Markets continued the relief rally on Wednesday as investors chose to hear the FOMC is not in a hurry to raise rates and ignored pretty much everything else.  Big tech had a great day as buyers inspired by AMD earned results pushed higher with the added benefit of bond yields pulling back.  Today we have a massive day of earnings reports that will culminate with a report from Apple after the bell.  The fear of missing out is kicking in the rally extends so remember to keep an eye on overhead resistance levels as economic reports roll in this morning. Whipsaws are possible with a gap open so plan your risk carefully.

Asian markets traded mostly higher overnight with only Shanghai just slightly lower even after their big stimulus efforts.  European markets trade decidedly bullish seeing green across the board adding to the relief rally after Powell’s comments.  U.S. futures ahead of earnings and economic report point to a gap up open with the tech sector leading the premarket surge.  Buckle up for another day of volatility.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AAPL, ACAD, ACCO, ACIW, ADT, ATI, SLGT, ALGM, AEP, AMH, APTV, ARW, TEAM, AVNT, BALL, BHC, BAX, BILL, SQ, BKNG, BWA, CNQ, CARS, LNG, CHUY, CRUS, CWEN, COHU, ED, COP, CROX, CUBE, CMI, CYBR, DOCN, BOOM, DKNG, DBX, DUK, LOCO, LLY, ENTG, EOG, EVH, EXC, EXPE, RACE, FIVN, FLWS, FND, FTNT, FOXA, FOXA, FOXF, FNKO, GIL, GDDY, HAE, HELO, HEP, HWM, HIII, HMN, HURN, H, IDA, ICE, IDCC, IONS, IRM, ITT, K, KN, LYV, MAR, MTZ, MERC, MCW, MRNA, TAP, MSI, MP, MUR, NRG, OGE, OMCL, OGN, PLTR, PZZA, PARA, PH, PCTY, PTON, PENN, PNW, PXD, PBI, PTLO, PPL, QLYS, PWR, RMAX, RGA, RYAN, SPGI, SBAC, SEE, SHAK, SHOP, SWKS, SO, SWN, SRC, SPXC, SBUX, SYK, SG, TPX, TRN, OLED, VTR, VIRT, WEN, WLK, WW, YELP, & ZTS.

News & Technicals’

Starbucks, the coffee giant, reported strong results for the fourth quarter of 2021, beating analysts’ expectations. The company’s net income attributable to the company rose to $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, a year ago. The company’s net sales increased by 11.4% to $9.37 billion. The company’s same-store sales, which measure the performance of its existing cafes, grew by 8%, driven by higher average spending and a 3% increase in customer traffic. The company attributed its success to its digital initiatives, menu innovation, and loyalty program. The company also raised its dividend by 10% and announced a new $20 billion share buyback program.

Shell, one of the world’s largest oil and gas companies, reported a lower profit for the third quarter of 2023 compared to the same period last year. The company earned $6.2 billion in the quarter, which was close to analysts’ expectations, but down from $9.45 billion in the third quarter of 2022. Shell attributed the decline to lower oil and gas prices, as well as weaker refining margins and chemical performance. Despite the lower profit, Shell announced a $3.5 billion share buyback program for the next three months, signaling its confidence in its cash flow and balance sheet.

Delta Air Lines, one of the largest U.S. carriers, is cutting some of its corporate and management staff as part of its efforts to reduce costs and improve efficiency. The company did not reveal how many employees will be affected by the layoffs but said they will not impact frontline workers such as pilots or flight attendants. Delta said the move is necessary to adjust to the changing market conditions and customer expectations. “While we’re not yet back to full capacity, now is the time to make adjustments to programs, budgets, and organizational structures across Delta to meet our stated goals — one part of this effort includes adjustments to corporate staffing in support of these changes,” the company said in a statement.

The Fed’s signal that it is not in a hurry to raise interest rates helped boost both U.S. and global stocks, as long-term bond yields fell sharply. The Treasury also announced that it will slow down the increase of its long-term debt sales, easing some of the pressure on the bond market. Moreover, weaker-than-expected jobs data suggested that the labor market recovery is still uneven. The 10-year Treasury yield dropped to its lowest level in 15 days, at 4.76%. Investors favored the tech giants inspired by the big rally in AMD.  Today we have a massive round of earnings events that include the behemoth market mover Apple after the bell. On the economic calendar, the bulls or bears will look for inspiration in Jobeless Claims, Productivity and Costs, Factory Orders, and a few bond auctions to keep an eye on as yields continue to decline this morning. Remember, the fear of missing out is a powerful emotion so be careful chasing stocks into major resistance levels.

Trade Wisely,

Doug

Markets edged higher on building on Monday’s gains but momentum was weak with all the uncertainty facing the Wednesday market.  Not only do we have three-quarters of a Trillion government funding debit raise announcement but we also have an FOMC decision and press conference so keep a close eye on bond yields that have been ticking higher this morning.  Add in Mortgage Apps, ADP, PMI, ISM, Construction Spending, JOLTS, Petroleum Status, and the huge number of earrings today the statement, “challenging price action”, could be a massive understatement!  Buckle up and be ready for just about anything.

