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S&P 500 Technical Update (Chart)

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What’s in Today’s Report:

  • Market Multiple Table Chart

Futures are moderately lower on digestion of Wednesday’s rally following a generally quiet night.

Economic data was sparse as Japanese Machine Orders was the only notable report, as it beat estimates (6.3% vs. (E) 2.0%).

On the stimulus front, Senate Republicans will pass a $500 bln stimulus bill today but it won’t pass the House, and hopes for a stimulus deal before the election (Nov 3rd) are fading, and if that’s the case we should expect that to weigh on stocks in the coming weeks, especially if economic data starts to roll over.

Today we get the ECB Decision at 7:45 a.m. ET and the expectation is for no change to rates or QE.  But, ECB President Lagarde could be dovish in her comments starting at 8:30 ET, and if so that could boost the dollar and be a mild headwind on stocks today.

Away from the ECB, the key report today is Jobless Claims (E: 830K) and markets will want to no major back tracking on the recent drop in claims (so no numbers close to 1MM).  Finally, we also get PPI (E: 0.3%), which was “hot” last month.  But, with the Fed max dovish, it’s unlikely even a high PPI would cause much volatility in stocks.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • ECB Decision Takeaways (The Outlook for Europe Continues to Improve)

Futures are sharply higher thanks to a big rally in European markets, which rose on the hopes for more stimulus.

The rally in Europe didn’t come because of any new headlines, and instead appears to be a delayed reaction to the bigger than expected ECB QE program, combined with the passage of the German stimulus earlier in the week.

Economically, the only notable number was German Factory Orders which fell –25.8% vs. (E) -20%.

Today the focus of markets will be the jobs report, and the estimates for job adds and the unemployment rate are as follows: Job Adds:  -7.725M, UE Rate: 19.8%.

Practically speaking, anything less than 10 million job losses likely doesn’t cause a pullback in stocks, while a number under 5 million job losses could extend today’s early rally, because markets are still solely focused on the incremental changes in economic data, not the historically bad absolute values.  The only other notable economic report today is Consumer Credit (E: -$14.0B).

A Game of Multiples

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What’s in Today’s Report:

  • A Game of Multiples
  • Why the ECB Decision Is the Most Important Event this Week

S&P futures are climbing this morning, tracking gains in overseas markets as investors digest positive trade war headlines from Monday and better-than-feared earnings to kick off a very busy week of the Q2 reporting season.

There were no notable economic reports overnight and macro news was limited.

Looking into today’s session, focus will be on the micro as earnings season picks up however there are two economic data points on the housing market: FHFA House Price Index (E: 0.3%) and Existing Home Sales (E: 5.340M). Meanwhile there are no Fed officials scheduled to speak.

In the bond market, there is a 2-Year T-Note Auction today at 1:00 p.m. ET which could affect the yield curve. If we see the curve flatten further as it did last week, that could weigh on stocks again but contrarily, if we see the 10s-2s widen back out towards 30 basis points, that should support stocks broadly.

Earnings remain in the spotlight this week with notable reports coming from: KO ($0.62), LMT ($4.74), BIIB ($7.58), UTX ($2.04), JBLU ($0.57), and TRV ($2.32) ahead of the bell, while SNAP (-$0.10) and V ($1.33) will report after the close.