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Bounce or Bottom? A Key Level to Watch

What’s in Today’s Report:

  • Bounce or Bottom?  A Key Level to Watch

Futures are slightly higher following a night of mixed earnings and continued reopening in China.

Shanghai continued to reopen and Beijing is still avoiding the most draconian lockdowns and that’s helping broader market sentiment.

Economic data was sparse as the only notable report was Euro Zone M3 (6.2% vs. (E) 6.3%) but that’s not moving markets.

Today the key report is the Core PCE Price Index (E: 0.3%, 4.9%) and if it underwhelms vs. expectations and furthers the idea that inflation has peaked, look for a continuation of this week’s rally.  We also get Consumer Sentiment (E: 59.1) and the key there will be the five-year inflation expectations.  If they drop below 3.0%, that’ll be an additional positive for stocks today.

Are Bonds a Buy?

What’s in Today’s Report:

  • If a Recession Is Imminent, Are Bonds a Buy?

Stock futures are down more than 1% this morning following more negative earnings news in the tech sector.

SNAP is down 30% this morning after issuing a profit warning late yesterday, citing a quickly deteriorating macroeconomic environment that is weighing on tech broadly.

Economically, Composite Flash PMI data slightly missed estimates in Europe overnight, but notably remained comfortably in expansion territory, easing some concerns about a looming recession.

Looking into today’s session, focus will be on economic data early with the PMI Composite Flash (E: 55.5) and New Home Sales (E: 748K) due to be released and the market will be looking for fresh signs that the economy is in good shape and not significantly losing momentum right now. There is also a 2-Yr Treasury Note auction at 1:00 p.m. ET today which could move yields on the short end of the curve, and in turn, impact equity trading.

Focus will turn to monetary policy midday with Fed Chair Powell scheduled to speak at 12:20 p.m. ET. Any hints at a less aggressive approach to policy tightening in the months ahead will be welcomed by investors and could help the latest attempt at a relief rally regain its footing. However, the combination of soft data in the morning and a hawkish-leaning Powell could send stocks lower.

Value vs. Growth Technical Outlook

What’s in Today’s Report:

  • Value vs. Growth Technical Outlook

Futures are moderately higher following a surprise rate cut by Chinese authorities.

Officials in China announced a larger than expected rate cut to the 5-year Loan Prime Rate (15 bps vs. (E) 5 bps) in a move that potentially signals greater ongoing support for the economy (if China can reopen and authorities substantially support the economy that would remove a big headwind on stocks).

Economic data was mixed overnight as German PPI remained hot (2.8% vs. (E) 1.2% m/m) while UK Retail Sales modestly beat estimates (rising 1.4% vs. (E) 0.2%) but neither number is altering the rate hike outlooks for the ECB or BOE (both are expected to continue to hike rates over the summer).

Today there are no notable economic reports and no Fed speakers scheduled so look for momentum and shorter-term technicals to drive trading.

Three Keys to a Bottom (Specifics)

What’s in Today’s Report:

  • Three Keys to a Bottom (Specifics)
  • Weekly Market Preview:  Can Easing Chinese Restrictions Fuel a Bigger Bounce?
  • Weekly Economic Preview:  May Data in Focus (Empire Today, Philly Wed)

Futures are modestly lower on disappointing Chinese economic data and as India banned wheat exports.

Chinese Industrial Production fell –2.9% vs. (E) 0.5% and Retail Sales plunged –11.1% vs. (E) -6.6%, underscoring the economic damage from the COVID lockdowns.

Geo-politically, India banned the export of wheat over the weekend, a move that will likely exacerbate global shortages and keep wheat/commodity prices high.

Today’s focus will be on economic data via the Empire State Manufacturing Index (E: 15.0), which is the first data point for May.  Markets will want to see stability in the data to ward off stagflation concerns and the bigger the drop in the price index, the better.  We also get one Fed speaker, Williams (8:55 a.m. ET), but he shouldn’t move markets.

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Are Financial Conditions Tightening? (The Answer Might Surprise You)

What’s in Today’s Report:

  • Are Financial Conditions Tightening? (The Answer Might Surprise You)

Futures are modestly lower following Thursday’s reversal lower as economic data and earnings were mixed overnight.

April global flash PMIs were mixed as the EU data was solid (55.8 vs. (E) 53.9), but the UK data was soft (57.6 vs. (E) 59.0).  UK retail sales also badly missed (-1.4% vs. (E) -0.3%) and the lackluster data is weighing on European shares.

Earnings overnight were “ok” although SNAP underwhelmed investors (so expect more pressure on tech).

Today focus will be on economic data via the April Flash Composite PMI (E: 57.5) and markets will want to see stability in the data to further ward off stagflation concerns.

On the earnings front, there are only a few notable reports today (and all are in the morning):  VZ ($1.35), AXP ($2.43), SLB ($0.32).