While we slept Asian markets closed mostly higher with the Nikkei surging 2.42% while Hong Kong slipped slightly lower.  European markets trade cautiously this morning chopping between gains and losses as they monitor the big day of data releases. However, U.S. futures suggest a bearish open ahead of all the market-moving earnings and economic reports likely to keep volatility high as traders react.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include AFL, ABNB, ALB, ALKT, ALL, ATUS, AFG, AIG, AWK, APO, ASTE, ACA, CAR, AXTA, BALY, BHCO, BMRN, BXP, EAT, BLDR, CHRW, CRC, CWH, GOOS, CDW, CF, CAKE, CHEF, CLH, CTSH, CFLT, CLB, CVS, DIN, DASH, DD, DXC, ELF, EA, ET, ETR, EL, ETSY, EXAS, EXTR, FSLY, FWRG, GRMN, GNRC, GSK, HLF, HST, HPP, HUM, IDXX, IR, IIPR, IQV, JHG, KHC, LMND, LNC, LMND, LNC, MGY, MTW, MOR, VAC, MLM, MCK, MLNK, MET, MSTR, MDLZ, MUSA, NSA, NOG, NCLH, NUS, NTR, PGRE, PK, PYPL, PRU, PTC, QRVO, QCOM, RDN, RDWR, RYN, RVLV, ROKU, SMG, SCI, SIMO, SBGI, SITM, SEDG, RGR, SMCI, TEL, TT, TRMB, TYL, VRSK, W, WERN, WMB, WING, YUM, & ZG.

News & Technicals’

AMD, one of the leading chipmakers in the world, announced its third-quarter earnings on Tuesday. The company is known for making high-end graphics processing units (GPUs), which are essential for training and deploying generative AI models. Generative AI models are capable of creating new and realistic content, such as images, videos, texts, and sounds, based on existing data. AMD said that its AI GPU sales could surpass $2 billion in 2024, as the demand for generative AI applications grows. The company also said that it is investing in developing new and innovative AI GPUs that can deliver better performance and efficiency. AMD’s earnings report showed that the company had a strong quarter, with revenue up 54% year-over-year and net income up 68% year-over-year.

The Treasury Department will announce on Wednesday the details of its refunding, which is the process of issuing new debt to pay off the maturing debt. The refunding announcement will reveal the size and duration mix of the Treasury auctions, which are the primary way of selling government debt to investors. The refunding announcement is expected to attract more market attention than usual, as investors are concerned about the rising government borrowing and its impact on the interest rates and the economy. The Treasury Department gave a preview of its borrowing plans on Monday when it said that it will auction off $776 billion of debt in the fourth quarter of 2021. The market will be watching closely the actual sizes of the auctions and the maturities mix, which are the key variables that affect the supply and demand of Treasury securities. The Treasury Department has been increasing the issuance of longer-term debt, such as 10-year and 30-year bonds, to lock in low-interest rates and reduce refinancing risks. However, this also exposes the government to higher interest payments and inflation pressures.

The Bank of England (BoE) is expected to keep its interest rate unchanged at 4.5% on Wednesday after it stopped its streak of 14 consecutive rate hikes in September. The market is pricing in a high probability of a second hold, as the BoE faces a mixed economic outlook. The BoE has been raising its interest rate since 2020 to curb inflation, which reached 5.2% in August, well above the BoE’s target of 2%. However, the BoE also has to consider the impact of its monetary policy on economic growth, which slowed down to 0.4% in the third quarter, below the BoE’s forecast of 0.7%. Mike Riddell, an analyst at Allianz Global Investors, said that it was “striking that the market’s central case is for the BoE to not cut interest rates below 4% ever again.” He said that this implies that the market expects inflation to remain high and persistent and that the BoE will not be able to ease its policy in the future.

Equities rallied to close higher on Tuesday, building on Monday’s gains, but unfortunately, the momentum was weak as investors worried about the pending data.  Bond yields retreated slightly yesterday but are once again ticking higher as the Treasury moves forward with a three-quarters of a Trillion debt raise to keep the government spending practices funded. Today we have a very big day of earnings events and the economic calendar is chalked full of potential market-moving reports to keep traders guessing.  Although it is very unlikely the Fed will raise the rate today be prepared to hear hawkish talk from Jerome Powell suggesting their work is not done on inflation.  Plan for considerable price volatility as the data is revealed.

Trade Wisely,

Doug

The bears ran roughshod over Friday’s market as Middle East tensions worried investors with oil prices surging and bond yields holding steady.  This week will be very busy with market-moving job numbers, a FOMC rate decision, and a huge number of earnings events as we slide into November.   The T2122 indicator is in a short-term very oversold condition so watch for a relief rally and a possible short squeeze to get it moving.  However, don’t rule out a retest of lows, and expect challenging price volatility so plan your risk carefully.

