Why Home Depot Earnings Point to a Soft Landing

What’s in Today’s Report:

  • Why Home Depot Earnings Point to a Soft Landing
  • Retail Sales Data Takeaways
  • Debt Ceiling Barometer: 1-Month T-Bill Yield Steadies

Stock futures are rebounding modestly from yesterday’s declines this morning as traders await more clarity on the debt ceiling negotiations (1-Month yield is down 2 bp to 5.56%) and digest in-line European inflation data.

Economically, Eurozone HICP (their CPI equivalent) met estimates at 7.0% y/y with the Narrow Core reading falling 0.1% to 5.6%, also as expected but still well above target.

There is just one economic report this morning: Housing Starts & Permits (E: 1.405M, 1.430M) and no Fed officials are scheduled to speak.

Retailer earnings continue this morning with TGT ($1.74) reporting ahead of the bell and investors will be looking for more signs of “soft landing” spending trends as we saw with HD yesterday.

As far as other potential catalysts go, there is a 20-Yr. Treasury Bond auction at 1:00 p.m. ET today and any big move in yields could impact stocks (too weak would indicate inflation worries, too strong would underscore growing debt ceiling fears).

Market Multiple Table: March Update

What’s in Today’s Report:

  • Market Multiple Table – March Update (Printable PDF Available)
  • February CPI Takeaways
  • Breakdown in the Energy Markets: Oil Update

Markets are trading with a risk-off tone this morning amid renewed worries about the global banking system.

Credit Suisse’s 2022 annual report revealed “material weaknesses” but the bank’s chairman ruled out government assistance while the largest shareholder, the Saudi National Bank, said further financing was not an option. The negative news flow has sent Credit Suisse shares down more than 20% to a new record low this morning and that is dragging global bank stocks lower and weighing heavily on sentiment.

Economic data overnight was mostly better than expected with Housing Sales in China notably rising more than expected while the PBOC injected more liquidity into he system than anticipated, both of which helped bolster Asian markets overnight.

Looking into today’s session, focus will be on economic data early with PPI (E: 0.3%, 5.4%), Retail Sales (E: -0.3%), the Empire State Manufacturing Index (E: -7.7), and the Housing Market Index (E: 41) all due out this morning.

Regarding the data, markets want to see a further decline in inflation metrics and more slowing in growth readings to help shore up less hawkish Fed expectations, however, focus will also remain on the banking sector and if banks can’t stabilize and start to rebound broadly, the major indexes are going to have a hard time finding their own footing today.

Three Technical “Cs” for a Lasting Market Bottom

What’s in Today’s Report:

  • Three Technical “Cs” for a Lasting Market Bottom

Futures are sharply lower on continued momentum from Thursday’s late day drop and following hot German inflation data and strong UK retail sales.

German CPI didn’t decline as much as hoped, falling –1.0% vs. (E) -1.6% and rising 17.8% vs. (E) 16.0%.  UK Retail Sales were also better than expected (0.5% vs. (E) -0.3% and the two reports are combining with yesterday’s hot US PPI to push rate hike expectations higher.

Today focus will remain on data and Fed speak.  The two notable economic reports are Import & Export Prices (E: -0.1%, -0.2%) and Leading Indicators (E: -0.3%).  The first deals with inflation and the second deals with growth, and if inflation is hot and growth is cool, expect more selling pressure.

There are also two Fed speakers today, Barkin (8:30 a.m. ET) and Bowman (8:45 a.m. ET) and we should expect them to sound hawkish (as most Fed speakers have been this week).

FOMC Minutes: Not as Dovish as the Market Reaction

What’s in Today’s Report:

  • FOMC Minutes:  Not as Dovish as the Market Reaction
  • Retail Earnings Takeaways
  • EIA and Oil Market Analysis

Futures are slightly higher on better-than-expected earnings, following an otherwise quiet night of news.

