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It Can Pay to Think Small(est)

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What’s in Today’s Report:

  • It Can Pay to Think Small(est)

U.S. futures are higher as Treasury yields pull back and a sharp drop in oil prices provides relief for investors.

Oil prices are falling after reports that U.S. and Iranian negotiators discussed a phased approach to ending the war and reopening the Strait of Hormuz.

Economically, the BoJ Core CPI rose 1.8% y/y vs. (E) 1.5%, while German GfK Consumer Climate fell to -30.6 vs. (E) -27.1.

Today, focus will be on Jobless Claims (E: 204K) and New Home Sales (E: 615K), while markets will continue to watch Treasury yields and oil prices for signs of easing inflation pressure.

Finally, two Fed speakers are speaking today: Schmid (9:20 a.m. ET) and Hammack (2:00 p.m. ET).

 

Technical Market Update

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What’s in Today’s Report:

  • Technical Market Update
  • Why are Small Caps Outperforming?
  • How Bad Was Economic Data Yesterday? (Answer:  Bad)

Futures are extending Wednesday’s losses following more disappointing earnings and as worries about the economy grow.

Alcoa (AA), Allstate (ALL), and Discovery Financial (DFS) posted soft earnings or negative guidance overnight.

Today we get several important economic reports including, in order of importance: Philly Fed (E: -10.3), Jobless Claims (E: 215K), and Housing Starts (E: 1.362M).

There are also several Fed speakers and the most important one is Brainard (1:15 p.m. ET) and if she’s slightly dovish, that will help markets stabilize.  Collins (9:00 a.m. ET) and Williams (6:35 p.m. ET) also speak today.

Finally on the earnings front, we get more important results today and the market needs some good news.  Reports we’re watching include:  PG ($1.58), FAST ($0.42), NFLX ($0.45), and PPG ($1.15).

ECB Preview (Dovish Surprise?)

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What’s in Today’s Report:

  • ECB Preview (Dovish Surprise?)
  • Did Small Caps Just Bottom?

Futures are marginally higher following another night of generally solid earnings and ahead of the ECB decision.

Delta variant fears continued to recede as governments appear to be focusing on re-masking as a policy response, not economic restrictions.

Today focus will be on the ECB Rate Decision & Press Conference (7:45 & 8:30 a.m. ET) and economic data via Jobless Claims (E: 350k) and Existing Home Sales (E: 5.90M).  Markets will want to see a dovish ECB and continued improvement in claims to reinforce that the global recovery is on going, and that central banks will remove accommodation very, very slowly.

On the earnings front, there are several more notable reports today:  T ($0.78), AAL (-$1.70), FCX ($0.73), TWTR ($0.07), INTC ($1.06).