Overnight Asian markets closed mixed but mostly higher ahead of Japan’s central bank decision.  European markets trade green across the board this morning reliving some of last week’s selling despite Middle Eastern worries.  U.S. futures suggest a substantial gap up hoping for a relief of some of the short-term oversold conditions as we wrap up October and slide into the holiday’s highly anticipated rally.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include AGNC, AMKR, ACGL, ANET, BCC, CHGG, CHKP, CRK, CWK, DENN, PLOW, FMC, FWRD, HTLF, IRT, KMPR, KFRC, LSCC, LEG, MPWR, ON, OGS, OTTR, PDM, PINS, PCH, PSMT, PCH, PSA, RMBS, SPG, SOFI, THC, RIG, VFC, VRNS, VNO, WELL, WDC, WOLF, XPO, & ZI.

News & Technicals’

Stellantis, the parent company of Chrysler, is facing a national labor strike in Canada, just days after it reached a tentative deal with the United Auto Workers union in the U.S. The strike, which started on Monday, affects two assembly plants in Ontario that produce some of the company’s popular models, such as the Chrysler 300 sedan and Pacifica minivan and the Dodge Challenger and Charger muscle cars. The workers, who are members of the Unifor union, are demanding better wages, benefits and working conditions. The strike could disrupt the production and supply of Stellantis vehicles in North America and hurt the company’s sales and profits.

The United Auto Workers union and Ford have reached a tentative agreement that includes $8.1 billion in new investments by the automaker and $5,000 bonuses for the workers. The tentative deal, which was approved by the local union leaders on Sunday, will now be presented to the 57,000 UAW-Ford members for regional meetings and voting, the union said on Sunday. The tentative agreement was achieved after the union launched selective strikes against Ford, General Motors, and Stellantis, as the three companies failed to meet the union’s demands by the Sept. 14 deadline. The union is seeking higher wages, better benefits, and more job security for its members.

Evergrande, the troubled Chinese property developer, saw its shares plummet to a record low on Monday, as it faced a possible liquidation by a Hong Kong court. The company’s shares dropped more than 20% from last Friday’s close of 23.6 Hong Kong cents to 18.8 Hong Kong cents in early Monday trading, before recovering slightly to 22.2 Hong Kong cents. The company is facing a winding-up order from a group of bondholders who claim that Evergrande has defaulted on its debt obligations. A Hong Kong judge said that the Dec. 4 hearing would be the last one before a decision is made on the order, according to Reuters. Evergrande is the world’s most indebted property developer, with more than $300 billion in liabilities. The company’s financial woes have sparked fears of a contagion effect on the Chinese and global economy.

The stock markets ended Friday with bears overwhelming the bulls as Middle East tensions grew and those pesky bond yields held firm. The S&P 500 and the Nasdaq, finished the week with more than 2.5% losses and are now more than 10% below their highs on July 31. However, the sell-offs in large tech companies like Google and Facebook (Meta) after they announced their earnings took some shine off the “Magnificent 7”.  As we finish up October about 40% of companies will come out from under their blackout period meaning buybacks could prove an increase in market breadth.  Today is the only light day of economic reports and keep in mind the earnings events will continue to increase through Thursday afternoon when Apple reports earnings.  Jobs numbers will be in focus this week as well as the FOMC rate decision on Wednesday afternoon. Plan for significant volatility.

Trade Wisely,

Doug

Though the Dow benefited from MSFT and BA the bears remained resilient attacking the tech sector with the so-called magnificent seven leading the way lower. Bond yields edged higher and unfortunately continue to do so this morning facing a huge day of earnings as well as a busy economic calendar chalked full of market-moving reports.  Indexes remain in a short-term extreme oversold condition that suggests a relief rally could begin at any time but if the data continues to pile on panic selling is possible to break recent market lows.  Plan for signalment price volatility!

Overnight Asian markets closed mostly lower with only the Shanghai index managing a 0.14% gain as Australia shares close at a one-year low. European markets are lower across the board this morning in reaction to earnings and the likelihood the ECB will hold rates steady.  U.S. futures also suggest a bearish open led by the tech sector ahead of a huge day of earnings and economic reports that could move the market substantially.  Buckle up for a potentially wild day of volatility as the investors react.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AMZN, AOS, AB, MO, AMT, AIT, ARCH, BJRI, SAM, BSX, BC, BG, CPT, COF, CSL CARR, CNP, CMS, CC, CMG, CINF, COLM, CMCSA, COUR, CFR, DECK, DXCM, DLR, EMN, EHC, ENPH, ESS, FAF, FHI, FE, F, FGLI, GWW, HOG, HIG, HAS, HSY, HTZ, HON, HUBG, INTC, IP, JNPR, KVUE, KDP, KIM, LHX, LH, LII, LIN, MAS, MA, MPW, MRK, MBLY, MHK, NRDS, NEM, NOC, NVCR, OLN, OSTK, BTU, PCG, PFG, PTCT, RS, RSG, RCL, STX, SKYW, LUV, STAG, STM, TEX, TXRH, TXT, TSCO, TW, TSCO, TW, TPH, UPS, X, UDR, VLO, VRSN, VMC, WTW, and WY.