Earnings Season Preview

What’s in Today’s Report:

  • Earnings Season Preview
  • EIA Analysis and Oil Market Update

Futures are little changed following a quiet night of news and ahead of the long weekend.

There were no notable economic reports overnight. Geopolitically, the Russia/Ukraine war raged on as fighting intensifies in eastern Ukraine (as has been expected).

Earnings overnight were net positive as Taiwan Semiconductor (TSM) provided solid guidance and that’s helping to relieve some ongoing semiconductor supply anxiety.

Today will be a busy day, with the first potentially big event being the ECB Decision at 7:45 a.m. ET.  No change is expected to rates or QE, but if Lagarde is hawkish in her commentary it could hit stocks.

Economically, we’ll have multiple reports today including, in order of importance, Retails Sales (E: 0.6%), Consumer Sentiment (E: 58.8), and Jobless Claims (E: 175K).  As has been the case, markets will want to see continued stability in the data.

Finally, we have two Fed speakers, Mester (2:30 p.m. ET) and Harker (6:00 p.m. ET), but they shouldn’t move markets.

Market Multiple Table: April Update

What’s in Today’s Report:

  • Market Multiple Table: April Update

Futures are modestly lower with European markets while oil rallies and global bond yields move higher amid simmering geopolitical tensions and lingering inflation fears.

Economically, Final Composite PMI data was mostly better than expected in Europe overnight but price measures continued to rise, suggesting inflation has still not peaked.

Today, we will get two economic reports starting with International Trade (E: -$88.8B), but the ISM Services Index (E: 58.5) will be the more important release to watch shortly after the opening bell as a continued rise in the price measures could further stoke inflation/stagflation fears.

Additionally, there are multiple Fed speakers today: Kashkari (10:00 a.m. ET), Brainard (11:05 a.m. ET), Daly (12:30 p.m. ET), and Williams (2:00 p.m. ET). And if their tone is more hawkish than current market expectations, that could send yields to new highs and pressure high growth tech names which would drag the broad market lower.

Jobs Day

What’s in Today’s Report:

  • Jobs Day (An Important Report)

Futures are moderately lower and European markets are down 3% as the Russia/Ukraine war shows little to no signs of actual de-escalation.

Russian forces attacked the largest nuclear power plant in Ukraine (and Europe) and a fire broke out at the plant.  The fire has been extinguished, but Russians now control the plant and the episode highlights the increasing chances of regional collateral damage from the ongoing conflict.

Today focus will remain first on the Russia/Ukraine conflict and any headlines about a cease-fire will obviously result in a knee-jerk rally higher (although to be clear no cease-fire headlines are expected today).

Away from Russia/Ukraine, the key event today is the Employment Situation report and expectations are as follows:  Job adds: 390K, Unemployment Rate: 3.9%, Wages: 0.5% m/m, 5.8% y/y.  Especially given geopolitical concerns, the market needs a “Just Right” number to help limit losses this morning, and if we get a “Too Hot” reading (on all three metrics) or a very soft number, expect losses to accelerate.

Finally, we get one Fed speaker today, Evans (8:45 a.m. ET), but he shouldn’t move markets given Powell’s testimony the past two days.

Ukraine Update and Why Future are Down

What’s in Today’s Report:

  • Ukraine Update and Why Futures Are Down
  • Switching Focus Back to the Fed
  • Weekly Market Preview:  Powell Testimony Wed/Thurs
  • Weekly Economic Cheat Sheet:  Jobs Week

Futures are sharply lower as markets react to additional sanctions against Russia, including removing select Russian banks from the SWIFT system. The additional sanctions and historic isolation of Russia by the global community are increasing economic uncertainty.

Positively, Ukraine and Russia are having peace talks today, and hopefully, that leads to a ceasefire sooner than later.

There were no notable economic reports overnight and no material economic reports today, so Russia/Ukraine headlines will drive trading, and any reports of a cease-fire will be a positive for markets.

February Inflation Expectations Update

What’s in Today’s Report:

  • Inflation Expectations Update: February 2022

Stock futures are solidly higher this morning after another mostly quiet night of news as tech shares rise amid falling bond yields ahead of tomorrow’s CPI report.

There were no market-moving economic reports overnight and no data is due to be released in the U.S. today.

With no economic data on the calendar, the focus will be on Fed speakers: Bowman (10:30 a.m. ET) and Mester (12:00 p.m. ET) as well as a 10-Yr Treasury Note auction at 1:00 p.m. ET.

There are also a few notable companies due to release earnings today including: TEVA ($0.70), UBER (-$0.33), and DIS ($0.57).

Bottom line, the market remains keenly focused on inflation right now and with bond yields pulling back from recent highs, stocks are enjoying a renewed relief rally that could extend higher today as long as yields don’t reverse back towards recent highs.