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Market Multiple Table Chart

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What’s in Today’s Report:

  • Market Multiple Table Chart
  • CPI Preview:  Good Bad and Ugly

Futures are slightly higher ahead of this morning’s CPI as reports suggest UK PM Truss will have to abandon more of her fiscal spending and tax cut plan.

Positively, conservative members of Parliament continued to push back against PM Truss’s fiscal plan and that’s helping the Pound rally and GILT yields to decline.

Negatively, Chinese authorities are reimposing some restrictions in Shanghai as COVID cases rise and as Chinese officials hold on to the “Zero COVID” policy.

Focus today will be on CPI and estimates are as follows: Headline: 0.2% m/m and 8.1% y/y. Core:  0.4% m/m and 6.5% y/y.  For CPI to spark a material rally, markets will want to see outright declines in CPI (so less than 8.1% and 6.3% respectively).  Conversely, year over year CPI coming in higher than September readings will reinforce the idea that inflation is not declining, and the market is a long, long way from a Fed pivot.  The other notable report today is Jobless Claims (E: 225K) but that shouldn’t move markets.

Why Stocks Hit New Lows

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What’s in Today’s Report:

  • Why Stocks Hit New Lows

Futures are higher on potential improvement in the UK fiscal drama and on better than feared economic data.

UK PM Truss will meet with the UK Office for Budget Responsibility today and the hope is something comes from the meeting to further stabilize markets.

Economically, the September Chinese manufacturing PMI beat estimates and rose back above 50 (50.1 vs. (E) 49.4).

The key event today will be the result of the meeting between UK PM Truss and the Office for Budget Responsibility, as that whole situation needs to stabilize if stocks are going to hold up.  Beyond the UK fiscal drama, today there is an important inflation report, the Core PCE Price Index (E: 0.5% m/m, 4.8% y/y) but unless it surprisingly drops, it shouldn’t move markets.

Finally, there are several Fed speakers today but the most important one is Brainard (9:00 a.m. ET) and if she’s slightly dovish, that could help stocks further rally.  Other speakers include Barkin (8:30 a.m., 12:30 p.m. ET), Bowman (11:00 a.m. ET) and Williams (4:15 p.m. ET).

Market Multiple Table Chart

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What’s in Today’s Report:

  • Market Multiple Table Chart
  • What Fed Speak Means for Markets (Yesterday and Today)

Futures are little changed following a mostly quiet night and ahead of the ECB decision and Powell Q&A session.

The Reserve Bank of Australia signaled it will slow the pace of rate hikes going forward but gave no insight into its “Terminal Rate.”

Economically, Japanese GDP slightly beat estimates (3.5% vs. (E) 3.0%) but that’s not moving markets.

Today’s focus will be on Powell (9:10 a.m. ET) and the ECB (75 bps hike), and any hint of “peak hawkishness” from Powell or the ECB will be a positive catalyst for markets (and no hints of it will likely be a headwind on stocks).  Outside of Powell and the ECB, we also get Jobless Claims (E: 240K) and there’s one Fed speaker, Evans (12:00 p.m. ET), but neither of those should move markets.

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.

What Should Clients Do in This Environment?

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What’s in Today’s Report:

  • What Should Clients Do in This Environment?
  • S&P 500 Approaching Key Support: Chart
  • JOLTS Data Takeaways – Labor Market Remains Tight

Stock futures pulled back from overnight gains and are now trading flat as most international markets are lower following mixed economic data.

Japanese Retail Sales and Industrial Production figures both handily topped estimates but the August HICP Flash in Europe (their CPI equivalent) showed core inflation jumped 4.3% vs. (E) 4.0%, reiterating inflation risks.

Today, the early focus will be on the ADP Employment Report (E: 200K) which will be the first one since they updated the methodology of the report so be prepared for a potentially surprising print.

From a market standpoint, traders will want to see a moderation in the labor market (especially after yesterday’s JOLTS report) to show the Fed’s tightening actions are beginning to cool the labor market which is one of the key steps towards reaching “peak hawkishness.”

There are also a few Fed speakers to watch today: Mester (8:00 a.m. ET), Logan (6:00 p.m. ET), and Bostic (6:30 p.m. ET) and the market would welcome any degree of less hawkish commentary as the more hawkish tone of the last week has been largely responsible for the equity market losses into the end of the month.

Updated Technical Take On the Market

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What’s in Today’s Report:

  • Updated Technical Take
  • EIA Update and Oil Market Analysis
  • More Bad Consumer Earnings

Futures are solidly higher following better-than-expected economic data and as markets continue to recoup Monday’s declines ahead of the Powell speech tomorrow.