News & Technicals’

Mercedes-Benz, the German luxury carmaker, reported lower profit and revenue for the third quarter of 2021, as it faced tough competition in the electric vehicle (EV) market. The company’s Chief Financial Officer, Harald Wilhelm, said that the EV market was a “pretty brutal space,” according to Reuters. He said that some traditional automakers were selling EVs at a loss, despite their higher production costs, to gain market share. This put pressure on Mercedes-Benz’s pricing and margins, as it tried to balance profitability and growth. The company’s shares fell by 2.6% on Thursday, as investors were disappointed by its results.

The U.S. economy may have performed well in the third quarter of 2021, but one strategist warns that the U.S. consumer, a key driver of the economy, is facing a looming crisis. Chris Watling, the chief executive of Longview Economics, a financial advisory firm, told CNBC’s “Squawk Box Europe” that the U.S. consumer is “walking towards a cliff.” He said that consumer spending, which has been boosted by stimulus checks and pent-up demand, is unsustainable and will soon run out of steam. He also said that the rising inflation, supply chain disruptions, and labor shortages will hurt consumer confidence and purchasing power. He predicted that the U.S. economy will slow down significantly in 2022 and 2023, as consumer spending weakens.

The commercial real estate markets in the U.S. and China are facing challenges in a scenario where interest rates remain high for a long time, according to Singapore’s United Overseas Bank (UOB). The bank said that higher rates could affect the demand and supply of commercial properties, as well as the financing and valuation of these assets. However, the bank also expressed optimism about one key region: Southeast Asia. The bank said that Southeast Asia has attracted strong investment flows, especially in the new economy sectors such as sustainability. The bank cited examples of green buildings, renewable energy projects, and digital infrastructure that have received funding from both domestic and foreign investors. The bank said that Southeast Asia offers attractive opportunities for commercial real estate investors, as the region has a large and growing population, a rising middle class, and a supportive policy environment.

Hints of a selling relief gave way to more selling Wednesday as the bears remained resilient, reacting to the earnings reports and the rising bond yields. The technology sector suffered the most as the so-called magnificent seven lost some of their shine. The Dow did better, thanks to the strong performance of Microsoft and Boeing shares. Interest rates remain the main factor for the financial markets. Ten-year Treasury yields rose again on Wednesday, going back over 4.9% but still below the recent highs after reaching 5% on Monday. Today we have a huge day of earnings with AMZN in focus after the bell.  We also have market-moving economic reports that include Durable Goods, GDP, International Trade, Jobless Claims, Pending Home Sales, as well as more Fed speak and bond auctions to keep traders guessing and volatility high.  Fasten your seat belts folks its likely to be a bummy day as we test recent lows in a very oversold short-term condition.

Trade Wisely,

Doug

Although the major indexes advanced on Tuesday the bulls struggled with momentum as mixed earnings results added uncertainty.  The big reports for the tech giants only added to the hesitation as MSFT surged higher and GOOGL declined sharply.  Today we have another big day of earnings with AMZN and META  after the bell with a few more economic reports to inspire the bulls or bears.  The mix of data is leaving more questions than answers and so far unable to offset the geopolitical impacts facing the market.  Plan for another day of whippy price action as traders navigate all the data the the path forward clouded in uncertainty.

While we slept Asian markets closed mixed but mostly higher after Australia reported higher-than-expected inflation numbers.  European markets trade cautiously with modest gains and losses this morning despite the 7% earnings rally from Deutsche Bank.  U.S. futures suggest a mixed open ahead of a big day of earnings and economic reports with more tech giant reports just around the corner.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include AEM, AGI, ALGN, AMP, AR, ATR, ADP, AVB, AVY, BKR, BA, BOKF, BA, BOKF, CP, CHE, CHDN, CME, CYH, ED, ESI, EQT, EQIX, ETD, EG, EVR, FLEX, FLS, FTV, GD, GL, GGG, GBX, HESS, HLT, IBM, EIX, IMAX, INVH, KRC, KLAC, LC, LAD, MAT, MOH, MCO, COOP, MSM, MSTR NAVI, NTGR, NSC, ORLY, ODFL, OTIS, OC, PPC, R,  SLM, SEIC, NOW, SUI, NOVA, TMHC, TDY, TER, TMO, TMUS, TNL, URI, UHS, VMI, VICI, VKTX, WNC, WFRD, WSBC, WFG, WU, WHR, WH.

News & Technicals’

The recent attack on Israeli civilians by Hamas, a Palestinian militant group, has triggered a wave of violence and fear in the Middle East, a region that is vital for the global economy. Economists are worried that the conflict will spread to other countries and pose a long-term threat to the energy and trade infrastructure that connects the world. Many international powers are trying to calm the situation and prevent further escalation. The Middle East hosts some of the world’s most important shipping routes, such as the Suez Canal, the Red Sea, the Persian Gulf, and the Strait of Hormuz, which carry oil, gas, and other goods. Any disruption or damage to these routes could have serious consequences for the global markets and consumers.

