What Powell’s Renomination Means for Markets

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What’s in Today’s Report:

  • What Powell’s Renomination Means for Markets
  • Gold Update: Cooling Inflation Outlook Favors the Bears

U.S. stock futures are trading lower with most overseas equity markets as elevated bond yields continue to weigh on big-cap tech names.

Economically, Composite PMI data in Europe was better than expected with the Eurozone figure hitting 55.8 vs. (E) 53.1 for November however the upbeat data is further supporting bond yields which are weighing on equities.

Looking into today’s session, there is one domestic economic report to watch: PMI Composite Flash (E: 57.8) and if it is as strong as the releases in Europe, that could support a further rise in yields which will keep pressure on equity markets.

There are no Fed officials scheduled to speak today but the Treasury will hold a 7-Yr Note auction at 1:00 p.m. ET that could serve as another catalyst for higher yields. And again, that is a potential negative for stocks as big-cap tech names will almost certainly extend yesterday’s late-day declines if yields continue this week’s rise.

Why Last Week Was More Positive for Stocks Than It Seems

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What’s in Today’s Report:

  • Why Last Week Was More Positive for Markets Than It Seems
  • Weekly Market Preview:  Will COVID Concerns Recede?
  • Weekly Economic Cheat Sheet:  Key Inflation Report on Wednesday

Futures are moderately higher on Powell optimism and as there were no incremental COVID restrictions in Europe.

President Biden was reportedly highly complimentary of Powell in meetings this weekend, leading markets to fully expect he will be reappointed as Fed Chair this week.

There were no new COVID restrictions announced in Europe over the weekend, providing some hope lockdowns won’t be extensive.

There were no notable economic reports overnight.

Today there are no Fed speakers and just one economic report, Existing Home Sales (E: 6.20 M), and that won’t move markets.  So, any news on Powell’s reappointment as Fed Chair and incremental COVID headlines will move markets today (if Powell is reappointed and COVID headlines don’t get worse, stocks can extend the rally).

Another Hot Economic Report

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What’s in Today’s Report:

  • Another Hot Economic Report (Philly Fed)

Futures are modestly lower on negative global COVID headlines.

Austria because the first European country to reimpose a national lockdown due to rising COVID cases and markets fear more countries could follow (especially Germany).

Inflation and economic data again implied a “hot” recovery as German PPI rose 3.8% vs. (E) 1.6% while UK retail sales rose 0.8% vs. (E) 0.5%.

There are no economic reports today although there are two Fed speakers, Waller (10:45 a.m. ET) and Clarida (12:15 p.m. ET).  Clarida’s comments will we watched but he is likely to repeat Powell’s dovish mantra (gradual tapering and no rate hikes until late 2022).  Beyond the Fed, COVID headlines are again driving short term trading, so if we see more restrictions from Europe that will be an increased headwind for stocks.

Two Potential Sources of Volatility Into Year-End

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What’s in Today’s Report:

  • Two Potential Sources of Volatility Into Year-End
  • Oil Update and EIA Analysis

Futures are bouncing from yesterday’s declines thanks to solid earnings and following an otherwise quiet night of news.

Widely held chipmaker Nvidia (NVDA) posted strong earnings after the close and that’s helping to ease some anxiety around chip supplies.

There were no notable economic reports overnight.

Today there are two notable economic reports, Jobless Claims (E: 261K) and the Philadelphia Fed Manufacturing Index (E: 21.4), and given every major economic report this week has been very strong, markets would like to see a solid number but nothing so strong that adds to the narrative that tapering may need to be accelerated.

Regarding the Fed, we have multiple speakers today including: Bostic (7:30 a.m. ET), Williams (9:30 a.m. ET), Evans (2:00 p.m. ET), and Daly (3:30 p.m. ET) although none of them should move markets.

Finally, as we explain in the issue, COVID and the Debt Ceiling are starting to become headwinds on stocks, and the headlines that imply further rising global case counts or lack of progress on the Debt Ceiling could be mild headwinds on stocks.

Dow Theory Update

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What’s in Today’s Report:

  • What the Early-November Squeeze in the Dow Transports Means for the Broader Equity Markets

Stock futures are little changed this morning as a hot U.K. inflation report is digested ahead of more retail earnings.

U.K. CPI rose 4.2% vs. (E) 3.9% year-over-year which is pushing the pound higher against most of its peers as rate hike expectations rise.