Cisco (CSCO) posted strong earnings and gave positive commentary on tech demand going forward.

Economically, EU HICP (their CPI) met expectations at 8.9% yoy and that reading means a 50 bps rate hike from the ECB is still likely in September.

Today’s focus will be on economic data, specifically the Philadelphia Fed Manufacturing Survey (E: -5.0).  If Philly Fed echoes the weak Empire Manufacturing reading and the price indices don’t decline, we’ll see stagflation concerns rise.  Other reports today include Jobless Claims (E: 265K) and Existing Home Sales (E: 4.85M) but neither should move markets.

We also get two Fed speakers, George (1:20 p.m. ET) and Kashkari (1:45 p.m. ET), and the market will be looking for any insight on a 50 bps vs. 75 bps hike in September (markets are expecting 50 bps).

Why Is the Market Suddenly Resilient?

What’s in Today’s Report:

  • Why Is the Market Suddenly Resilient?

Futures are slightly higher on momentum from yesterday’s recovery and despite mixed Chinese economic data.

Chinese Industrial Production and Fixed Asset Investment both slightly missed estimates while Retail Sales beat expectations, but importantly the data didn’t show the Chinese economy had lost significant momentum.

Today there are numerous economic reports and some of them potentially will move markets.  The most important report today is 5-Yr Inflation Expectations (3.1% previous) and if they drop to 3.0% or lower that will be a good sign on inflation.  Retail Sales (E: 0.9%) and Empire State Manufacturing Index (E: -1.3) are the next most important reports today and again markets will want to see moderation – a slowing of activity but not a collapse.  Finally, we also get Industrial Production (E: 0.1%) and Consumer Sentiment (E: 50.0).

We also have one Fed speaker today, Bostic (8:45 a.m. ET), and we’d expect him to follow yesterday’s script and push back on the inevitability of a 100 basis point hike (although acknowledge that anything’s possible depending on the data).

What the Fed Decision Means for Markets

What’s in Today’s Report:

  • What the Fed Decision Means for Markets: Not as Hawkish as Feared (But That’s Not as Positive as It Used to Be)
  • FOMC Decision Takeaways
  • Retail Sales and Empire State Manufacturing Index Takeaways – A Further Loss of Momentum

Stock futures are down more than 2% this morning, tracking global shares lower as investors digest the latest central bank decisions, a rebound in rates and recession fears.

The Swiss National Bank surprised markets with a 50 bp hike overnight which is compounding fears about aggressive central bank policy in the face of slowing growth ahead of this morning’s BOE announcement.

Today, focus will be on the Bank of England announcement early and if we see another hawkish decision, stocks could extend this morning’s decline on a combination of rising rate fears and growing concerns about future economic growth.

From there, focus will turn to economic data in the U.S. with Jobless Claims (E: 220K), Housing Starts and Permits (E: 1.695M), and the Philadelphia Fed Manufacturing Index (E: 5.5) all due to be released this morning. With the Fed set on tackling inflation in the months ahead, the market will want to see strong data to show the economy can weather sharply tightening financial conditions.

Then in the late morning, the Treasury will hold an auction for 4-Week and 8-Week Bills at 11:30 a.m. ET. Bottom line, if we see rates rise materially today, especially on the shorter end of the yield curve, then stocks are likely to extend this morning’s declines on aggressive policy concerns.

The Delta Variant and Markets

What’s in Today’s Report:

  • Is the Delta Variant Impacting the Markets?
  • Retail Sales and Industrial Production Takeaways
  • Chart: Value Outperforming Growth In August

Stock futures are slightly lower as investors digest dovish central bank developments, mixed inflation data out of Europe and look ahead to the release of the Fed minutes.

The Reserve Bank of New Zealand unexpectedly left rates unchanged at 0.25% (E: 0.50%) citing COVID-19 uncertainties which crashed the kiwi to a fresh 9-month low overnight.