The escalating conflict between Israel and Hamas is adding to the economic uncertainty and anxiety in the world, according to the IMF chief. Kristalina Georgieva, the Managing Director of the IMF, said on Wednesday that the worsening violence in the Middle East was another cloud on the horizon of an already gloomy economic outlook. She made these remarks at a panel hosted by CNBC’s Dan Murphy at the Future Investment Initiative Institute conference. Georgieva was not alone in expressing her concern, as other senior business figures at the conference also felt the impact of the conflict on the global economy. The conflict, which started on Oct. 7 when Hamas launched rockets at Israeli civilians, has killed hundreds of people and displaced thousands more. It has also raised fears of a wider regional war and disrupted the supply and demand of oil and other commodities.

The U.S. is likely to increase its pressure on Iran, an OPEC member and a major oil producer, for its support of Hamas, a Palestinian militant group that has been attacking Israel. This is the view of Helima Croft, the head of global commodity strategy at RBC Capital Markets, who spoke to CNBC on Wednesday. Croft said that the Biden administration, which has been trying to revive the 2015 nuclear deal with Iran, might tighten the sanctions on Iran’s oil exports in response to its backing of Hamas. She also said that the expected ground invasion by Israel into Gaza, where Hamas is based, could determine how the West reacts to Iran. The conflict between Israel and Hamas, which started on Oct. 7, has raised concerns about the stability of the Middle East and the global oil market.

The equity markets rallied Tuesday but the bulls struggled with momentum worried about the war in the Middle East and the mix of earnings results. Bond yields paused moving higher while the U.S. Dollar strengthened slightly as gold, silver, and crypto strengthened in a flight to safety. The tech titans came in with mixed results as MSFT surged higher while GOOGL sold off sharply adding more uncertainty as to what lies ahead.  Today we have another huge round of earnings that includes META and AMZN after the bell for traders to ponder.  On the economic calendar, we have Mortgage Applications, New Home Sales, Petroleum Status, bond auctions, and another Jerome Powell speech after the market closes to keep traders guessing.  Plan for another day of whippy price action filled with uncertainty about what comes next.

Trade Wisely,

Doug

Index charts started the day making lower lows as the 10-year bond topped 5% but as it began to ease markets whipsawed higher and whipped again to finish a rough day mostly lower. After the bell today we will begin the tech giant reports with the highly anticipated GOOGL and MSFT results. Expect some wild price action as traders and investors react from this extreme short-term oversold market condition.  Buckle up the earnings over the next ten trading days could determine market direction for the rest of the year.

Asian markets recovered from early losses to close the day with modest gains with only Hong Kong slightly lower.  European markets trade cautiously higher after disappointing results from Barclays while waiting on an important manufacturing report.  U.S. futures push higher this morning as earnings roll out pondering the pending big tech reports after the bell.  Anything is possible so plan your risk carefully.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ADM, ARCC, ABG, BYD, CNI, CNC, KO, CB, GLW, DHR, DOV, DOW, WIRE, FFIV, FI, FELE, GE, GOOGL, GM, HAL, HA, ITW, IVZ, JBT, KMB, MMM, MSFT, MTDR, NEE, NEP, NUE, ONB, PACR, PACW, PNR, PII, PHM, DGX, RRC, RHI, RTX, SHW, SMPL, SNAP, SPOT, SYF, TECK, TDOC, TXN, TRU, VZ, VICR, V, WM, XRX.

News & Technicals’

Norway’s sovereign wealth fund, the largest in the world, reported a loss of 374 billion Norwegian kroner ($34 billion) in the third quarter of 2021, due to a weaker performance of the stock market. The fund, which is officially called the Government Pension Fund Global, still managed to beat its benchmark index by 0.17 percentage points. The fund’s deputy chief executive, Trond Grande, said in a statement that the third quarter was weaker than the first half of the year when the fund gained 1.4 trillion Norwegian kroner ($126 billion). The fund invests in stocks, bonds, and real estate around the world, and holds about 1.4% of all listed shares globally.

Barclays, the British banking giant, reported a lower-than-expected profit of £1.03 billion for the third quarter of 2021, down from £1.51 billion a year ago. The bank’s CEO, C.S. Venkatakrishnan, said that the bank “continued to manage credit well, remained disciplined on costs, and maintained a strong capital position” despite a “mixed market backdrop.” The bank faced challenges from lower income in its investment banking division and higher provisions for bad loans due to the COVID-19 pandemic. Analysts polled by Reuters had predicted a profit of £1.18 billion for the quarter, which was also lower than the £1.33 billion profit in the second quarter of 2021.

Nvidia and AMD, two of the leading manufacturers of PC chips, are reportedly developing chips that use the Arm-based instruction set, which is different from the x86 instruction set used by Intel’s PC chips. The Arm-based instruction set is more common in smartphones and other mobile devices, as it allows for lower power consumption and longer battery life. According to a Reuters report, Nvidia and AMD are aiming to challenge Intel’s dominance in the PC market by offering more energy-efficient and cost-effective alternatives. The report also said that Nvidia and AMD are working with Microsoft, which has been developing its own Arm-based PC operating system and software.

