The President came to a tentative debit agreement over the long weekend providing some bullish premarket inspiration.  However, tentative is the keyword here as the R’s and D’s in the congressional bodies try to pass the 2-year deal by Wednesday.  I wouldn’t be surprised if we experience some substantial whipsaws as they let the rhetoric fly adding uncertainty to the process.  After Friday’s rally on the disappointing Core PCE numbers we face a big week of Jobs data, a declining number of earnings events, and the question of can big tech giants continue to rally on all the AI without a correction.

Asian markets traded mostly higher overnight as they wait on the key U.S. debt vote later this week.  European markets appear a bit more tentative as they wait for Congress trading mixed this morning.  However, U.S. futures continue to power higher this morning driven mostly by the tech giants continuing to shrug off Friday’s rising inflation data.  Watch for possible a whipsaw after the morning gap.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include AMBA, BOX, CGC, HPE, HPQ, & SPWH.

News & Technicals’

Stocks are set to rise on Tuesday after a deal to raise the debt ceiling for two years was reached by Biden and McCarthy. The deal needs Congress’s approval by Wednesday to avoid a default by June 5. Investors are relieved by the deal amid inflation and banking woes.

North Korea has confirmed its plan to launch a military spy satellite in June, which it claims is needed to monitor the U.S. and its allies’ military activities in the region. The announcement has raised alarm among neighboring countries, especially Japan, which has ordered its forces to shoot down the satellite or any debris if they enter its territory. The launch is seen as a provocation by North Korea, which has been testing missiles and nuclear weapons since 2022 in defiance of U.N. sanctions. The launch also coincides with the 70th anniversary of the U.S.-South Korea alliance, which has been conducting joint military exercises near the border with North Korea. The launch news has boosted the shares of South Korean defense companies, such as Firstec, Victek, and Korea Aerospace Industries, which rose by 3.8%, 3.3%, and 0.6% respectively on.

The war between Russia and Ukraine escalated on Tuesday as Moscow reported a drone attack on its capital that damaged several buildings and injured two people. The Russian Defense Ministry accused Kyiv of being behind the attack, which it said involved eight drones that were all shot down by air defenses. Ukraine has not commented on the allegation. The drone attack came after Kyiv suffered three Russian bombardments in 24 hours, killing one woman and wounding 13 others. The Ukrainian authorities said the attacks were carried out by missiles and drones launched by Russia.

As we begin a holiday-shortened week the bulls are inspired due to the tentative debt agreement between the President and Speaker. Now comes the task of passing the 2-year deal by Wednesday so I would not rule out some substantial whipsaws as the rhetoric flies between the R’s and D’s along the way.  With the number of earnings declining markets will have a lot of jobs data to react to this week as traders grapple with the next FOMC rate decision coming up on June 14^th after the disappointing Core PCE last Friday.  Can giant tech continue to rise on AI hopes without a correction? We will soon find out, so buckle up for another wild week.

Trade Wisely,

Doug

The debt ceiling negotiations showing little progress brought out the bears Wednesday with the DIA suffering the majority of the technical damage closing below its 50-day average.  The NVDA blowout report has the tech sector flying high this morning despite the Fitch AAA negative watch on the U.S. with the House saying they will go home for the weekend with no deal!  Europe is now officially in a recession and the substantial decline shown in the Monday Suppy report suggests the U.S. is not far behind unless something changes soon.  With a big day earnings, economic reports, and plenty of uncertainty to go around plan for substantial price volatility.

Asian markets closed mostly lower overnight with Hong Kong declining 1.93% as the Bank of Korea holds rates steady.  After officially entering a recession, European markets trade mixed near the flatline this morning as they monitor the debit ceiling dog and pony show that shows little progress.  With a busy morning of earnings and economic data pending U.S. futures trade mixed as the tech sector surges on the back of the NVDA homerun report. 

Economic Calendar

Earnings Calendar

Notable reports for Thursday include ADSK, BBY, BURL, CTLT, COST, DECK, DLTR, GPS, GCO, MANU, MRVL. MDT, NTES, NTNX, ME, PDD, RL, SUMO, TITN, TD, ULTA, VMW, WB, & WDAY.

