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Technical Market Update

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What’s in Today’s Report:

  • Technical Market Update
  • Two Events to Decide the Year
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (All About Inflation This Week)

Futures are surging and global markets are up 1% thanks to apparent progress on the EU/Italy budget standoff.

Italian deputy PM Salvini said over the weekend that Italy wasn’t “stuck” on the 2.4% budget deficit, adding to the momentum that a compromise might be achieved.

Economic reports overnight were again disappointing.  Japanese flash manufacturing PMI missed estimates (51.8 vs. (E) 53.0), as did German IFO business expectation (98.7 vs. (E) 99.2.

There are no notable economic reports or Fed speakers today, so focus will remain on the tech sector.  Tech traded with some decent relative strength Friday, and if it can build on that today, then we could see a good bounce back rally.  Conversely, if tech fails to rally, then so too will the boarder markets.

Is the Corporate Bond Bubble Bursting?

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What’s in Today’s Report:

  • Pullback Update: Why we think the 2650-2850 trading range is still intact.
  • Is the Corporate Bond Bubble Bursting?

Futures are enjoying a modest oversold bounce following a generally quiet night.

Italy will be in focus today as the European Commission will issue a decision on the resubmitted budget and rejection is likely.  Positively, however, there were some reports Italy would be open to negotiation on the proposed budget, and that helped fuel the bounce this morning.

There were no notable economic reports overnight.

Today should be a generally quiet day as travel picks up for the Thanksgiving holiday.  But, that said, there are three notable economic reports this morning: Durable Goods (E: -2.5%), Jobless Claims (E: 215k), Existing Home Sales (E: 5.21M).  Bottom line, tech remains key in the short term.  If Nasdaq and FDN can bounce, stocks can recoup some of the week’s losses.

Everyone please have a happy and safe Thanksgiving!

Inflation Peaking?

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What’s in Today’s Report:

  • Is Inflation Peaking Already?

Futures are flat while overseas markets were mostly lower o/n after yesterday’s huge drop in oil weighed on risk sentiment, global data was mixed, and EU political tensions continued.

Chinese FAI and Industrial Production figures for October were slightly ahead of expectations but Retail Sales notably missed which pressured Asian shares overnight.

In Europe, the German GDP flash missed which only added to ongoing angst over Brexit and the Italian budget drama in broader European markets.

Today is the busiest day of the week as far as catalysts go. First we will get the latest inflation release in the U.S. ahead of the open: CPI (E: 0.3%), then Quarles speaks shortly thereafter (9:00 a.m. ET).

There is nothing major scheduled during market hours today but focus this evening will be on CSCO earnings ($0.72) after the close and then Powell and Kaplan are speaking in Texas at 5:00 p.m. ET (with Q&A) where Powell is expected to take a more dovish tone.

Four Keys to a Bottom Updated

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What’s in Today’s Report:

  • Four Keys to a Market Bottom Updated
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (All About Inflation)

Futures are slightly lower following a quiet weekend outside of the oil markets.

Saudi Arabia signaled it will cut oil output by 500k bbls in December in response to falling oil prices, and Russia hinted it will do the same.  Oil rallied 2% on the news initially although it’s given back most of those gains as of this writing.

Away from oil it was a quiet weekend as there were no notable economic reports or changes in U.S./China trade, although the U.S. dollar is hitting new 2018 highs on the latest negative Brexit headlines.

Today should be a generally quiet day given 1) the Veteran’s Day holiday (banks and bond markets are closed), and 2) There are no notable economic reports or earnings today.  There is one Fed speaker, Daly (2:30 p.m. ET) but her comments won’t move markets.

So, our focus today will be on the dollar, which is now at fresh 2018 highs. If it continues to grind higher that will likely pressure stocks today (a suddenly stronger dollar is not what this market needs right now).

Growth and Volatility

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What’s in Today’s Report:

  • Updated Market Outlook: “Growth Pillar” Remains Solid, but Volatility Not Necessarily Over
  • Weekly Economic Cheat Sheet

US stock futures are little changed this morning as last week’s gains are digested with focus remaining on the trade war with China, elections, and recent economic data.

There were no material developments on the trade front over the weekend however sentiment has deteriorated modestly since Friday which weighed on risk assets overnight, namely in Asia.

Additionally, China’s Services PMI fell 2.3 points to a thirteen month low of 50.8 in October which further weighed on Asian markets.

Looking into today’s session, there is one economic report to watch in the US: ISM Non-Manufacturing Index (E: 59.4) and there are two Fed speakers: Williams ahead of the bell (8:30 a.m. ET), and Kaplan later this evening (7:30 p.m. ET).

On the charts, 2705 will be a key support level to watch in the S&P today as a violation would likely see selling accelerate back down into the mid 2,600’s. To the upside, a break above 2,750 would open the door to a run back above 2,800.

