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Economic Breaker Panel: May Update

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What’s in Today’s Report:

  • Economic Breaker Panel – May Update
  • Empire State Manufacturing Survey Takeaways (Price Index Charts)

Futures are trading modestly higher in sympathy with global shares which rallied on rising re-opening bets overnight while economic data came in largely as expected.

Economically, Japanese and Eurozone GDP data as well as the U.K. Labour Market Report all printed largely in-line with estimates o/n and did not materially move markets.

Today, there is one economic report: Housing Starts (E: 1.715M) but it should not have a major impact on markets while the Treasury will hold a 52-Week Treasury Bill auction at 11:30 a.m. ET (these shorter duration auctions will become increasingly important as investors gauge the market’s taper/tightening expectations).

Turning to Fed, there are two speakers to watch today: Bostic (11:00 a.m. & 12:30 p.m. ET) and Kaplan (11:05 a.m. ET).

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Jobs Report Preview (Too Hot is the Risk)

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What’s in Today’s Report:

  • Jobs Report Preview (Too Hot Is the Risk)
  • EIA Analysis  and Oil Market Update

Futures are modestly higher as markets digest yesterday’s dovish Fed rhetoric while data overnight was solid.

German Manufacturers’ Orders and Euro Zone Retail Sales both beat estimates, again implying the economic recovery in Europe is gaining momentum (this is positive for European stocks).

Fed officials repeated their dovish stance yesterday with Vice Chair Clarida reinforcing it’s not time to think about tapering despite rising inflation and strong growth.

Today focus will be on weekly Jobless Claims (E: 533K) and again markets will want to see them hold the gains of the past few weeks.  We also get numerous Fed speakers including (in order of importance): Williams (9:00 a.m. ET), Mester (1:00 p.m. ET), Bostic (1:00 p.m. ET) and Kaplan (10:00 a.m. ET) but we don’t expect any of them to materially move markets.

What’s Going To Move This Market Higher?

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What’s in Today’s Report:

  • What’s Going to Move This Market Higher?
  • Weekly Market Preview:  How Strong is the Global Recovery (The Stronger, the Better)
  • Weekly Economic Cheat Sheet:  What Happens if Friday’s Jobs Report is “Too Hot?”

Futures are modestly higher as markets bounce back from Friday’s decline thanks to solid global economic data.

Economically, German Retail Sales beat estimates, surging 7.7% vs. (E) 3.0% while the final EU manufacturing PMI slightly missed estimates at 62.9 vs. (E) 63.3.  But, that’s still a strong number in an absolute sense and implies the EU economy is rebounding from COVID.

Politically, President Biden signaled support for a bipartisan infrastructure plan, which means it will be smaller than proposed but also more likely to pass and become law.

Today the key number will be the ISM Manufacturing PMI (E: 65.0) and markets will want to see continued strength in the U.S. recovery.  We also get one Fed speaker, Williams at 2:10 p.m. ET, and it will be interesting to see if he acknowledges that it’s time to “talk about, talking about” tapering QE, like Dallas Fed President Kaplan did on Friday.  If so, that could push the 10 year yield slightly higher.

Earnings Season Update

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What’s in Today’s Report:

  • Earnings Season Update: Are Upside Risks Building?

U.S. stock futures are trading lower with most overseas markets as investors digest the recent run to fresh records amid rising COVID-19 cases and mostly upbeat earnings.

German PPI was hotter than expected o/n with a headline of 0.9% (E: 0.5%) but the report is not materially moving markets.

Looking into the U.S. session today, there are no economic reports and no Fed officials are scheduled to speak. There is a 52 Week T-Bill Auction at 11:30 a.m. ET, however, that could influence bond yields and ultimately stocks if the results are far from expectations.

Earnings season will continue to pick up today with JNJ ($2.31), LMT ($6.32), PG ($1.19), and TRV ($2.44) releasing Q1 results ahead of the bell while NFLX ($2.98), CSX ($0.95), and IBKR ($0.90) will report after the close.

Bottom line, markets have been trading with a risk-off tone so far this week amid a resurgence in COVID-19 cases in several global hotspots. And if the news flow regarding the latest regional outbreaks continues to deteriorate, stocks could continue to decline, potentially sharply, as the health of the recovery will come into question.

April Economic Breaker Panel: Is the Economy Set to Overheat?

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What’s in Today’s Report:

  • April Economic Breaker Panel: Is the Economy Set to Overheat?
  • EIA Analysis and Oil Update

Futures are moderately higher following a solid start to earnings season (GS/WFC/ABB/TSMC/LVMH all posted good results) and ahead of a lot of economic data later today.

Speaking of today’s data, the key reports to watch today are (in order of importance):  Jobless Claims (E: 695K), Empire State Manufacturing Index (E: 17.0), Philadelphia Fed Manufacturing Index (E: 43.0), Retail Sales (E: 5.6%) and Industrial Production (E: 2.8%).  As has been the case, markets will want to see solid activity to imply the economic recovery is on-going, but also no hints of building inflation pressures.

There are also several Fed speakers including Bostic (11:30 a.m. ET), Daly (2:00 p.m. ET) and Mester (4:00 p.m. ET).  Yesterday Vice Chair Clarida got more forcefully dovish, so we’ll see if that sentiment is echoed by other Fed members today.

