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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.

Market Multiple Table: September Update

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What’s in Today’s Report:

  • Market Multiple Table: September Update

Equity futures initially declined at the electronic open last night after AstraZeneca reportedly halted their COVID-19 vaccine trial due to an adverse reaction by a subject in the U.K. but S&P futures have stabilized, and are now up 1%.

Economically, Chinese CPI and PPI headlines for August both met estimates at 2.4% and 2.0%, respectively.

Outside of the AstraZeneca trial headlines, news flow was mostly quiet overnight with investors remaining focused on the recent rout in tech shares.

Looking ahead to today’s session, there is just one economic report: JOLTS (E: 5.950M) but the data is from July so the release should not materially impact markets while no Fed officials are scheduled to speak.

The “thin” catalyst calendar will leave focus on the broader tech space today as profit taking in the sector has single-handedly driven the recent volatility and until tech (Nasdaq) stabilizes, equities will remain under pressure broadly.

Did Anything Change Last Week?

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What’s in Today’s Report:

  • Did Anything Change Last Week?

U.S. futures are trading lower (Nasdaq 100 down more than 2%) as tensions between the U.S. and China rose over the weekend while economic data mostly beat estimates.

In a press conference yesterday, President Trump mentioned interest in economically “decoupling” from China with a focus on bringing jobs back to the U.S.

Economically, EU GDP was not as bad as feared while the U.S. NFIB Small Business Optimism Index was 100.2 vs. (E) 98.9 in August which is bolstering small caps this morning.

Looking into today’s session, there are no economic reports and no Fed officials are scheduled to speak.

From a catalyst standpoint, the quiet calendar will leave investors looking for any developments on the next stimulus bill or further commentary on the uptick in U.S.-China tensions from the weekend while, based on the pre-market price action, big cap tech shares are likely to continue leading the broad market today.

Jobs Day

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What’s in Today’s Report:

  • Why Did Stocks Drop Yesterday?
  • How the VIX and Stocks Rose Together in August

Futures are seeing a marginal oversold bounce after Thursday’s big sell off, as newswires were quiet overnight.

Economic data again disappointed, as German Manufacturers’ Orders rose 2.8% vs. (E) 6.2%, while the UK Construction PMI fell to 54.6 vs. (E) 58.5.

Both reports, combined with other lack luster data this week, are limiting the size of the bounce this morning.

Today the focus will be on the Employment Situation Report and the expectations are as follows:  Jobs Adds: 1.413M, UE Rate: 9.9%.  As mentioned, the “best” outcome for this report is a strong number towards 2 MM job adds, but not so strong that it relieves pressure on Congress to pass a stimulus bill.  A very soft number (less than 1MM job adds) likely adds to yesterday’s downside.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Data and Oil Update

Futures are moderately lower on digestion of Wednesday’s rally and some disappointing economic data.

EU Retail Sales badly missed estimates (-1.3% vs. (E) 1.5%) which is slightly increasing concern about the EU economic recovery.

Global August service and composite PMIs (China/EU) were generally in-line with expectations while the British service PMI slightly missed estimates (58.8 vs. (E) 60.1).  Bottom line, the numbers weren’t great, but they weren’t awful either and generally speaking they won’t change the current market outlook.

Today there are two important economic reports, Jobless Claims (E: 977K) and the ISM Non-Manufacturing PMI (E: 56.8), and the market will want to see the actual data close to or better than both numbers to reinforce the economic recovery is ongoing.  There’s also one Fed speaker today, Evans at 1:00 p.m. ET.

Finally, it’s important to note that vaccine “chatter” is getting louder and the chance we get a vaccine announcement before the election (November 3rd) is rising.  Yesterday the CDC formally notified all 50 states to be ready to distribute a vaccine by late October/early November, so I want everyone to be aware of that, as a vaccine announcement would be another positive for stocks.

Don’t Fight The Fed (and the Fed Wants Inflation)

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What’s in Today’s Report:

  • Fed Chair Powel’s Speech Preview (All About Inflation)
  • Oil Market Update (Inventories and Hurricane Laura)

Futures are marginally weaker following a quiet night of news as markets digest Wednesday’s rally ahead of weekly jobless claims and Fed Chair Powell’s speech.

Economic data was sparse overnight as Eurozone Money Supply was the only notable economic report and it beat estimates, rising 9.5% vs. (E) 9.1%, but that’s not moving markets.

Today the two key events are weekly Jobless Claims (E: 987K), and Fed Chair Powell’s speech (9:10 a.m.).  The market will be looking for claims below 1MM and for Powell to hint at a new average inflation target, and disappointment on either will likely cause some selling in stocks, especially given this week’s rally.

Other notable events today include Revised Q2 GDP (E: -32.9%), Pending Home Sales Index (E: 1.5%) and another Fed speaker, Barkin (12:30 p.m. ET), but they shouldn’t move markets.

The Current Market Equation (How Investors Justify New All Time Highs)

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What’s in Today’s Report:

  • The Current Market Equation (How Investors Justify New All Time Highs)
  • Weekly Market Preview:  More Dovish Commitments from the Fed This Week?
  • Weekly Economic Cheat Sheet:  Important Inflation Data on Friday.

Futures are moderately higher on COVID-19 treatment optimism following the FDA’s authorization of plasma treatment for severely ill COVID patients.

President Trump announced on Sunday that the FDA has granted “Early Use Authorization” (EUA) for use of plasma from recovered COVID patients on severely ill patients.  The EUA will increase the availability of this treatment.

While the EUA for plasma is clearly a positive, from a market standpoint a vaccine remains a true “silver bullet” that could super charge a rally.  So, while positive, the plasma news is not a bullish gamechanger (although it does add to the feeling of FOMO (fear of mission out)).

Outside of the plasma news it was a quiet weekend, as there was no economic data nor any progress on stimulus.

Today will be a generally quiet day as there are no economic reports and no notable Fed speakers (the Jackson Hole conference is later in the week), so focus will remain on COVID treatment optimism.

Why Doesn’t the Market Care There’s No Stimulus?

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What’s in Today’s Report:

  • Why Doesn’t This Market Care That There’s No Stimulus?
  • Weekly Market Preview:  Watching Washington and the Data
  • Weekly Economic Cheat Sheet:  August Flash PMIs on Friday – Can the Data Hold Up?

Futures are marginally higher following some potentially positive headlines from Washington over the weekend.

Speaker Pelosi is calling the House back into session to address Postal Service funding (this was a major sticking point in the larger stimulus bill).  The hope is that if there’s a compromise on that issue, the larger stimulus bill becomes much easier to pass.

There was no notable economic data overnight.

Today’s focus will be on Washington and specifically if there’s any hint that negotiations may re-open on the larger stimulus bill.  If that’s the case, then we’ll likely see new all-time highs today in the S&P 500.

Economically, the Empire Manufacturing Index (E: 17.0) is the key report today, and the market will want to see continued progress from July (especially because the stimulus payments have stopped).  We also get the  Housing Market Index (E: 72), although that shouldn’t move markets.