News & Technicals’

Nvidia, the leading provider of advanced GPU chips for artificial intelligence, reported stellar first-quarter earnings for its fiscal 2024 on Wednesday. The company beat analysts’ expectations on both revenue and earnings per share, thanks to the surging demand for its data center products. Nvidia’s shares spiked 26% in extended trading, reaching a new all-time high. The company’s CEO Jensen Huang attributed the strong performance to the growing adoption of generative AI applications like OpenAI’s ChatGPT, which rely on Nvidia’s GPU chips to train and deploy. Nvidia also raised its guidance for the next quarter, signaling confidence in its future growth prospects.

The United States’ AAA long-term foreign-currency issuer default rating, the highest possible rank by Fitch Ratings, is under threat due to the ongoing political deadlock over the debt ceiling. Fitch has placed the rating on negative watch, meaning that it could downgrade it if the U.S. fails to raise or suspend the debt limit before the x-date, which could be as early as June 1. The rating agency warned that such a scenario could lead to the government missing payments on some of its obligations, which would have severe implications for the global financial system. The news rattled the markets, as futures linked to the Dow Jones Industrial Average fell after Fitch issued its warning. However, Fitch also noted that it still expects a resolution to be reached before the deadline, as it has been in previous episodes of debt ceiling brinksmanship. House Speaker Kevin McCarthy said that negotiations with the White House were progressing toward a deal, but disagreements over spending remain.

The big overhang for markets Wednesday was the U.S. debt ceiling negotiations showing little progress engaged the bears creating some index technical damage in the DIA. Bond yields rose slightly adding pressure to already challenged banks and the Money Supply report indicated substantial contraction. After the bell, NVDA reported blowout earnings fueled by the massive interest in AI chips lighting a fire under the NASDAQ futures this morning.  Today is our biggest earnings day with a GDP, Jobless Claims, Pending Home Sales, and more Fed speeches to add to the likely volatility as the House goes home for the weekend with no deal.

Trade Wisely,

Doug

Investors grew nervous Tuesday bringing out the bears as another day passed with no progress on the debt ceiling negotiations with the June I deadline looming.  The DIA suffered a little technical damage by failing its 50-day morning average and though the SPY, QQQ and IWM experienced some selling no technical damage was created.  Today we have a light morning economic calendar with the release of the FOMC minutes this afternoon.  We have a few more earnings events to keep traders guessing with the possible market-moving NVDA report coming after the bell.

As we slept Asian markets declined across the board led by Hong Kong down 1.62% as another wave of pandemic infections breaks out in China.  European markets are also decidedly bearish this morning despite the decline in U.K. inflation to 8.7%.  U.S. futures suggest a bearish open as debt negotiation uncertainty moves ever closer to the deadline with little to no progress.  Plan for possible big moves as the news and rhetoric spew from Washington.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ANF, AEO, ADI, APPS, CRMT, DY, GES, KSS, MOD, NVDA, WOOF, PLAB, PLCE, PATH, SNOW, and SPLK.

News & Technicals’

The U.K. economy has shown resilience in the face of Brexit uncertainty, but inflation has been a persistent challenge. In April, however, inflation fell sharply to 8.7% year-on-year, the lowest level since December 2021. This was mainly due to lower prices for clothing, footwear, and household goods, as well as a base effect from the spike in energy prices a year ago. Some analysts believe that inflation will continue to decline in the coming months, as weak consumer demand and tighter monetary policy take their toll. The Bank of England, which has raised interest rates four times since November 2022, may have to revise its inflation forecast downward in its next report.

The U.S. government is facing a looming deadline to raise the debt ceiling and avoid a default that could have consequences for the global economy. Treasury Secretary Janet Yellen warned that the Treasury Department will run out of cash by June 1 unless Congress acts soon. However, House Republicans questioned the urgency of her warning and accused her of using scare tactics to pressure them into a deal. President Joe Biden and House Speaker Kevin McCarthy met on Monday to try to break the impasse, but they still have several sticking points to resolve. These include Republican demands for changes in energy policy, welfare programs, and pandemic relief spending.