Rebound Update

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What’s in Today’s Report:

  • Bottom Line: Rebound Update
  • Jobs Report Preview (Abbreviated Version)

Futures are decidedly higher this morning after Chinese shares led global equities higher overnight thanks to continued optimism about a US-China trade deal.

A Bloomberg article released early this morning reported that the Trump Administration has begun working on the terms of a trade agreement to present to President Xi at the G20 spurring sizeable risk-on money flows overnight.

Looking ahead to today’s session, focus will be on economic data early with the Employment Situation (E: 190K), International Trade (E: -$53.3B), and Factory Orders (E: 0.4%) figures all due out within an hour of the open. There are no Fed officials scheduled to speak today.

On the earnings front, there are several notable releases to watch ahead of the bell: BABA ($1.09), XOM ($1.21) and STX ($1.55).

Once earnings and economic data are digested, focus will likely return to momentum, technicals, and any incremental news on trade. On the charts, the S&P’s 200 day moving average is sitting at 2765 which will be an initial upside target if the bullish momentum continues today.

Updated Market Outlook (Fundamental & Technical)

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What’s in Today’s Report:

  • Updated Market Outlook (Medium/Longer Term Risk/Reward Attractive As Long As Growth Remains Solid)
  • Updated Technical Outlook
  • Weekly Economic Cheat Sheet (Inflation Metrics)

Futures are enjoying a modest oversold bounce following Friday’s drop.

The weekend was generally quiet although sentiment towards Italy is a bit better after S&P did not downgrade the country’s credit rating.

Economically, Japanese Retail Sales beat estimates (2.1% vs. (E) 1.7%) but that report isn’t moving markets.

There are no notable earnings reports today so focus will be on the Core PCE Price Index (E: 0.1% m/m, 1.9% y/y) which is contained in the Personal Income and Outlays Report.  This market does not need suddenly “hot” inflation numbers that will make the Fed more hawkish.  So, if the Core PCE Price Index prints in-line, that should help fuel today’s early rally.  Finally, there is also one Fed speaker:   Evans (9:45 a.m. ET).

Bounce or Bottom? Updated Market Technicals

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What’s in Today’s Report:

  • Bounce or Bottom?  Updated Market Technicals

Futures and global markets are sharply lower and have given back most of Thursday’s gains as it was another bad night of corporate earnings.

AMZN and GOOGL both posted disappointing earnings and that caused a resumption of the weakness in tech, which is dragging global markets lower.

The only notable economic data was German GkK Consumer Climate, which was unchanged at 10.6.

Today we get Initial Q3 GDP (E: 3.3%) but that won’t move markets unless it’s a major disappointment (remember GDP is very backward looking).

Bottom line, markets look like they are going to open sharply lower, so holding Thursday’s lows, especially in the Nasdaq (7099) is important, otherwise we could be looking at another Wednesday washout.

What’s Wrong With Bank Stocks?

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What’s in Today’s Report:

  • What’s Wrong With Bank Stocks?
  • Monday’s Economic Data Analysis
  • Natural Gas Fundamental Update

Futures are bouncing modestly this morning after international markets were mixed overnight as the recent volatility continues to be digested and focus turns to earnings.

Economically, Chinese inflation data met expectations overnight however the German ZEW Survey pretty badly missed expectations showing a sharp drop in confidence among financial professionals.

There is no shortage of potential catalysts today between economic data, earnings and politics/trade.

Economic releases to watch: Industrial Production (E: 0.2%), Housing Market Index (E: 67), and August JOLTS data (E: 6.905M) are all due out within 30 mins of the open.

Notable companies releasing earnings today include: GS ($5.42) and MS ($1.00) ahead of the open and later NFLX ($0.68) and IBM ($3.40) after the market close.

Lastly, traders and investors are showing more interest than normal in the US Treasury’s foreign exchange report as it may shed light on Chinese currency policies and if any manipulation violations were discovered which would again elevate tensions between the world’s two largest economies.

Higher Rate Playbook

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What’s in Today’s Report:

  • Higher Rate Playbook Revisited
  • Was Yesterday a Reversal?

Futures are flat following a generally quiet night as markets look ahead to this morning’s jobs report.

Economic data and earnings overnight were solid as Samsung posted good numbers while German Manufacturers’ Orders handily beat expectations (2.0% vs. (E) 0.2%).

There was no notable trade news or European political news (Italy) out overnight.

Today the focus will be on the jobs report, and expectations are – Jobs: 180k, Unemployment: 3.8%, Wages: 0.3% m/m, 2.9% y/y.

The key is the wage number, and if it prints a 3.0% yoy gain, look for Treasuries and the dollar to rally.  A rally in the dollar to the mid 96 level and the 10 year yield moving into the mid to high 3.20% range will likely pressure stocks again.

Outside of the jobs report, there are two Fed speakers, Kaplan (12:30 p.m. ET) and Bostic (12:30 p.m. ET) but neither should move markets.

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