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Three Sectors to Watch if Biden Wins

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What’s in Today’s Report:

  • Three Sectors to Watch if Biden Wins

Stock futures pulled back overnight on news that JNJ halted a phase 3 trial for a COVID-19 vaccine due to an adverse reaction in one of the volunteers, however, futures have since stabilized and are only modestly lower this morning.

Economically, Chinese trade data showed that exports continued to rise in September, up from 9.5% to 9.9% pointing to an ongoing recovery in the Chinese economy.

Today, there is one economic release due ahead of the bell: CPI (E: 0.2%) and one Fed speaker late this evening: Daly (8:00 p.m. ET) but neither is expected to materially move markets given the other market influences on the calendar today.

The first of which is the start of Q3 earnings season with several big names scheduled to release results including: JPM ($2.35), C ($1.01), DAL (-$3.10), JNJ ($1.99), FAST ($0.37), FRB ($1.38), and BLK ($7.46).

Additionally, today is Amazon’s “Prime Day” so online shopping activity will be significantly elevated but if initial reports suggest a weaker than anticipated consumer turnout, the disappointment could weigh on stocks.

Apple is also set to unveil the latest iPhone models at a product launch and given the weight the stock carries in the major indexes, a good event will be good for markets while an underwhelming event could see a good portion of yesterday’s gains given back.

Is A Blue Wave Really Good for Stocks?

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What’s in Today’s Report:

  • Is a Blue Wave Really Good for Stocks?

Futures are moderately higher again on momentum from the previous day’s rally, as it was another quiet night of news.

Economic data overnight was disappointing, as the Chinese Composite PMI missed estimates (54.5 vs. (E) 55.0), as did Japanese Household Spending and UK IP.

Politically, nothing  changed overnight, as no stimulus is expected until after the election.

Today there are no notable economic reports and only one Fed speaker, Barkin at 9:00 a.m. ET, so stimulus headlines will likely drive trading, as they have all week.

Why are Treasury Yields Breaking Out?

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What’s in Today’s Report:

  • Why Are Treasury Yields Breaking Out (And Cyclical Sectors Outperforming?)
  • Weekly EIA Report and Oil Update

Futures are modestly higher mostly on momentum from yesterday’s rally, following a quiet night of news.

The Vice Presidential debate was traditional and didn’t provide any surprises and won’t impact the Presidential race.  Currently the market is fully expecting a Biden win and partially pricing in a “Blue Wave” in November.

Economically, German exports slightly beat estimates, rising 2.4% vs. (E) 1.5%, but that number isn’t moving markets.

Today focus will remain on chatter of any potential stand-alone stimulus bills for the airlines or direct payments to citizens, but nothing is expected.  Beyond stimulus, we do get an important economic report via Jobless Claims (E: 819K), and markets will want to see continued improvement to show the recovery is indeed ongoing.  A drop below 800k would be positive surprise.

Finally, there are multiple Fed speakers today including Rosengren (12:10 p.m. ET), Kaplan (1:00 p.m. ET), Bostic (2:00 p.m. ET) and Barkin (2:30 p.m. ET), but none of them should move markets.

Market Multiple Table: September Update

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What’s in Today’s Report:

  • Market Multiple Table: September Update

Stock futures are modestly lower today as investors digest yesterday’s strong equity rally and assess the COVID-19 outbreak among politicians after President Trump’s return to the White House from Walter Reed Medical Center.

Economically, German Manufacturers’ Orders grew 4.5% vs. (E) 2.3% in August but positive economic data remains a near-term negative for risk assets as it reduces pressure for lawmakers to unleash more stimulus.

Looking into today’s session, there are two economic reports to watch: Goods & Services Trade (E: -$66.5) before the bell and JOLTS (E: 6.250M) shortly after the open but neither is expected to materially move markets.

There are also multiple Fed speakers today including: Harker (12:00 p.m. ET), Bostic (2:00 p.m. ET), and Kaplan (6:00 p.m. ET) but Powell (10:40 a.m. ET) will be the most closely watched as the market looks for further clues into future policy.

Beyond economic data and Fed speakers, markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up call today so investors will be anxiously waiting for any updates from their conversation.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Takeaways and Oil Data

Futures are moderately higher on more stimulus hopes combined with solid economic data.

Positive chatter regarding a potential stimulus deal continued overnight with whispers implying the deal may be worth more than $1.5T.  But, I want to again caution that many hurdles remain to get a deal done by the election (most important of all being if it can pass the Senate, and that remains unclear).

Economic data was solid overnight as Final Sept. EU manufacturing PMIs met expectations at 53.7.

Stimulus headlines will drive trading today and there’s an outside chance we get an announcement of a deal between Treasury Secretary Mnuchin and Speaker Pelosi.  But, while the market will embrace that, as mentioned, it remains to be seen if the Senate will pass something prior to the election.