Today, there is just one economic report: Housing Starts & Permits (E: 1.587M, 1.630M) but it is another very busy day of Fed speak: Williams (9:10 a.m. ET), Mester (11:20 a.m., 12:40 p.m. ET), Waller (12:40 p.m. ET), Daly (12:40 p.m. ET), Evans (4:05 p.m. ET), and Bostic (4:10 p.m. ET).

There is also a 20-Year Treasury Bond auction at 1:00 p.m. ET that could move yields and investors will be closely watching earnings releases from notable retailers ahead of the open: TGT ($2.87) and TJX ($0.81) as well as NVDA ($1.10) after the close.

Tom Essaye Interviewed by Yahoo Finance on November 15, 2021

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Market Recap: Monday, November 15: Stocks drop as tech leads losses, 10-year yield tops 1.6%

I think what it is, is essentially that the bond market is looking past this transitory spike in inflation…said Tom Essaye, founder of Sevens Report Research. Click here to watch the full interview.

Inflation Expectations Update

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What’s in Today’s Report:

  • Inflation Expectations Update
  • Empire State Manufacturing Index Takeaways

Stock futures are slightly lower this morning following a mostly quiet night of news as investors look ahead to several important economic releases in the U.S. today.

Economic data was in-line to slightly better than expected overnight while the Xi-Biden talks, while largely uneventful, did help to modestly improve general market sentiment.

Today, focus will be on economic data early with Retail Sales (E: 1.0%), Import & Export Prices (E: 0.9%, 0.7%), and Industrial Production (E: 0.9%) all due out ahead of the opening bell while the Housing Market Index (E: 80) will be released at the top of the 10:00 a.m. hour (ET).

Additionally, there are several Fed speakers today: Bostic (12:00 p.m. ET), Harker (2:55 p.m. ET), and Daly (3:30 p.m. ET) and the market will continue to look for patient remarks that suggest the pace of the taper will not be accelerated and rate hikes will not be pulled forward from late 2022.

Sector Winners from the Infrastructure Bill

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What’s in Today’s Report:

  • Sector Winners from the Infrastructure Bill

Futures are slightly higher following a generally quiet night of news as global yields are again little changed.

10 year Treasury yields are up two basis points to 1.59% and that small move is helping futures to slightly rally.

Economic data was sparse as the only notable report was Euro Zone Industrial Production which fell –0.2% vs. (E) -0.6% but that number isn’t moving markets.

Focus today will be on economic data, and specifically the inflation expectations component of the Consumer Sentiment report.  If inflation expectations rise above 5% for next year and above 3% for the next five years, that will get the Fed’s attention and likely push yields higher.  The other economic report this morning is JOLTS (E: 10.1M) and we have one Fed speaker, Williams at 12:10 p.m. ET.

Why Stocks Dropped Yesterday (It Wasn’t CPI)

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What’s in Today’s Report:

  • Why Stocks Dropped Yesterday (It Wasn’t CPI)
  • EIA Analysis and Oil Market Update

Futures are enjoying a mild bounce following Wednesday’s losses as global yields are stable while U.S. bond markets are closed.

10 year Bund and GILT yields are little changed and that, combined with the bond market closure in the U.S., is allowing stocks to rebound.

Economically, British IP missed estimates (-0.4% vs. (E) 0.1%) while monthly GDP slightly beat (0.6% vs. (E) 0.5%).

Today is Veterans Day and as such, the bond markets are closed and there will be no economic reports and no Fed speakers.  So, GILT and Bund yields will partially dictate trading and as long as they don’t rise, stocks can continue this early rebound from yesterday’s losses.

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart

Stock futures are mildly lower and Treasury yields are rising with the dollar this morning after hotter than expected Chinese inflation data is prompting some hawkish money flows ahead of today’s U.S. CPI report.

Economically, Chinese CPI rose slightly more than forecast in October (1.5% vs. E: 1.4%) but PPI surged 13.5% vs. (E) 12.0% which was the highest reading since 1995.

Looking into today’s session there are a few potential catalysts to move markets with the October CPI release (E: 0.5%) being the primary focus but Jobless Claims data (E: 267K) will also warrant attention. Both reports are due out at 8:30 a.m. ET.

After those pre-market releases, the schedule is pretty clear with no Fed officials speaking over the course of the day but there is a 30-Year Treasury Bond auction at 1:00 p.m. ET that could move yields and potentially stocks.

Finally, earnings season is already beginning to wind down however DIS ($0.50) will report quarterly results after the closing bell.

Bottom line, focus is on inflation data and if today’s CPI report runs hot, we could see taper expectations, as well as the market’s rate hike outlook, take a hawkish turn which would spur broad market volatility.