The indexes pushed higher shaking off the stronger-than-anticipated jobs data Friday with the hope it will help us dodge a possible 2024 recession and a hawkish Fed continuing its higher-for-longer stance. Although today we have light earnings and economic calendars the CPI, PPI, and Fed’s rate decision on Tuesday and Wednesday add a level of uncertainty for the Monday session.  Plan your risk carefully and expect some choppy market conditions as we wait. 

Overnight Asian markets shook off deflationary Chinese data to finish the day mixed but mostly higher.  European markets are chopping around the flat line mixed but mostly higher at the time of this report.  U.S. markets point to a flat to slightly bearish open working to recover from overnight lows and facing a big week of market-moving economic data.  Plan for substantial price volatility as the data rolls out.

Economic Calendar

Earnings Calendar

Notable reports for Monday include CASY, FECL, and ORCL.

News & Technicals’

Macy’s Inc., the iconic department store chain, has received a takeover offer from two hedge funds, Arkhouse Management and Brigade Capital Management. The offer, which was reported by sources close to the deal, values Macy’s at $5.8 billion, or $21 per share. This is a premium of about 23% over the company’s latest closing price of just over $17 per share. Macy’s has been facing a decline in sales over the past year, as the pandemic and the rise of online shopping have hurt its business. The company has been trying to adapt to the changing retail landscape by closing stores, cutting costs, and investing in e-commerce. However, it is unclear whether the offer from Arkhouse and Brigade will be accepted by Macy’s board and shareholders, or whether it will face any regulatory hurdles.

The U.S. economy is facing mixed signals about the possibility of a recession, according to a hedge fund manager. David Neuhauser, the CIO of Livermore Partners, said that “somebody has got it wrong” in interpreting the market indicators. He pointed out that the falling oil prices and rising gold prices suggest that investors are worried about a slowdown in economic growth and inflation. However, he also noted that the 10-year Treasury yields rose on Friday, which implies that investors are optimistic about a soft landing for the economy. He said, “Somebody has it wrong here, is what I’m trying to tell you … It’s hard to describe who has it [wrong] yet.” He added that he is cautious about the outlook for the U.S. economy, given the uncertainty and volatility in the markets.

The Philippines Maritime Task Force denounced the China Coast Guard for “severely damaging” one of its ships and ramming another in the South China Sea on Sunday. The Philippine ships were part of a convoy that was delivering supplies to Second Thomas Shoal, where Filipino troops were stationed on a stranded warship in the submerged reef. The reef is part of the Spratly Islands, which are claimed by both the Philippines and China, among others. The Philippines said that it has the right to access the shoal, based on the 2016 ruling by the Permanent Court of Arbitration that rejected China’s sweeping claims in the South China Sea. China, however, blamed the Philippines for “insisting on rushing into” the disputed waters and violating its sovereignty.

Stocks ended higher on Friday, as markets absorbed a jobs report that was stronger than anticipated a may keep rates higher for longer or hawkish Fed engaged for the time being.  Interest rates also ticked higher as a result, with the 10-year Treasury yield climbing back over 4.2% after dropping to 4.1% earlier this week. Despite this, traders choose to concentrate on the hope that strong job data will overcome the weakening consumer dodging recession worries for 2024.  Today we have a light day on the earnings and economic calendar as we wait for a CPI report on Tuesday a PPI report and a FOMC decision on Wednesday. That uncertainty could produce low-volume chop as we wait. With the rally now nearly two months straight up it may be wise to raise stops to protect positions should the pending data wate up the bears.

Trade Wisely,

Doug