Outside of stimulus, we get two important reports on growth (Jobless Claims (E: 850K and ISM Manufacturing PMI (E: 56.3)) and one on inflation (Core PCE Price Index (1.4%)) and the market will want to see solid numbers across the board to imply the economic recovery is not plateauing.  Finally, there are two Fed speakers today, Williams (11:00 a.m. ET) and Bowman (3:00 p.m. ET), but neither should move markets.

Has the Market Reached “Fair” Value Yet?

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What’s in Today’s Report:

  • Pullback Update:  Have We Reached “Fair Value” Yet?
  • Weekly Economic Cheat Sheet:  Jobs Friday, PMI’s Thursday (It’s an Important Week)
  • Weekly Market Preview:  Coronavirus and stimulus hopes are the near term divers of stocks.

Futures are sharply higher thanks mostly to momentum from Friday’s rally, although there were incrementally positive headlines on stimulus and coronavirus over the weekend that are also helping stocks rally this morning

Speaker Pelosi made optimistic comments on a pre-election stimulus deal, but nothing specific was mentioned.

On the coronavirus front, cases keep rising, but news that Florida was fully reopening and European countries were planning more surgical shutdowns both helped sentiment.

Today there are no notable economic reports and no Fed speakers, so markets will be focused on whether the S&P 500 can hold Friday and this mornings’ gains.  From an influence standpoint, in the near term coronavirus cases and stimulus hopes are driving markets, and any incrementally negative headlines on either topic will risk seeing Friday’s gains given back.

How Much Further Can the Correction Go?

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What’s in Today’s Report:

  • How Much Further Can the Correction Go?
  • Oil Update and EIA Analysis
  • Flash PMIs:  More Signs of a Plateau in the Recovery?

Futures are little changed as markets digest Wednesday’s selloff following a quiet night of news.

Economic data was mixed as German Ifo Business Expectations slightly missed estimates (97.7 vs. (E) 98) while British Distributive Trades (retail sales) beat (10% vs. (E) -11%).

Today the key report will be weekly Jobless Claims, which are forecast to move up to 880K.  If weekly claims are worse than expectations, concerns will grow that the economic recovery is indeed plateauing (and remember we’re almost certainly not getting stimulus until late November/early December, at the earliest).  We also get the latest look at New Home Sales (E: 875K).

Finally, there is a veritable parade of Fed speakers today:  Kaplan (8:50 a.m. ET), Bullard (12:00 p.m. ET), Barkin (1:00 p.m. ET), Evans (1:00 p.m. ET), Williams (2:00 p.m. ET), Bostic (2:00 p.m. ET), Powell (10:00 a.m. ET).  Of those speaking, Powell is clearly the most important, but we don’t expect him to say anything new (and as such the market should ignore pretty much all of it).

All Clear for Tech?

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What’s in Today’s Report:

  • Does This Bounce Mean an “All-Clear” in Tech?

Futures are rallying with international shares this morning as investors digest soft economic data and look ahead to another day of Powell’s testimony before Congress.

The EU PMI Composite Flash missed estimates this month (50.1 vs. E: 51.7) due to an unexpected drop in the services index but the weakness is bolstering stimulus hopes.

Turning to the U.S. session, there are two economic reports to watch this morning: FHFA House Price Index (E: 0.6%) and the PMI Composite Flash (E: 54.5). The latter will be the important one to watch as investors will be looking to see if the service index “whiffed” as it did in Europe which would up the pressure on lawmakers to pass a new stimulus bill.

Beyond the data, there is a slew of Fed speak today including: Mester (9:00 a.m. ET), Evans (11:00 a.m. ET), Rosengren (12:00 p.m. ET), Bostic (1:00 p.m. ET), Kashkari (1:00 p.m. ET), and Daly (3:00 p.m. ET), however Chair Powell’s second day of testimony before Congress (beginning at 10:00 a.m. ET) will be the most closely watched as the market continues to look for affirmation that more accommodation and stimulus are on the way.

Is the Pullback Over? (Technical Levels to Watch)

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What’s in Today’s Report:

  • If the Selloff Continues, Where Is Technical Support?

Stock futures are wavering between gains and losses this morning while international markets were mixed overnight amid a continued rise in COVID-19 cases clouding the outlook for the global economic recovery.

There were no market-moving economic reports overnight however new coronavirus cases topped 50,000 in the U.S. yesterday, a more than one-month high, suggesting the resurgence in the outbreak may not be limited to Europe.

Today, there is one economic report to watch: Existing Home Sales (E: 5.965M) and the Chicago Fed’s Evans will speak at 10:00 a.m. ET but the market’s main focus will be Chair Powell’s testimony before congress, alongside Treasury Secretary Mnuchin, beginning at 10:30 a.m. ET.

Powell and Mnuchin are expected to reiterate concerns about the fragile state of the economic recovery and as long as they remain extremely dovish/accommodative, it should help markets begin to stabilize following the recent, near-10% pullback in the S&P 500.

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.