It would seem rather obvious that the next several days of this earnings silly season will be ruled by tremendous speculation and trepidation.  Perhaps the market could do better with a psychological analyst than a technical analyst due to the emotional reactions we will likely see the rest of the week.  Today we have housing data, consumer confidence numbers, and a large group of earnings reports that will reach a feared pitch when GOOGL and MSFT report after the bell.  As the market reacts, expect very challenging price action with whipsaws and significant morning gaps. 

Asia market finished the day with primarily bullish results, led by Hong Kong, up 1.67% at the close.  Unfortunately, European markets look mostly lower this morning as they wait on earnings results and the FOMC decision Wednesday afternoon.  Likewise, U.S. futures point lower this morning after some early disappointing earnings results, but anything is possible by the open as data continues to roll out.  Experienced day traders will likely have the upper hand as the market reacts to the tech giant reports throughout the week. 

Economic Calendar

Earnings Calendar

Tech Giant reports begin after the bell today with a busy morning to set the stage for volatility.  Notable reports include GOOGL, MSFT, MMM, AGYS, ACI, ADM, BXP, BYD, CNC, CMG, CB, KO, GLW, ENPH, FE, FISV, GE, GM, IEX, JNPR, KMB, MSCI, MCD, MDLZ, NAVI, PCAR, PII, PHM, RTX, SSTK, SKK, SAVE, SYK, TER, TXN, TRU, UBS, UPS, V, VIST, WH, XRX, YNDX, & ZION.

News & Technicals’

A late Monday announcement from WMT, which cut quarterly and full-year profit estimates citing rising food inflation.  WMT plunged nearly 9% in extended trading, dragging down other retail stocks, TGT fell 4,7%, AMZN dropped 3%, M & DG declined 4.3% & 3.3% respectively.  CEO Doug McMillon said aggressive markdowns on items such as clothing are also hurting margins.  General Motors reported second-quarter earnings that fell short of Wall Street’s estimates after supply chain issues led it to ship fewer vehicles than expected.  GM also confirmed that it had secured the battery materials needed to build 1 million EVs annually by 2025.  The company maintained its previous earnings guidance for the full year and expected to ramp up production in the second half.  With second-quarter GDP data due Thursday, the question of whether the economy is in recession will be on everyone’s mind.  The economy stands at least a fair chance of hitting the rule-of-thumb recession definition of two consecutive quarters with negative GDP readings.  Should inflation stay at high levels, that will trigger the biggest recession catalyst, namely Federal Reserve interest rate hikes.  Treasury Secretary Janet Yellen said “we just don’t have” conditions consistent with a recession.  Major U.S. and European banks should be prosecuted for “committing war crimes” over their financing of the Russian regime, according to a top aide to Ukraine president Volodymyr Zelenskyy.  Oleg Ustenko, an economic advisor to Zelenskyy, said the Ukrainian government believes banks, such as JPMorgan, HSBC, and Citi, are aiding the Kremlin’s war efforts in Ukraine.  “Everybody who is financing these war criminals, who are doing these terrible things in Ukraine, are also committing war crimes in our logic,” he told CNBC’s Hadley Gamble on “Capital Connection” on Tuesday.  UBS posted a net profit attributable to shareholders of $2.108 billion, below analyst expectations aggregated by the Swiss bank.  As market declines accelerated across equity and fixed income in the second quarter, the bank’s wealth management division took a hit.  However, CEO Ralph Hamers told CNBC that this had been largely offset by rising interest rates, with the U.S. Federal Reserve embarking on an aggressive hiking cycle to reel in inflation.  Treasury yields moved slightly lower in early Tuesday trading, with the 2-year pricing at 3.00%, the 5-year at 2.84%, the 10-year at 2.75%, and the 30-year dipping to 2.98%. 

The silly season will hit its stride today with tremendous speculation and trepidation as we wait on the tech giants GOOGL and MSFT to report after the bell today.  Toss in the busy morning slate of earnings reports, a reading on Consumer Confidence and housing with Case-Shiller & New Home Sales, and we have the recipe for wild price action.  Then, of course, the market will also have to deal with the anxiety of the pending FOMC rate decision Wednesday afternoon.  I think it goes with saying that anything is possible, and even the best technical analysis likely won’t be of much use as the emotion spill out in reaction to the data.  Protect your capital and prepare for intraday whipsaws and possible significant morning gaps the rest of the week. 

Trade Wisely,

Doug