Economically, Eurozone HICP met estimates however U.K. PPI ran slightly hot versus expectations while revisions were to the upside which is keeping inflation concerns elevated for now.

Looking into today’s session, it should be a fairly slow morning as far as news flow goes with just one economic report to watch: Housing Starts (E: 1.61M) and no Fed officials scheduled to speak.

Then in the afternoon investors will be watching a 20 Year T-Note auction at 1:00 p.m. ET before the FOMC Meeting Minutes are released at 2:00 p.m. ET. Yesterday, there was a reversal higher in yields from overnight lows in the wake of the not-as-bad-as-feared Retail Sales report so the risk appears to be to the upside for yields which could weigh on big-cap growth names and drag major indexes lower if a rise in yields gains momentum.

Growth vs. Value: A Closer Look

What’s in Today’s Report:

  • Value Sectors vs. Growth Sectors – A Closer Look
  • Retail Sales and Industrial Production Data Takeaways

Stock futures are trading modestly higher this morning as investors continue to digest the latest vaccine news against still elevated coronavirus cases and new lockdowns across parts of the U.S.

Economically, the only report overnight was Eurozone HICP from October which met estimates at 0.2% M/M and did not materially impact markets.

Today, there is just one economic release to watch ahead of the bell: Housing Starts and Permits (E: 1.46M, 1.56M) before the “Fed speak” picks up again after the open with Evans (10:00 a.m. ET), Williams (12:15 p.m. ET), Bullard (1:20 p.m. ET), Kaplan (6:00 p.m. ET) and Bostic (7:00 p.m. ET) all due to speak over the course of the day.

Beyond data and Fed chatter, investors will continue to watch the fluid macro backdrop of the broader markets which includes vaccine developments, coronavirus case counts, lockdown policies, and any clues as to the time frame and size of the next relief package from Congress.

Economic Data Takeaways

What’s in Today’s Report:

  • Bottom Line – “Pump the Breaks”
  • Retail Sales and ISM Manufacturing Takeaways

Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was digested amid a slight pullback in bond yields.

The Reserve Bank of Australia was the latest central bank to note downside risks in the global economy overnight.

Economically, Eurozone PPI was a mild miss: 0.1% vs. (E) 0.2% in February but inflation has been subdued and the report does not change the outlook for ECB policy.

Today, Motor Vehicle Sales (E: 16.8M) will begin to come in over the course of the morning while there is one notable economic report ahead of the open: Durable Goods Orders (E: -1.8%). There are no Fed speakers today.

With a lack of material catalysts between now and Friday’s jobs report, macro focus will be on U.S. – China trade negotiations and the bond market. If Treasury yields revisit last week’s lows, stocks will have a hard time holding the strong gains of the last few sessions, so watch bonds closely.

Seven Ifs Updated

What’s in Today’s Report:

  • Seven “Ifs” That Will Move This Market Updated (Not Much Progress)
  • Weekly Market Preview (All About China)
  • Weekly Economic Cheat Sheet (Important Numbers This Week, Starting Today)

Futures are slightly higher following a generally busy weekend of economic, geo-political and Fed related news.

Economic data was mixed as CN New Yuan Loans slightly missed estimates (885 bln vs. (E) 950bln), as did German IP (-0.8% vs. (E) 0.5%) while German exports beat estimates.

On trade, the Trump/Xi summit appears to have been delayed till April, although a trade deal is still expected so this delay isn’t a negative for markets, yet.

Fed Chair Powell was on 60 Minutes Sunday night but didn’t say anything new so it’s having no impact on markets.

Today markets will be focused on the Retail Sales (E: 0.0%) report, in part because Powell specifically cited it as something he’d be watching in the 60 Minutes interview.  The key to this number, as always, is the “Control” group which is retail sales less gas, autos and building materials, and the market estimate is 0.7%.  A beat of that estimate will provide a boost of confidence for the economy, while a miss will exacerbate fears of a potential slowdown.