The U.S. stock market closed lower on Tuesday, as investors grew nervous about the possibility that debt negotiations could fail to reach a deal by June 1. President Biden and House Speaker McCarthy met on Monday to try to reach a deal, but they did not announce any breakthrough. The uncertainty weighed on market sentiment, especially in Europe, where luxury goods makers also suffered from China’s crackdown on excessive consumption. The only bright spot was the energy sector, which benefited from higher oil prices. Bond yields and the dollar also rose slightly, reflecting the risk-off mood. Today traders will have to deal with Mortgage Apps, Petroleum Status, Fed speak, bond auctions, and the FOMC minutes.

Trade Wisely,

Doug

While waiting for a debt ceiling deal the major indexes chopped in a narrow range with the Dow, particularly volatile with sharp whipsaws through the day. Lowe’s reported a disappointing quarter this morning but we still have several notable reports today to inspire the bulls or bears.  We also face PMI, New Home Sales, and Richmond MFG numbers with more Fed member talk while debt ceiling pontificating continues.  Expect some sharp big point moves in this emotionally charged market environment.

Asian markets turned mostly lower overnight led by selling in China down 1.52% as real estate default worries reemerge.  European markets trade mostly lower this morning while monitoring debt ceiling negotiations.  With political wrangling continuing along with earnings and economic data pending, U.S. futures suggest a modestly bearish open.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include A, AZO, BJ, DKS, INTU, PANW, LOW, TOL, URBN, VFC, VIPS & WSM.

News & Technicals’

Lowe’s Cos Inc, one of the largest home improvement retailers in the United States, has cut its full-year sales and profit forecasts for 2023, as demand for its products wanes amid high inflation and a shift in consumer spending patterns. The company reported a decline in net sales and comparable sales for the first quarter, missing analysts’ expectations. Lowe’s attributed the weak performance to adverse weather conditions, falling lumber prices, and lower spending on discretionary items such as appliances and tools. The company now expects its full-year comparable sales to drop by 2% to 4%, compared to its previous guidance of flat to down 2%. It also lowered its full-year adjusted earnings per share range from $13.60-$14.00 to $13.20-$13.

JPMorgan Chase CEO has warned that some banks could face trouble, especially in certain markets and sectors. He said that commercial real estate is the area most likely to cause problems for lenders, as remote workers are reluctant to return to offices and high inflation forces consumers to cut back on spending. He said that banks need to be prepared for interest rates to rise far higher than most expect, and that credit is already tightening up as banks try to retain capital. Dimon made these remarks during his bank’s investor conference on Monday.

Shell, the British oil giant, is facing an over at its annual general meeting on Tuesday. A group of climate-focused investors, led by the Dutch activist group Follows This, has proposed a resolution that urges Shell to align its emissions targets with the Paris Agreement and cut its carbon footprint by 45% by 2030. The resolution has been backed by some of Shell’s largest shareholders, including Dutch pension managers MN and PGGM. Shell, which reported record profits of $39.9 billion for 2022, has rejected the resolution and said it is already committed to becoming a net-zero emissions business by 2050.

The major indexes chopped in a narrow range Monday, with the S&P 500 rising just 0.02%, as markets tread water while debt-ceiling negotiations continue. Fed officials continued to talk hawkishly yesterday adding uncertainty leave markets searching for any indications of whether June will bring another hike or a pause. Traders today will have a few more notable earnings reports, PMI, New Home Sales, Richmond MFG numbers along with more Fed speak and of course the debt ceiling drama to navigate. 

Trade Wisely,

Doug

With the deadline drawing near the rhetoric and political gobblygook woke up the bears on Friday as bond yields continue to rise adding pressure to a stressed regional banking sector.  Despite the bearish move, no technical damage occurred in the indexes.  This the market faces some big economic reports, lots of political wrangling over the debt ceiling, and few market-moving earnings reports.  That said, we could experience some big point moves in the market and I would not rule out substantial head fakes and whipsaws to keep traders and investors guessing.

