate hikes were likely in the 3rd quarter (this was a bit more hawkish than expected).
Today there are no notable economic reports and just one Fed speaker, Bostic (12:00 p.m. ET). If Bostic echoes Bullard’s slightly less hawkish than feared commentary from Friday afternoon, then stocks can extend Friday’s rebound.
In a morning note, market analyst Tom Essaye of the Sevens Report pointed out retail customers are buying less high-margin merchandise (like apparel and electronics) to instead spend more on lower-margin food (like bread and eggs), and also shifting spending away from brand names to cheaper private labels—signs that “consumers are starting to…” to read the full report, click here.
What’s in Today’s Report:
Futures are moderately higher following a surprise rate cut by Chinese authorities.
Officials in China announced a larger than expected rate cut to the 5-year Loan Prime Rate (15 bps vs. (E) 5 bps) in a move that potentially signals greater ongoing support for the economy (if China can reopen and authorities substantially support the economy that would remove a big headwind on stocks).
Economic data was mixed overnight as German PPI remained hot (2.8% vs. (E) 1.2% m/m) while UK Retail Sales modestly beat estimates (rising 1.4% vs. (E) 0.2%) but neither number is altering the rate hike outlooks for the ECB or BOE (both are expected to continue to hike rates over the summer).
Today there are no notable economic reports and no Fed speakers scheduled so look for momentum and shorter-term technicals to drive trading.
In a note on Monday, Tom Essaye, the founder of market research firm the Sevens Report, said he’s watching three major shifts that have to occur to help him determine when stocks have bottomed, and how to know when they’ve happened. He counts people at firms like UBS, Morgan Stanley, and Charles Schwab as readers of such insights in his daily reports.
What’s in Today’s Report:
Futures are sharply lower following more disappointing earnings and on momentum from Wednesday’s collapse.
Cisco (CSCO) missed earnings after the close and the stock is down 12% after hours. The company blamed Chinese lockdowns for the earnings miss and made positive comments about overall demand, but in this market, that nuance doesn’t matter, and the results weighed on futures.
Today’s focus will turn back towards economic data and specifically the Philadelphia Fed Manufacturing Index (E: 16.1). If it plunges like Empire did on Monday, that will increase anxiety about stagflation and further weigh on stocks. Other notable data includes Jobless Claims (E: 197K) and Existing Home Sales (E: 5.650M) and we get two Fed speakers, Michael Barr (10:00 a.m. ET) and Kashkari (4:00 p.m. ET) but they shouldn’t move markets.