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Market Multiple Table: Fork in the Road?

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What’s in Today’s Report:

  • Market Multiple Table: Fork in the Road?
  • S&P 500 Chart: 50-50 Chance of New Lows
  • ISM Service Sector PMI
  • OPEC+ Policy Meeting Takeaways

U.S. stock futures have rebounded from overnight losses amid a steadying bond market and mostly upbeat economic data out of Europe.

Economically, German Industrial Production and Italian Retail Sales were both notably better than feared while the Final Q2 Eurozone GDP came in at 0.8% vs. (E) 0.6%, all of which is helping ease concerns about an imminent recession in Europe.

Today, there is one economic report to watch in the morning: International Trade in Goods (E: -$70.5B) and the Fed will release their Beige Book in the afternoon (2:00 p.m. ET) that could shed some light on the Fed’s current view of the economy and inflation trends ahead of this month’s FOMC meeting.

Additionally, there are a few Fed speakers over the course of the day: Mester (10:00 a.m. ET), Brainard (11:55 a.m. ET), and Barr (2:00 p.m. ET). Investors will be most closely focused on commentary from Vice Chair Brainard with the September meeting coming into view.

Bottom line, if data is generally good, rhetoric from the Fed is not more hawkish than it has been lately, and the bond market continues to stabilize, the S&P 500 should be able to hold the critical 3,900 area. However, a break below would be notable and greatly increase the odds of a retest of the June lows.

A Historical Reason to be Optimistic for the Second Half

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What’s in Today’s Report:

  • A Historical Reason to Be Optimistic for the Second Half

Futures are slightly lower following another high-profile guidance cut and more mixed economic and inflation data.

Micron (MU) materially cut forward guidance, sighting a steep drop in demand at the end of the second quarter and becoming the latest company to warn of deteriorating business conditions.

Economic and inflation data was mixed as EU headline HICP (their CPI) was hotter than expected but Core HICP underwhelmed, while the EU and UK final manufacturing PMIs reflected the slowing growth sweeping the globe.

Today’s focus will be on the ISM Manufacturing Index (E: 55.0) and the key here is moderation – markets need to see a slowing of growth but not a dramatic collapse.  If we see moderation, stocks can rally to start the second half.

Are Semiconductors A Buy?

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What’s in Today’s Report:

  • Are Semiconductors A Buy?

Futures are little changed following a quiet night of news.

Economic data was mixed as final May manufacturing PMIs were in-line with expectations for the EU and UK, although German Retail Sales missed estimates (–5.4% vs. (E) -0.1%).

On the Fed front, Bostic said his comments about a “pause” on rate hikes shouldn’t be interpreted that the Fed will help rescue volatile markets.

Today focus will be on economic data and Fed speak via the ISM Manufacturing PMI (E: 54.5), JOLTS (E: 11.40M) and comments by Williams (11:30 a.m. ET) and Bullard (1:00 p.m. ET).  Bottom line, the ideas of slowly moderating (but not collapsing) growth and the possibility for a Fed “pause” in rate hikes in late summer/early fall have helped stocks rally, and as long as today’s data and Fed speak don’t refute those possibilities, stocks can extend the recent rally.

Is the Outlook Really This Bad?

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What’s in Today’s Report:

  • Is the Outlook Really This Bad?
  • Weekly Market Preview:  FOMC Decision Wednesday (Will It Be More Hawkish Than Feared?)
  • Weekly Economic Cheat Sheet:  A Busy and Important Week (ISM Manufacturing PMI today, FOMC Decision Wednesday, Jobs Report Friday)

Futures are enjoying a modest oversold bounce following Friday’s selloff, but there was no improvement over the weekend on the three headwinds pressuring stocks:  Chinese growth worries, Ukraine war and hawkish Fed.

Economic data was mixed as the April Chinese manufacturing PMI dropped further (to 47.4 from 49.5) while the EU PMI slightly beat estimates (55.5 vs. (E) 55.3) and German Retail Sales underwhelmed (-0.1% vs. (E) 0.3%).

Today focus will be on the ISM Manufacturing PMI (E: 58.0) and markets need to see a solid number to push back on stagflation concerns.  If we get a weak number, expect the selling to resume and stagflation fears to grow.

Earnings season will begin to wind down this week but there are still some important results coming and some we’re watching today include:  NXPI ($3,17), CAR ($3.54) and MGM ($-0.09).

It’s All About Escalation (And What Can Go Wrong)

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What’s in Today’s Report:

  • It’s All About Escalation (And What Can Go Wrong)
  • ISM Manufacturing Report Takeaways

Stock futures recovered from overnight losses as investors digest President Biden’s State of the Union speech, and a slight de-escalation in the Russia-Ukraine conflict.

Geopolitically, President Biden announced that the U.S. would close its airspace to Russian planes during the open of his State of the Union address, however overnight, Russia expressed willingness to resume talks with Ukrainian leadership today and that is raising hopes for a ceasefire deal, fueling moderate risk-on money flows.

Economically, the Eurozone HICP Flash was hot with the headline jumping to 5.8% vs. (E) 5.3% which is adding to angst about stagflation.

Today, there are a few data points to watch including: Motor Vehicle Sales (E: 14.6M) and the first look at official February jobs data in the form of the ADP Employment Report (E: 320K).