Asian markets traded mostly higher overnight after China leave loan rates unchanged with the tech-heavy HSI leaning the way up 1.17% at the close.  However, European markets are taking a more cautious approach this morning as they monitor the debt ceiling negotiations trading slightly bearish this morning.  With a light day of earnings and a morning filled with Fed speakers, U.S. futures suggest a flat open to begin another week as we wait and hope for a deal out of Congress and some potential market-moving economic report later this week.

Economic Calendar

Earnings Calendar

Although earnings season is winding down we will still have some substantial market-moving reports over the week.  Notable reports for Monday include GLBE, HEI, NDSN, & ZM.

News & Technicals’

The leaders of the Group of Seven (G7), an intergovernmental organization of wealthy Western nations have issued a joint statement that signals their intention to balance their economic ties with China and their security concerns over its actions. The statement says: “We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying.” This follows the remarks of U.S. Treasury Secretary Janet Yellen, who urged the G7 countries to cooperate in addressing the challenges posed by China at a meeting earlier this month. Some analysts, such as Goldman Sachs economists Hui Shan and Andrew Tilton, expect more measures to come from the G7, especially with the Committee on Foreign Investment in the United States (CFIUS), a body that reviews foreign investments for national security risks.

Meta, the parent company of Facebook, has been hit with a record-breaking fine by the European Data Protection Board (EDPB) for violating the privacy rights of its EU users. The EDPB, which oversees the implementation of the General Data Protection Regulation (GDPR) in the bloc, has ordered Meta to pay 1.2 billion euros ($1.3 billion) for transferring EU user data to the U.S. without adequate safeguards. The EDPB has also given Meta five months to stop any future data transfers to the U.S. and six months to cease processing any EU user data that was previously transferred in breach of GDPR. Meta said it would appeal the decision and the fine, claiming that it was “singled out” and that the ruling “sets a dangerous precedent” for other companies.

Rising bond yields added pressure to the already stressed regional banking sector and the political gamesmanship on the debt ceiling woke up the bears on Friday.  However, other than some possible bearish candle patterns no technical damage was created.  According to Goldman’s report, the CTA”s are maxed out but that doesn’t necessarily mean selling in the market if corporate buy-backs and retail continue to buy.  But, beware, if the profit-taking begins the sell side could quickly gain some momentum so be prepared.  With more political wrangling, some big economic reports, Fed speak, and a few random market-moving earnings reports throughout the week the potential for big price swings traders will have to stay on their toes and be ready for just about anything.

Trade Wisely,

Doug

With disappointing economic data and Fed speakers remaining hawkish on their battle with inflation but in a late-day surge investors whipsawed the indexes with the Dow reversing more than 350 points from low to high in the last 30 minutes of the day!  The SPY broke out above resistance to joining the QQQ while the DIA and IWM remain range bound after the 2-day rally.  Only a handful of the tech giants provide the majority of the rally.  Today with a light earnings calendar the focus will likely be on the economic calendar dominated by Fed speakers including Jerome Powell.

Though Japanese stocks reached their highest level since 1990 Asian markets closed mixed with Hong Kong down 1.40%.  European markets trade green across the board this morning as G-7 leaders commit to more Russian sanctions.  U.S. futures suggest a modest open on Friday with Jerome Powell’s comments following committee member comments likely to dominate today’s market sentiment.

Economic Calendar

Earnings Calendar

We have a very light day on the earnings calendar.  Notable reports for Friday include DE & FL.

News & Technicals’

Leaders in the G-7 have committed to more Russian sanctions.  “We will starve Russia of G-7 technology, industrial equipment, and services that support its war machine,” the G-7 said in a statement released late Friday. The G-7 added, “We will continue our joint effort to support Ukraine’s repair of its critical infrastructure, recovery, and reconstruction.” The United Kingdom separately imposed further sanctions on Russia’s diamonds, an industry worth $4 billion in exports in 2021.