Economic data was better than expected overnight as German GDP beat estimates (1.8% vs. (E) 1.4%) as did the IFO Business Expectations survey (80.3 vs. (E) 78.8).

On the Fed front, Bostic said the September rate hike was a 50/50 proposition between 50 bps or 75 bps, and that’s largely in line with market expectations.

Today’s focus will be on economic data via Jobless Claims (E: 255k) and Revised Q2 GDP (E: -0.9%) and markets will want to see a continued slow rise in jobless claims and a stable GDP report (so not materially worse than expected).

Additionally, while the official Fed speaker calendar doesn’t have any events today, we should prepare for a deluge of Fed commentary via the financial media (CNBC, FT, WSJ, Marketwatch, etc.) as the Jackson Hole conference begins.  Barring any major surprise commentary, though, markets should look past Fed speak today and focus on Powell’s speech tomorrow.

Economic Breaker Panel: August Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel: August Update
  • S&P 500 Reaches Key Technical Support: Chart

Stock futures are steady this morning as this week’s rise in both the dollar and bond yields has paused while economic data in Europe was better than feared

Economically, the Eurozone Manufacturing PMI was 49.7 vs. (E) 49.0 and the Services PMI came in at 50.2 vs. (E) 49.0 which is helping ease some stagflation concerns after last week’s soft growth numbers yet stubbornly high inflation across Europe.

Looking into today’s session, the focus will be on economic data early, specifically, the PMI Composite Flash (E: 49.2) as investors will want to continue to see steady moderation and evidence of slowing growth but not an all-out crash in the data either. New Home Sales (E: 575K) will also be released shortly after the open.

Outside of the data, there is one Fed speaker on the calendar: Kashkari, but not until after the close (7:00 p.m. ET) while there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could move yields.

Bottom line, news flow has not been decidedly negative over the last few sessions and the pullback in stocks has been largely driven by the rally in the dollar and rising bond yields. So if we can see those two markets stabilize, equities should be able to stabilize today as well, especially with the S&P into solid technical support, however, if the dollar and yields both grind higher, expect further volatility in the stock market ahead of Jackson Hole.

FOMC Minutes: Not as Dovish as the Market Reaction

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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).

What Currencies and Bonds Are Saying About the Fed

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What’s in Today’s Report:

  • Better-Than-Feared WMT and HD Earnings Drive Trading
  • Why Currency and Bond Markets Are Not Signaling a “Less Hawkish” Fed
  • Chart: S&P 500 Quietly Closes at Fresh Highs
  • Economic Takeaways: Housing Starts and Industrial Production

U.S. futures are tracking European shares lower following disappointing economic data out of the EU ahead of today’s release of the July FOMC meeting minutes.

U.K. CPI jumped to a new multi-decade high of 10.1% vs. (E) 9.8% in July while the Q2 Eurozone GDP Flash dipped to 3.9% vs. (E) 4.0%, rekindling concerns about stagflation.

Looking into today’s session, focus will be on economic data early with Retail Sales (E: 0.1%) due out before the bell as well as more retailer earnings including: TGT ($0.71), LOW ($4.63), and TJX ($0.68).

Then there is one Fed speaker, Bowman, at the open (9:30 a.m. ET) before focus will shift to the July FOMC meeting minutes which will be released at 2:00 p.m. ET.

Bottom line, the market will want to see more good earnings and guidance out of the remaining major retailers due to report quarterly results today as well as a not-as-hawkish-as-feared set of Fed minutes released this afternoon, if this latest leg higher in stocks is going to continue. Otherwise, we could be set up for a pullback into the back half of the week as stocks have become near-term overbought without any new meaningfully positive catalysts.

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart
  • Takeaways From a Dismal Empire State Manufacturing Report

Futures are modestly lower this morning as investors digest more downbeat economic data and disappointing earnings out of HD ahead of the Fed Minutes tomorrow.

The German ZEW Survey’s Economic Sentiment reading was -55.2 vs. (E) -52.7, underscoring ongoing concerns about the outlook for growth in the months ahead.

Looking to today’s session, there are two economic reports to watch: Housing Starts and Permits (1.540M, 1.650M) and Industrial Production (E: 0.3%). Data has been disappointing so far this week so any positivity in the releases could help buoy equities in what has been so far a pretty quiet trading week.

There are no Fed officials scheduled to speak today but WMT ($1.60) will report earnings in the pre-market and investors will be looking for the massive retailer to reiterate guidance and meet or beat estimates to provide evidence that the consumer remains resilient in the face of extremely high inflation. Any disappointment in the quarterly results could spur volatility given the most recent leg higher in stocks leaving the market overbought.