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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).

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.

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.

 

Market Multiple Table: November Update

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What’s in Today’s Report:

  • Market Multiple Table: November Update

Stock futures pulled back overnight following the release of the Fed’s Financial Stability Report, which noted stretched asset prices, but markets have since stabilized as new domestic inflation data comes into focus.

Economically, the German ZEW Survey was mixed (Current Conditions missed, Economic Sentiment beat) while the NFIB report was mildly underwhelming however neither report materially moved markets in pre-market trade.

Looking into today’s session, earnings season continues with a lot of smaller cap companies reporting however focus this morning will be on economic data with the October PPI report due before the bell (E: 0.6% M/M, 8.6% Y/Y).

Then the Fed speaker circuit also remains active today with Bullard (7:50 a.m. ET), Powell (9:00 a.m. ET), Kashkari (1:30 p.m. ET) all speaking over the course of the session and the market will be looking for further confirmation that rate hikes will not commence before late 2022 otherwise we could see a hawkish reaction from markets.

Finally, there is a 10-Yr Treasury Note Auction at 1:00 p.m. ET that could move bonds and subsequently trigger a reaction from stocks.

Near-Term Macro Calm (But Risks Building for 2022)

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What’s in Today’s Report:

  • Near Term Macro Calm (But Risks Building for 2022)
  • Weekly Market Preview (Risks of An Accelerated Taper?)
  • Weekly Economic Cheat Sheet (Key Inflation Data This Week)

Futures are little changed following a quiet weekend outside of the passage of the physical infrastructure bill.

On Friday the House passed the physical infrastructure bill but it’s only $550 billion of new spending over 10 years, and that’s not going to have a big impact on the economy.

The broader $1.75 trillion spending bill remains under debate as Democrat infighting continues, but a deal is expected by year-end.

Today there are no economic reports, but there are numerous Fed speakers and the market will be looking for insight into the possibility of an accelerated taper beyond December.  Powell (10:30 a.m.) is the headliner today but he’s only making opening remarks and shouldn’t offer any insights on policy.  Vice Chair Clarida (9:00 a.m.) will speak on policy, so his interview is probably the most important one to watch today.  Other Fed speakers include Montgomery (10:00 a.m.), Harker (12:00 p.m.) and Evans (1:50 p.m.) but they shouldn’t move markets.

What Fed Tapering Means for Markets

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What’s in Today’s Report:

  • What Fed Tapering Means for Markets (Short Term Positive, Medium Term Uncertainty)
  • EIA and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets digest Wednesday’s Fed decision.

Economic data was sparse and the only notable report was German Manufacturers’ Orders which missed estimates, falling –1.8% vs. (E ) –1.3%.

There was no progress on the Democrat’s spending bill overnight as Manchin remains a holdout, but a deal is ultimately expected in the coming days or weeks.

Today focus will be on economic data and we get two notable reports:  Jobless Claims (E: 277K) and Productivity and Costs (E: -1.5%, 5.3%) and one Fed speaker, Quarles at 1:50 p.m. ET.  But, unless there’s a major surprise from the data, focus will turn back to Congress and the fate of the Democrat spending bill, and any headlines that imply quick passage without any material tax hikes will be a short-term tailwind on stocks.