The indexes had a rough day whipsawing as they eyed the 10-year Treasury yield and pondered the pending and highly anticipated tech giant reports. The yield reached above 5.0% in the morning but retreated to around 4.85% by the end of the day. The sharp rise in government bond yields has caused more fluctuations in both stocks and bonds. Higher yields can also affect the economy and the markets in various ways, such as by raising borrowing costs, lowering stock valuations, and reducing the bond price returns. China’s banking system is also in crisis according to a Bloomberg report as money flees the country adding worries of global economic instability.  Today we have a barrage of earnings events that include the market movers of GOOGL and MSFT after the bell. The economic calendar is light with a PMI composite, Richmond Fed Mfg., and a 2-year bond auction to inspire. Expect considerable price volatility and perhaps a short squeeze IF the data supports a relief rally from this extreme short-term oversold condition.  In fact, the next ten trading days could set the direction for the rest of the year so plan carefully.

Trade Wisely,

Doug

The bear ran roughshod over the bulls for the fourth consecutive session on Friday erasing October’s gains.  A hawkish Jerome Powell drove bond yields higher and Middle Eastern war worries drove the market sentiment further damaging index chart technicals.  Today, with the 10-year bond topping 5% we have a few notable earnings and a light economic calendar to inspire price movement.  The T2122 indicator is in an extremely oversold condition suggesting a relief could begin at any time unless the bearish data continue to pile on. Plan for substantial price volatility, whipsaws, and maybe even a short-squeeze rally sometime this week.

Overnight Asian market closed red across the board as the China CSI fell to 2019 levels.  European markets also see red across the board as they monitor rising rates and developments in the Middle East. U.S. futures gave up early gains as the 10-year yield topped 5% but as we move toward the open they have also recovered off session lows in a very volatile premarket trade.  Plan for just about anything in this short-term oversold condition.

Economic Calendar

Earnings Calendar

Notable reports for Monday include AGYS, ARE, BRO, CADE, CALX, CLF, CR, MEDP, PKG, SSD, WRB, & WSFS.

News & Technicals’

Chevron, one of the largest oil companies in the world, has announced that it will acquire Hess, a smaller oil company, in a $53 billion deal. The deal will be paid entirely in stock, meaning that Hess shareholders will receive Chevron shares in exchange for their Hess shares. The deal will allow Chevron to expand its presence in Guyana, a South American country that has huge oil reserves. Chevron and Hess are already partners in some oil projects in Guyana, along with Exxon Mobil, another oil giant. The deal will make Chevron and Exxon Mobil the main competitors in two of the most promising oil regions in the world – shale and Guyana. Shale is a type of rock that contains oil and gas and can be extracted using a technique called fracking. Guyana is a new frontier for oil exploration, as it has been discovered to have billions of barrels of oil under its seabed.

Google, the tech giant owned by Alphabet, is facing an antitrust investigation in Japan over its search practices on mobile devices. The Japan Fair Trade Commission (JFTC) announced on Monday that it is looking into whether Google has violated the country’s competition law by making deals with Android smartphone makers to give preference to its apps and services. Google denied any wrongdoing and said that Android is an “open-source platform that has enabled a diversity” of partners and device manufacturers. The JFTC’s probe comes amid growing scrutiny of Google’s dominance in the global digital market.

Philips, a Dutch company that specializes in health technology, has raised its full-year outlook after reporting strong results for the third quarter of 2021. The company said its core profit more than doubled to 457 million euros ($483.3 million), beating analysts’ expectations. The company also saw an 11% increase in comparable sales, reaching 4.5 billion euros. The growth was driven by higher demand for its medical scanners, patient monitoring equipment, and personal health devices, which helped the company cope with the impact of the COVID-19 pandemic. Philips said it expects to deliver a double-digit improvement in adjusted earnings per share and a high single-digit increase in comparable sales for the full year.

The equity markets continued to slide for the fourth consecutive session, erasing the gains made in early October. Investors are nervous about the rising Treasury yields, which reached new highs for this cycle, and the increased geopolitical tensions in the Middle East. Fed Chair Powell delivered a hawkish message saying the inflation is still too high and more rate increases are possible but data dependent. The defensive sectors outperformed, while growth-style investments fell behind. Banks also struggled as Regions Financial warned of further drops in net interest income. Today the bulls and bears will look for inspiration in the earnings reports and of course bond yields that continue to rise this morning. The economic calendar is light for the beginning of this week but market-moving reports are pending at the end of this week. 

Trade Wisely,

Doug

Increasing geopolitical concerns engaged the bears on Wednesday as bond yields and rising interest rates reversed Tuesday’s gains.  Mortgage rates topped 8% for the first time since 1995 and unfortunately, the yields continue to rise this morning as we wait on Jerome Powell’s comments at mid-day.  Bulls or bears will have plenty of earnings results and economic data to inspire price volatility with an afternoon filled with bond auctions and Fed speakers to keep traders guessing.  Anything is possible folks so plan your risk carefully.