The Walt Disney Co. has scrapped its plans to build a new campus in Lake Nona, Florida, and relocate 2,000 employees from California to work in digital technology, finance, and product development. The company cited “changing business conditions” as the reason for the decision. The move comes amid a bitter feud between Disney and Florida Gov. Ron DeSantis over a state law that bans classroom lessons on sexual orientation and gender identity in early grades. Disney filed a First Amendment lawsuit against DeSantis and other officials last month. The new campus was expected to cost $1 billion and create 13,000 jobs over the next ten years.

Investors whipsawed the indexes on Thursday, despite the uncertainty over Fed rate comments and the debt-limit talks in Washington. Hotter-than-expected jobless claims and a very weak economic outlook in the Philly Fed report started the day sharply lower but surged sharply higher in the last 30 minutes of the day with the Dow moving more than 350 points from low to high. The good news is that the late-day surge finally broke the resistance in the SPY with the tech giants doing most of the lifting.  However, the DIA and IWM remain range bound although looking improved with the 2-day rally. We have a light day on the earnings calendar and the economic calendar will be dominated by Fed speakers with Jerrome Powell speaking at 11:00 AM Eastern.

Trade Wisely,

Doug

The bulls were energized on Wednesday triggering a short squeeze when both the President and Speaker came out with statements saying they are working together for a deal on the debt ceiling.  Unfortunately, the rally didn’t break the trading range of the DIA, SPY, and IWM which has kept indexes trapped for more than one and a half months.  Today along with WMT earnings we will get Jobless Claims, the Philly Fed numbers, Existing Home Sales, and more Fed member chatter to add the potential for price volatility.   

Asian markets took a cue from the U.S. surge closing the day with gains across the board with the Nikkei leading the way up 1.60%.  European markets are also decidedly bullish this morning reacting to the debit ceiling progress hopes.  U.S. futures reversed overnight losses to once again suggest a bullish open ahead of potentially market-moving earnings and economic data.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AMAT, BABA, BBWI, BILI, BRC, COOS, CSIQ, DECK, DOLE, DXC, FTCH, FLO, NIO, NTNX, PLCE, ROST, WMT, VIPS.

News & Technicals’

The global debt has reached a near-record level of $305 trillion, according to the Institute of International Finance (IIF). This is an increase of $45 trillion since the start of the pandemic, driven by unprecedented fiscal and monetary stimulus measures. However, as central banks start to raise interest rates to curb inflation, the debt servicing costs have also risen, creating a “crisis of adaptation” for borrowers and lenders. The IIF warned that the high leverage in the financial system poses significant risks to financial stability and economic growth.

The tech giants are dominating the stock market in 2023, as they continue to grow their profits and expand their businesses. Apple, Alphabet, Amazon, and Microsoft have all increased their share prices by more than 30% since January, while Meta has more than doubled its value. These five companies are outperforming the rest of the market by a wide margin, as the Dow Jones Industrial Average has barely moved in the same period. The tech sector is showing its resilience or is this an irrational move indicating a growing tech bubble?

Target is facing a serious problem of organized retail crime, which is costing the company more money and putting its stores at risk. The company expects to lose $500 million more in 2023 than in 2022 because of theft and damage by criminal groups. Target’s CEO Brian Cornell said the company is taking steps to protect its products and employees and to keep its stores open for customers. Other retailers have also complained about the increase in retail crime and blamed online platforms that allow criminals to sell stolen goods.

The market saw a substantial short squeeze after lawmakers said they are nearing a debt ceiling deal. Both sides said they don’t want to miss the deadline of early June and are working hard to a compromise. The earnings season is wrapping up with reports from big retailers like Walmart and TJX companies later this week. We will also get data from Jobless Claims, Philly Fed, and Existing Home Sales with more Fed speakers throughout the morning.  The big question for the day is; Can the bulls follow through with another day of bullishness as the data rolls out?  Buckle up for another day where anything is possible!

