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Is a Dovish Hike the Same as a Fed Pivot? No.

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What’s in Today’s Report:

  • Is a Dovish Hike the same as a Fed Pivot?  No.  Here’s Why.
  • EIA Update and Oil Analysis

Futures are little changed as rising hope of smaller than expected future rate hikes is being offset by ugly tech earnings.

Meta (FB) missed earnings and posted underwhelming guidance and the stock fell nearly 20% after hours, continuing this week’s trend of disappointing tech earnings.

Today will be a busy day of earnings and economic data.  The most important events of the day will come after the close via the AAPL ($1.26), AMZN ($0.22), INTC ($0.34) earnings, and given the disappointing tech earnings so far this week, the market will need solid numbers today.

Outside of those earnings, other key events today include the ECB Rate Decision (E: 75 bps hike), Durable Goods Orders (E: 0.6%), Jobless Claims (E: 223K) and Preliminary Q3 GDP (E: 2.3%) and the market will be looking for “just right” outcomes from each (an ECB that’s not too hawkish, and U.S. economic data that’s not too good or not too bad).

Three Keys to a Bottom Updated

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What’s in Today’s Report:

  • Three Keys to a Bottom Updated
  • Was Friday’s WSJ Article A “Fed Pivot?”  No.  Here’s Why.
  • Weekly Market Preview:  The Height of Earnings Season
  • Weekly Economic Cheat Sheet:  More Hints of Stagflation?

Futures are slightly higher as momentum from Friday’s close offset steep losses in Chinese markets.

The Hang Seng fell 6% as Premier Xi emerged from China’s National Conference with an even tighter grip on power, ensuring continued “zero COVID” policies and heightened tensions with the West.

Economically, the Euro Zone and UK flash PMIs missed estimates as both remained below 50 (47.1 and 47.2 respectively).

This week will being a deluge of critical earnings reports but that doesn’t’ start until tomorrow, so focus today will be on the flash PMIs (October Flash Manufacturing PMI (E: 51.2), October Flash Services PMI (E: 49.3)) and if those numbers show solid activity and falling prices, stocks can extend the rally.

Tom Essaye Quoted in CNBC on August 8th, 2022

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Strong economic data puts ‘Fed pivot’ rally in danger, Essaye says

The market has rallied hard on the idea of a Fed pivot. Friday’s jobs report didn’t support that hope and, if anything, will make the Fed more resolute about rate hikes. So, now inflation needs to clearly show signs of peaking and declining, otherwise we’d expect this market to abandon some of that near-term hope, and for volatility to increase, Essaye wrote. Click here to read the full article.