Asian markets closed sharply lower overnight with Japan reporting a surprise trade surplus and the Bank of Korea holding rates steady.  European markets trade red across the board this morning as the Middle East war hampers sentiment and increases winter energy prices.  Ahead of earnings and possible market-moving economic reports, U.S. futures point to mixed but overall flat open but that could change substantially as the data rolls out. 

Economic Calendar

Earnings Calendar

Notable reports for Thursday include ALK, AAL, T, BMI, BX, CSX, FITB, FCX, GPC, ISRG, KEY, KNX, LNN, MAN, PM, POOL, SNA, TFC, UNP, WDFC, WBS & WNS.

News & Technicals’

Netflix, the streaming platform, reported better-than-expected results for the third quarter, sending its shares up nearly 14% in premarket trading on Wednesday. The company added 8.8 million subscribers in the quarter, the highest number since the peak of the pandemic. The company attributed its strong performance to its diverse and original content, as well as its expansion in international markets. Netflix also said that it expects to add 8.5 million subscribers in the fourth quarter, surpassing the market expectations. Netflix’s results showed that it remains the dominant player in the streaming industry, despite the increasing competition from other platforms.

Tesla, the electric car maker, reported lower-than-expected earnings for the third quarter, as its operating margin declined sharply from a year ago. The company earned 66 cents per share on an adjusted basis, missing the analysts’ estimate of 73 cents per share. The company’s operating margin, which measures how much profit it makes from each dollar of revenue, was 7.6%, down from 17.2% in the same quarter last year. The company said that the lower margin was due to higher costs and lower prices for its vehicles. Tesla CEO Elon Musk said on the earnings call that the company was facing challenges in the global economy and that it was working on making its cars more affordable for more customers. Tesla also said that it delivered a record number of vehicles in the quarter and that it expects to achieve its full-year delivery target of 750,000 vehicles.

TSMC, the world’s leading chipmaker, reported a third-quarter profit of NT$211 billion on Thursday, beating the analysts’ expectations. However, the profit was the lowest since the first quarter of 2019, as the demand for consumer electronics remained weak after the pandemic. The Taiwanese company produces the most advanced processors for various devices, but the post-pandemic recovery has been uneven and slow for the consumer electronics sector. TSMC said that it expects the demand to improve in the fourth quarter, as it ramps up its production capacity and launches new products. TSMC also said that it is confident in its long-term growth prospects, as it invests in new technologies and markets.

The bears attacked the indexes on Wednesday, as bond yields and interest rates surged higher as geopolitical issues weighed on investor’s minds. The energy sector was the only one that did well, as oil prices rose due to supply concerns. The defensive sectors, such as consumer staples, utilities, and health care, also performed better than the cyclical sectors, such as small caps, which suffered more. That said, better-than-expected earnings results from NFLX may help improve investor spirits in the QQQ.  Unfortunately, TSLA’s overnight decline and the bond yields continuing to rise may well mute that bullish bright spot.  Today traders will have to deal with Jobless Claims, Philly Fed MFG, Existing Home Sales, Natural Gas, and a slew of Fed speakers that include Jerome Powell at noon Eastern time.  We also have a busy day of earnings to add to the volatile price action this morning so plan your risk carefully.

Trade Wisely,

Doug

After gapping lower in reaction to hotter-than-expected Retail Sales numbers the bulls rushed back in producing a very whippy and volatile Tuesday as bond yields surged higher with worries about inflation.  After surging higher to test resistance levels index prices softened leaving behind more questions than answers with the declining market breadth. Today we have a very busy day of earnings and economic reports to inspire the bulls or bears.  However, the war in the Middle East and the increasing tensions add a level of caution and uncertainty to the morning as oil prices surge higher.

Asian market closed the day mixed with modest gains and losses despite the better-than-expected economic figures out of China. European markets trade red across the board this morning as they monitor Middle East tensions and worry about inflation as energy prices rise.  U.S. futures suggest a slightly bearish open due to the war tensions, but anything is possible by the open of the day with earnings and economic reports before the bell.  Expect another day of challenging price action.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ABT, AA, ALLY, ASML, CFG, CCI, DFS, EFX, FNB, FHN, KMI, LRCX, LVS, MTB, MS, NDAQ, NFLX, NTRS, PPG, PG, REXR, SLG, STT, STLD, TSLA, TRV, USB, WGO, ZION.

News & Technicals’

China’s economy grew faster than expected in the third quarter of this year, according to the latest data from China’s National Bureau of Statistics. The data showed that China’s gross domestic product (GDP) increased by 4.9% year-on-year in the July to September period, beating the 4.4% growth forecast by economists. China’s retail sales also exceeded expectations, rising by 4.3% year-on-year in September. China’s urban unemployment rate dropped to 4.7% in September, the lowest level since November 2019. The data indicated that China’s economic recovery from the Covid-19 pandemic was gaining momentum, as domestic consumption and industrial production improved. China was the only major economy to report positive growth in 2020 and is expected to maintain its growth momentum in the fourth quarter of this year.