Additionally, there are two Fed speakers around the time of the open: Evans (9:00 a.m. ET) and Bullard (9:30 a.m. ET) before Fed Chair Powell will begin his semi-annual Congressional testimony at 10:00 a.m. ET.

Bottom line, the Russia-Ukraine conflict will continue to dominate the headlines and markets today, and any de-escalation could trigger a further relief rally. However, investors will be watching Powell closely for any signs of a change in policy which could also impact markets.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • ISM Manufacturing Index – Takeaways

U.S. futures are trading slightly lower along with most overseas markets following mostly inline economic data and a less-hawkish-than-feared RBA meeting outcome.

The RBA struck a slightly dovish tone in their latest meeting announcement, especially with regard to inflation, which is pressuring bond yields this morning.

Today is lining up to be a fairly slow day with just one economic data point due out: Motor Vehicle Sales (E: 12.4M) while the focus will begin to shift to the November FOMC meeting which begins this morning.

There is a 52-Week Treasury Bill auction at 11:30 a.m. ET and while it is not typically a widely followed auction, the results could shed new light on investor expectations for rate hikes next year, and therefore could impact markets ahead of tomorrow’s Fed announcement.

Lastly, earnings season remains in full swing with several notable results due out today from: PFE ($1.08), UAA ($0.15), COP ($1.53), ZG ($0.16), TMUS ($0.54), LYFT (-$-0.04), PGR ( $1.09).

Market Multiple Table: October Update

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What’s in Today’s Report:

  • Market Multiple Table: October Update
  • ISM Services Index – Takeaways

Stock futures are down more than 1% and bond yields continue to climb higher amid renewed stagflation fears while traders look ahead to this week’s U.S. jobs data.

Economically, data was disappointing overnight as German Manufacturers Orders fell by -7.7% vs. (E) -2.1% in August and EU Retail Sales for the same month rose just 0.3% vs. (E) 0.8%.

Meanwhile, U.K. 10-year Gilt breakevens jumped 10 basis points to the highest since 2008 (above 4%) as surging energy costs add to inflation concerns.

Looking into today’s session, focus will be on the September ADP Employment Report (E: 428K) ahead of the bell while there is one Fed official speaking this morning: Bostic (9:00 & 11:30 a.m. ET). The bond market is continuing to have a significant impact on stocks right now so if there is a spike higher in yields in the wake of the private payrolls print, expect stocks to remain under pressure today.

Market Multiple Table (Deterioration from May)

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What’s in Today’s Report:

  • June Market Multiple Table (Deterioration from May)
  • ISM Manufacturing PMI: Why It Wasn’t As Good As It Seemed

Futures are little changed following a generally quiet night of news as markets await the first employment report of the week.

Economic data was sparse but disappointing, as German Retail Sales fell –5.5% vs. (E) -2.6% while Euro Zone PPI rose 7.6% yoy vs. (E) 7.3% and those disappointing numbers are weighing slightly on European indices.

Today’s focus will be on the ADP Employment Report (E: 627k) and if it’s much weaker than expected, or there’s some specific mention about labor shortage issues, expect that to be a headwind on stocks.  There are also three Fed speakers today, Evans (12:00 p.m. ET), Harker (12:00 p.m. ET), and Kaplan (6:05 p.m. ET) but we don’t expect them to move markets.

What Can Go Right and What Can Go Wrong?

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What’s in Today’s Report:

  • What Can Go Right and What Can Go Wrong?
  • Weekly Economic Preview:  More Tapering Talk?
  • Weekly Economic Cheat Sheet:  All About Friday’s Jobs Report.

Futures are modestly higher thanks to more solid economic data combined with generally in-line inflation metrics.

The Chinese, EU, and UK final May manufacturing PMIs all largely met expectations and confirmed the global economic recovery is continuing (and importantly not deteriorating).

EU HICP (their CPI) rose 2.0% vs. (E) 1.9%, but the core reading was in line with expectations at 0.9% and as such not spiking inflation fears.

Focus today will be on the ISM Manufacturing PMI (E: 60.9) and the market will want to see a “Goldilocks” number that shows the economic rebound is continuing, but that activity isn’t so hot that it increases inflation fears.  If we get that “Goldilocks” number stocks can extend the early rally.

Is a Bad ISM PMI Really Worth a 3% Pullback?

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What’s in Today’s Report:

  • Jobs Report Preview
  • Is A Bad ISM Really Worth a 3% Pullback?

Futures are enjoying a modest oversold bounce despite more trade noise and disappointing economic data.

On trade, the U.S. imposed $ 7.5 billion worth of tariffs on the EU following a WTO ruling.  But, while the headline is scary, this was widely expected and not a new negative.

Economic data was soft again as Japanese and EU composite PMIs and the UK services PMI all missed estimates.

Today the focus will be on economic data and the key report is the ISM Non-Manufacturing Index (55.4).  If it badly misses expectations, concerns about a broader economic slowdown will grow further, and that will weigh on stocks again.  We’ll also be watching Jobless Claims (E: 215K) for any signs of slowing in the labor market.

There are also several Fed speakers today, but with rate cuts expected, I doubt they will say anything too material.  Speakers today include:  Quarles (8:30 a.m. ET), Mester (12:10 p.m. ET), Clarida (6:35 p.m. ET).