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Defensive Playbook (Three Places to “Hide”)

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What’s in Today’s Report:

  • Defensive Playbook for a Protracted Geopolitical Conflict (and Higher Oil Prices)
  • Is Apple a Potential Hedge for AI-Disruption and Geopolitical Uncertainty?

U.S. futures are enjoying a modest relief rally along with EU stocks while risk-off money flows continued to grip Asian equities overnight after yesterday’s volatile session on Wall Street.

Economically, China’s February Composite PMI came in “hot” with the Services Index jumping to 56.7 vs. (E) 52.3 while the final EU Composite PMI rose to 51.9 vs. (E) 51.8. Additionally, EU Unemployment edged down while headline PPI jumped well above expectations in January which is contributing to today’s rise in global yields.

Today kicks off February “jobs week” with the February ADP Employment Report (E: 43K) due out before the open while one of the more important economic data points of the week, the ISM Services PMI (E: 52.3) will be released shortly after the bell.

There are no Fed officials scheduled to speak today, however, there is a 4-Month Treasury Bill auction at 11:30 a.m. ET that could move short-term interest rates and subsequently impact equity markets in mid-day trade.

Finally, Q4 earnings continue to trickle in with a few noteworthy companies reporting results today: ANF ($3.56), AVGO ($1.67), and OKTA ($0.29). AVGO being a critical AI stock will be the most important release to watch.

 

Re-Examining the Four Pillars of the Rally

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What’s in Today’s Report:

  • A Bad Sign from the Most Important ETF in the Market
  • Re-Examining the Current Market Setup – 4 Pillars of the Rally

Futures are mildly higher as traders digest yesterday’s “AI-disruption” selloff ahead of Trump’s State of the Union address this evening.

There were no noteworthy economic reports overnight.

Today, trader focus will be on economic data early with the Case-Shiller Home Price Index (E: 1.3%), the FHFA House Price Index (E: 0.3%), and Consumer Confidence (E: 88.0) reports all due to be released. As has been the case lately, the market will want to see “Goldilocks” data signaling resilient growth trends and cooling inflation pressures in order to mount a meaningful relief rally.

Additionally, there is a slew of Fed speak today as Goolsbee (8:00 a.m. ET), Bostic (9:00 a.m. ET), Collins (9:00 a.m. ET), Waller (9:15 a.m. ET), Cook (9:30 a.m. ET), and Barkin (3:00 p.m. ET) are all on the calendar scheduled to deliver comments.

Finally, there are a handful of noteworthy Q4 earnings due out today, including HD ($2.52), NRG ($1.17), MELI ($11.77), AXON ($-0.18), HPQ ($0.77), and GDDY ($1.58). In addition to solid economic data and less-hawkish Fed speak, strong earnings would offer another tailwind for markets in the wake of yesterday’s latest wave of selling pressure.

 

February MMT: A New Threat to the Rally

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What’s in Today’s Report:

  • February MMT: New Threat to the Rally
  • Empire Manufacturing PMI Takeaways

Futures are trading tentatively higher amid easing AI-disruption angst despite soft PANW earnings yesterday (shares down ~7% today) while bonds and precious metals are steady.

Economically, U.K. CPI cooled from 3.4% to 3.0% Y/Y vs. (E) 3.0% in January while French CPI held steady at 0.3% Y/Y, meeting estimates. Both inflation prints add conviction that the global disinflation trend remains well underway.

Today, focus will be on economic data early with the delayed release of the December Durable Goods report (E: -2.3%) and December Housing Starts data (E: 1.31 million) this morning. Additionally, the as-scheduled January Industrial Production (E: 0.4%) report will be released just ahead of the opening bell.

There are no Fed speakers today however, the January FOMC meeting minutes will be released at 2:00 p.m. ET which will be widely watched by investors looking for fresh clues on the future path of Fed policy rates.

Finally, earnings continue with releases from ADI ($2.31), GRMN ($2.39), CVNA ($1.13), KGC ($0.55), DASH ($0.58), and EBAY ($1.35) all due out today.