Roblox, the online gaming platform and game creation system, has announced a change in its work policy that will require its employees to relocate to the office. Roblox CEO David Baszucki said in a memo on Tuesday that the company will adopt a hybrid work model, where employees will have to work from the office on Tuesdays, Wednesdays, and Thursdays, starting from January 2024. Employees who choose not to relocate to the office can opt for a severance package and leave the company. The new policy is a reversal from the previous one, which allowed employees to “primarily work remotely” since May 2022. Baszucki said that the change was necessary to foster collaboration, innovation, and culture at Roblox.

United Airlines, one of the largest U.S. airlines, has warned that its profits will be affected by higher fuel costs and the conflict in the Middle East. The airline said that the price of jet fuel has increased by 50% since the beginning of the year and that the war between Israel and Hamas has reduced the demand for travel to the region. United Airlines and other airlines with large international networks have enjoyed a boost in overseas travel this summer, as more countries reopened their borders and eased travel restrictions. The summer season is usually the most profitable period for airlines, as they generate most of their revenue in the second and third quarters. However, United Airlines said that the rising fuel costs and geopolitical uncertainty will offset some of the gains from the recovery in international travel.

Index prices produced a whippy and volatile Tuesday after gapping lower after the retail sales report came in hotter than expected driving bond yields higher yet finishing the day nearly unchanged. The industrial production also surprised to the upside, growing by 0.3% month-over-month in September, while the forecast was for a 0.1% drop. However, the market was also affected by the weak housing market index, which fell to 40 in October, the lowest level since January. The index showed that the higher interest rates have hurt the demand for housing, and the 2-year bond surging back above 5% yesterday added more pressure. Today, investors face a big day in earnings events as the 4^th quarter season heats up with NFLX, and TSLA numbers pending.  We also have Mortgage Apps, Housing Starts, Petroleum Status, and several Fed speakers throughout the day.  With renewed concerns in the Middle East this morning oil prices are surging adding inflation worries to the mix of uncertainties the market faces. 

Trade Wisely,

Doug

With no major economic news to influence the DIA enjoyed a weirdly bullish day as market breadth declined.  The SPY and QQQ recovered much of Friday’s selloff while continuing to struggle with overhead resistance as those pesky bond yields moved higher.  Today bulls and bears will have plenty of data to find inspiration with Retail Sales and industrial Production numbers, with several potential market-moving earnings that include BAC and GS. Be prepared for volatile prices with consensus estimates suggesting a decline in the retail figures.

Overnight Asian markets enjoyed a strong bullish session as China and Australia broke a three-day losing streak.  However, European markets trade mixed and mostly lower this morning taking a cautious approach to earnings and economic data with Middle East tensions keeping investors on edge.  U.S. futures indicate a slightly bearish open ahead of busy morning earnings and economic numbers that may provide clues to the strength of the consumer.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ACI, BAC, BK, FULT, JNJ, GS, HWC, IBKR, JBHT, LMT, PNFP, PLD, UAL, and WTFC.

News & Technicals’

Country Garden, the largest property developer in China, is facing a possible default if it does not pay a $15 million interest on its offshore bond on Tuesday. The company, which has been struggling with high debt and slowing sales, warned last week that it might not be able to meet all of its offshore obligations. The company also said that it was seeking a waiver from its creditors and that it was facing uncertainty in its liquidity and asset sales. The potential default of Country Garden has raised concerns about the financial stability of the Chinese property sector, which has been under pressure from the government’s regulatory tightening and the pandemic.

The global inflation crisis has prompted central banks around the world to raise interest rates sharply in the last year and a half, but the results have been mixed so far. Some countries have managed to tame inflation, while others have seen it persist or worsen. Now, many economists and central bankers agree that interest rates will remain high for a longer time, as inflation pressures are not likely to ease soon. This means that both businesses and central banks will face more challenges in investing and managing their finances. World Bank President Ajay Banga said that higher rates will make the investment landscape more complex and uncertain for everyone.

Apple CEO Tim Cook made a surprise visit to China, where he attended an event for gamers and praised their enthusiasm. The visit showed the importance of the Chinese market for Apple, which is facing some challenges in selling its latest iPhone model. The iPhone 15, which was launched less than a month ago, has received a tepid response from Chinese consumers. According to Counterpoint Research, the sales of the iPhone 15 series in China in the first 17 days were 4.5% lower than the sales of the iPhone 14 series in the same period.

The DIA had a weirdly bullish day, with no major economic news to influence it with the SPY and QQQ recovering Friday’s selling though still struggling with overhead resistance levels. Bond yields also went up, with the 10-year Treasury yield ending around 4.7% and they continue higher this morning. Commodities such as gold, silver, and oil prices eased slightly after Friday’s spike that seemed to be run to safety.  Today we ramp up earnings events with around a dozen notable reports that include BAC and GS that could inspire some premarket volatility while we wail on Retail Sales and Industrial Production figures.  With the consumer showing significant signs of stress the retail number today could be substantially market-moving so be prepared for just about anything at the open.

Trade Wisely,

Doug