Despite all the talking head predictions the hawkish Federal Reserve reversed early bullish producing a nasty whipsaw that unfortunately left behind some technical damage in the index charts.  This morning we have more data to inspire the bulls or bears with Jobless Claims, Philly Fed, and Current Account figures before the bell.  However, there is little on earnings for the rest of the week.  Watch for potential bounces near support levels and plan for the price volatility to continue with so many companies in their blackout period as we wait on the 4^th quarter earnings results.

While we slept Asian markets traded lower across the board in reaction to the FOMC decision.  European markets trade decidedly bearish this morning falling into negative territory amid central bank actions.  After a bearish reversal on the hawkish Fed, U.S. futures point to a substantial gap down open with several pending economic reports that could quickly make it better or worse by the open. 

Economic Calendar

Earnings Calendar

Notable reports for Thursday include DRI & FDS.

News & Technicals’

The Writers Guild of America (WGA) strike, which has lasted for more than two months and disrupted the production and release of many TV shows and movies, may be nearing its end. According to sources close to the negotiations, the writers and the producers are close to reaching an agreement after meeting face-to-face on Wednesday. The two sides hope to finalize a deal on Thursday, which would end the strike and allow the writers to resume their work. However, the sources also cautioned that if a deal is not reached, the strike could last through the end of the year, causing more losses and delays for the entertainment industry. On Wednesday evening, the WGA and the AMPTP released a joint statement that they met for bargaining and would meet again on Thursday. The statement did not provide any details or specifics about the progress or outcome of the meeting. However, sources said that both sides were willing to compromise and make concessions on some of the key issues. They also said that both sides were hopeful that they could reach a mutually beneficial agreement that would end the strike and restore normalcy to the industry.

The UAW strike, which has affected the U.S. auto industry for more than two months, has caused more layoffs and disruptions for the workers and the companies. GM, one of the largest automakers in the U.S., said it idled an assembly plant in Kansas because of a shortage of parts due to the strike. About 2,000 of its workers were laid off on Wednesday, adding to the tens of thousands of workers who have been affected by the strike. GM also said that because of the strike, the workers laid off on Wednesday will not be eligible for the supplemental unemployment benefits it normally pays, which could hurt their income and well-being. Stellantis, another major automaker, also laid off about 370 workers at three parts factories that supply its Jeep plant in Toledo, where the UAW went on strike last week. The Jeep plant employs about 3,000 workers, who are demanding better wages and working conditions from Stellantis. The layoffs and disruptions at GM and Stellantis show the ripple effects of the UAW strike, which has reduced the production and supply of vehicles in the U.S. market. The strike has also increased the costs and losses for both the workers and the companies, as they lose their revenues and fees. The strike has also affected consumers, who have fewer choices and options in buying new cars. The UAW strike is one of the longest and largest labor disputes in the U.S. auto industry in recent history, and it remains unresolved despite ongoing negotiations between the union and the producers.

Poland, one of Ukraine’s closest allies in its conflict with Russia, has announced that it will stop supplying weapons to Ukraine, as a trade dispute escalates. Poland has been supporting Ukraine since Russia invaded and annexed Crimea in February 2022, and backed the separatist rebels in eastern Ukraine. Poland has donated weapons, tanks, fighter jets and military training to Ukraine’s armed forces, as well as providing diplomatic and humanitarian aid. However, a recent dispute over Ukraine’s agricultural exports has threatened to break the alliance. Ukraine has accused Poland of imposing unfair and discriminatory tariffs and quotas on its agricultural products, such as wheat, corn, and sunflower oil. Ukraine has said that these measures violate the free trade agreement between the two countries, and have caused significant losses for its farmers and exporters. Poland has defended its actions, saying that they are necessary to protect its domestic market and consumers from cheap and low-quality Ukrainian products. Poland has also accused Ukraine of failing to comply with the sanitary and phytosanitary standards required by the European Union, of which Poland is a member. As a result of the trade dispute, Poland has decided to suspend its weapons deliveries to Ukraine, which could weaken Ukraine’s defense capabilities and security situation. The decision has sparked criticism and concern from other European countries and the United States, which have urged Poland and Ukraine to resolve their differences peacefully and constructively. They have also warned that the dispute could benefit Russia, which has been trying to undermine and isolate Ukraine from its Western partners.

Markets began the day with high bullish hopes but the hawkish Federal Reserve meeting on Wednesday engaged the bears creating a nasty whipsaw that left behind technical damage in the index charts. The Fed signaled that it would raise interest rates sooner and faster than expected despite all the predictions from the talking heads. The two-year Treasury yield reached its highest level this year reversing some early weakness in the dollar. Today we have a busy economic calendar with Jobless Claims, Philly Fed, Current Account, Existing Home Sales, Leading Indicators, and Natural Gas numbers to inspire the bulls or bears. Expect the challenging volatility to continue and don’t be surprised if we experience another whipsaw after the gap down as the market reacts to the data.

Trade Wisely,

Doug