Finally, earnings season continues to roll on and we get several notable reports this morning including: BAC ($0.65), C ($2.56), TSM ($0.95), PEP ($1.12), UNH ($4.41), DAL (-$2.94), AA ($0.48), PPG ($3.67).

Is the Tapering Talk Set to Begin?

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What’s in Today’s Report:

  • Is the Tapering Talk Set to Begin?

Futures are little changed following a quiet night as markets wait for the latest reading on inflation via this morning’s CPI report.

Economic data was mixed overnight.  UK Industrial Production was better than feared (-4.2% vs. (E) -5.1%) while the German ZEW Economic Sentiment slightly missed expectations (70.7 vs. (E) 77.0) but neither number is moving markets.

Today there are two notable events and both pertain to Treasury yields.  First, we get Core CPI (E: 0.2% m/m, 1.6% y/y) and later this afternoon there is a 30 year Treasury auction.  If CPI comes in hot and there’s tepid demand at the auction, Treasury yields will likely rise and that should be a headwind on stocks.  Conversely, if CPI is tame and the auction is solid, yields will likely be little changed, and stocks should be able to grind higher.

We also have several Fed speakers today:  George, Daly, Harker, Barkin (12:00 p.m. ET) and Bostic (3:15 p.m. ET) but unless they give us more insight into tapering requirements (like Bullard did yesterday) they shouldn’t move markets.

Global Bond Yields Are Rising Too (And That’s Important)

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What’s in Today’s Report:

  • Global Bond Yields Are Rising Too (And That’s Important)

Futures are modestly lower following a quiet night of news as global bond yields remained buoyant.

Bond yields were slightly higher earlier this morning and  they are holding this weeks’ gains, and absent any other notable news that weighed on global stocks and futures.

There was no notable economic data other than the Australian Labour Force Survey which met expectations.

Today economic will be in focus and if the data comes in better than expectations, look for the 10 year yield to rise further (and that could put a headwind on stocks and tech especially).  The key reports today are: Jobless Claims (E: 757K), Philadelphia Fed Manufacturing Index (E: 20.0) and Housing Starts (E: 1.650M). We also get two Fed speakers, Brainard (8:00 a.m. ET) and Bostic (10:00 a.m. ET) but we don’t expect them to move markets.

What Could Go Wrong?

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What’s in Today’s Report:

  • Another Look at What Could Go Wrong
  • Weekly Economic Cheat Sheet: February Data in Focus

U.S. equity futures are trading solidly higher with international markets this morning thanks to positive COVID-19 headlines and mostly encouraging economic data overnight.

New coronavirus cases in the U.S. fell below 100K/day for the first time in months over the weekend while Biden is expected to speak about the new stimulus package today.

Economically, the Q4 Eurozone GDP Flash and details of the German ZEW Survey both topped estimates overnight which is helping support risk-on money flows this morning.

Looking into today’s session, there is one economic report ahead of the bell: Empire State Manufacturing Index (E: 5.7), and just one Fed official scheduled to speak in the afternoon: Daly (3:00 p.m. ET).

Bottom line, as long as the Empire data, which is importantly a February report, does not disappoint and Biden maintains a very accommodative tone regarding the new stimulus package, stocks should be able to continue higher to start the week today.

Inflation Update

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What’s in Today’s Report:

  • Inflation Update (Why the Soft CPI Is Likely Understating Inflation)

Futures are modestly lower mostly on digestion of the week’s rally, but also on some incrementally negative COVID policy headlines.

Over the past 24 hours headlines of possible COVID related travel bans to Florida and negative COVID testing requirements for interstate air travel weighed on sentiment.  Both would be economically negative (and the later a total disaster for airlines).

Economically, the only notable data was UK GDP and UK Industrial Production, and the results were mixed.  But, neither number is moving markets.

Focus today will be on any incremental COVID policy headlines, and if there’s traction on the any travel bans to states or it looks like people will need negative COVID tests to fly, that will hit stocks.  Away from COVID policy, we get Consumer Sentiment (E: 80.9) and have two Fed speakers: Williams (10:00 a.m. ET) and Daly (3:00 p.m. ET) but unless there’s a major surprise, they shouldn’t move markets.

Why Stocks Faded Yesterday (and Why They Are Down This Morning)

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What’s in Today’s Report:

  • Why Stocks Faded Yesterday (And Why They Are Down This Morning)

Futures are moderately lower on disappointing economic data and as optimism on stimulus fades slightly.

On stimulus, the political reality of Washington is starting to impact markets, and it’s becoming more unclear when Democrats’ ambitious stimulus goals will become law.

Economically, global flash PMIs were bad.  Japanese, EU and British PMIs all fell further below 50 and there was significant deterioration across the board from the December readings, implying that the coronavirus lockdowns are having a negative impact on global growth (and slowing global growth isn’t priced into stocks).

Today the key number will be the Flash Composite PMI (E: 55.5).  Markets will be looking for stability and for the U.S. to avoid the slowing of activity that we saw in the global data earlier this morning, because again a material slowing in growth is not priced into stocks at these levels.  We also get Existing Home Sales (E: 6.540M) later this morning.

Finally, earnings season remains in full swing, and some reports we’ll be watching today include:  ALLY ($ 1.05), SLB ($ 0.18) KSU ($1.91).