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What’s in Today’s Report:

  • Is Valuation a Problem for the Market (Yes & No)
  • September Flash PMI Takeaways

Futures are rebounding from yesterday’s Powell-induced declines with tech leading as MU reported solid Q3 earnings while BABA announced a $50B AI investment overnight.

Economically, Germany’s Ifo Survey disappointed across the board with the headline Business Climate down to 87.7 vs. (E) 89.1.

Today, there is one economic report to watch: New Home Sales (E: 649K) and one Fed official scheduled to speak: Daly (4:10 p.m. ET).

The Treasury will hold a 4-Month Bill auction (11:30 a.m. ET) and a 5-Yr Note auction (1:00 p.m. ET) today, and as has been the case recently, the results have the potential to move fixed income markets/Fed policy expectations and ultimately could impact stocks.

Additionally, there are a few more noteworthy earnings releases due out today including: CTAS ($1.19), THO ($1.16), KBH ($1.50).

 

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Why Didn’t Stocks Fall on the Ugly PMIs?

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What’s in Today’s Report:

  • Why Didn’t the Ugly PMIs Cause a Further Decline in Stocks?
  • August Flash PMI Takeaways
  • Dollar Index Hits New Highs: Chart
  • Is there a New “OPEC+ Put” Under the Oil Market?

Stock futures are flat and international markets were little changed overnight as currency and bond markets continued to stabilize with the focus remaining on the Jackson Hole Economic Symposium later in the week.

There were no notable economic reports overnight.

Today, no Fed officials are scheduled to speak leaving the focus on economic data early with Durable Goods Orders (E: 0.5%) and Pending Home Sales (E -2.5%) both due out early in the day.

Beyond those economic reports, there is a 5-Yr Treasury Note auction at 1:00 p.m. ET, and if it is as soft as yesterday’s 2-Yr Note auction, that could result in rising yields which would in turn weigh on stocks ahead of Jackson Hole. However, barring any meaningful moves in the currency and bond markets today, it should be relatively quiet as traders begin to position into Powell’s speech on Friday morning.

Three Keys to a Bottom (Updated)

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What’s in Today’s Report:

  • Three Keys to a Bottom (Updated)
  • Weekly Market Preview:  Focus Turns to Earnings
  • Weekly Economic Cheat Sheet:  Flash PMI on Friday is the Big Report to Watch

Futures are moderately higher mostly on momentum from Friday’s rally and following a generally quiet weekend.

Investors continue to hope for a near-term peak in inflation and Friday’s drop in University of Michigan inflation expectations (2.8% vs. (E) 3.0%) and multi-month lows in the Empire Manufacturing price indices fueled that hope and resulted in the rally on Friday and in futures this morning.

Today’s focus will shift to earnings, and they will dominate market action early this week as there are no Fed speakers and no market-moving economic reports till later this week.  If earnings are better than feared, they can help extend this rally in the near term while disappointing results will cause more volatility.  Some reports we’re watching today include BAC ($ 0.77), GS ($6.99), SCHW ($0.91), IBM ($ 2.29).

Markets Still Need Macro Clarity

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What’s in Today’s Report:

  • Bottom Line:  Markets Still Need Macro Clarity
  • Weekly Market Preview:  The Heart of Earnings Season
  • Weekly Economic Cheat Sheet:  October Flash PMIs are the Key Report this Week

Futures are modestly lower thanks to underwhelming Chinese economic data and rising global bond yields.

Chinese data disappointed as GDP (4.9% vs. (E) 5.2%), Industrial Production, and Fixed Asset Investment all missed estimates, raising concern about the strength of the Chinese economy.

Global yields are higher as New Zealand CPI spiked to 2.2% (a decade high) while BOE Governor Bailey hinted at a rate hike in December.

Today there are two notable economic reports, Industrial Production (E: 0.2%) and the Housing Market Index (E: 75) and one Fed speaker: Kashkari (2:15 p.m.ET).   On the earnings front, the majority of the important reports come later this week but reports we’ll be watching today include:  STT ($ 1.92), STLD ($4.95), ZION ($1.38).

However, unless there are major surprises in the data or earnings today, they shouldn’t move markets.  So, yields will be the main influence on stocks today and if yields rise throughout the day, expect a stiffening headwind on stocks.

Why Negative Headlines Still Aren’t Hurting Stocks

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What’s in Today’s Report:

  • Why Negative Headlines Still Aren’t Hurting Stocks (Three Reasons)
  • Weekly Market Preview:  Can Good Earnings Continue to Offset Negative Macro Headlines?
  • Weekly Market Cheat Sheet:  Flash PMIs and Powell’s speech Friday are the highlights.

Futures are modestly higher on momentum from Friday’s rally and following mixed (but not bad) global PMIs.

Economic data was mixed as the EU August flash composite PMI was solid (59.5 vs. (E ) 59.7) although the UK  PMI (55.3 vs. (E ) 58.4) missed expectations, as did the Japanese and Australian readings.  But, in aggregate, the numbers were good enough to show the global economic recovery is still on going (and that helped stocks rally this morning).

There was improvement on the COVID front as new cases in China continued to plunge with daily new cases falling to zero in many local precincts and that’s raising hopes the current COVID wave in China is subsiding.

Today focus will be on the August Flash Composite PMI (E: 59.5) and markets will want to see solid data (so close to last month’s reading and close to expectations).  If it’s a bad miss, that will likely weigh on stocks.  We also get Existing Home Sales (E: 5.83M) but that shouldn’t move markets.

The New Market Dynamic (Lockdowns and Stimulus)

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What’s in Today’s Report:

  • Navigating the New Market Dynamic (Lockdowns and Stimulus)
  • Weekly Economic Cheat Sheet:  The Key Number is Today’s Flash PMI
  • Weekly Market Preview:  Lockdowns vs. Vaccine Optimism, Round 2.

Futures are moderately higher as the Astra-Zenica vaccine accountment is helping to offset still surging COVID cases and more economic lockdowns.

Astra-Zenica (AZN) announced its COVID-19 vaccine was 70% effective against the disease, but 90% effective when given in two doses (making it essentially on par with the Pfizer and Moderna vaccines).

Economically, flash November PMIs were mixed as the EU PMI missed estimates, while the UK PMI beat expectations, but both numbers declined from the October levels, reflecting the lockdown-related headwinds on the economy.

Today the key number is the November Flash Composite PMI (E: 55.6).  Markets will want to see stability in that number, but if it’s a bad miss then markets will grow more nervous about a potential “double dip” recession in early 2021, and that will hit markets regardless of the AZN vaccine news.