Trade Wisely,

Doug

Tuesday turned out to be a rough day for the DIA, SPY, and IWM after the Home Depot miss and a retail sales report that came in short of expectations.  Of course, the debit ceiling negotiation cloud hanging over the market didn’t help the overall sentiment but now it seems there has been some progress with the President seeming willing to negotiate.  Expect a market reaction if a deal is finally struck.  Target’s earning report seems to have left a mixed reaction as evidence of a slowing economy continues to grow.  Mortgage Apps, Housing, and Petroleum figures are on deck with several earnings reports that could be market-moving. 

Overnight Asian markets traded mixed in reaction to economic data and monitoring debit ceiling negations. However, European markets trade flat to mostly lower this morning with Commerzbank down 6%.  On the other hand, U.S. futures seem to have a very different opinion pushing for a bullish open and working to recover some of yesterday’s losses.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday BOOT, CPRT, CSCO, JACK, STNE, SNPS, TTWO, TGT, TJX, TCOM, WIX, & ZTO.

News & Technicals’

According to reports, there was some progress made in the negations of the debit ceiling between the President and the Speaker of the house.  This continues to weigh on the mind of the market and as information rolls out on this issue expect it to have market ramifications. 

Kraft Heinz is introducing HEINZ REMIX™, a digital sauce dispenser that lets customers create their customized condiments. The dispenser has a touchscreen that offers a choice of four bases and four enhancers, with three intensity levels, resulting in over 200 possible combinations. The company aims to attract consumers who want more variety, spiciness, and sweetness in their sauces and to use the data from the dispenser to inform its future product launches in grocery stores. The innovation is part of Kraft Heinz’s turnaround strategy that focuses on its away-from-home segment.

Target reported better-than-expected earnings for the first quarter of fiscal 2023, despite a slight decline in sales. The retailer earned $1.89 per share, beating the consensus estimate of $1.40 by 35%. However, its revenue fell 0.8% year over year to $25.37 billion, as consumers became more cautious about their spending amid inflation and recession fears. Target’s comparable sales also dipped 0.5% in the quarter. The company said it was focused on investing in its stores, digital capabilities, and merchandise assortment to gain market share and drive long-term growth.

Equities fell on Tuesday after Retail sales missed estimates and Home Depot disappointed on earnings guiding lower for the next quarter. Markets were disappointed by weak consumer-spending data and worried about the debt-ceiling deadline. Small-cap stocks suffered more today, signaling a gloomier economic outlook. This was also reflected in sector performance, with cyclical sectors like energy, real estate, and industrials among the worst performers. Treasury yields edged up slightly on the day with Fed speakers suggesting they will hold the line on rates and still willing to raise them if necessary to achieve their 2% target.  Today markets will have Mortgage Applications, Housing Starts, and Peterleum numbers along with several earnings reports with a retail theme for the day.

Trade Wisely,

Doug

The indexes finished the day about where they began the day with modest gains in another day of chop despite a truly awful Empire State MFG report showing a massive decline in the sector.  The capacity for the market to continue to ignore these data points is remarkable and makes one wonder if its actual market strength or complacency. With an earnings miss from HD this morning we have Retail Sales, Industrial Production, Inventories, the Housing Index, and several Fed speaker to keep traders on edge.  Plan for yet another day of uncertainty while hoping something happens to end the range-bound chop.

As we slept Asian market traded mixed with modest gains and losses after China reported better-than-expected retail sales activity. European markets trade with modest gains this morning as they monitor the U.S. debt ceiling negotiation progress and economic data.  Ahead of a big morning of earnings and economic reports along with Fed speakers while wrangling over the debt ceiling continues, futures suggest a bearish open.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include AGYS, BIDU, HUYA, KEYS, KD, HD, SE, SSYS, TME, & TUP.

News & Technicals’

The debt limit crisis is looming over Washington as President Joe Biden and House Speaker Kevin McCarthy are set to meet again on Tuesday with other top lawmakers. The meeting comes after a week of daily negotiations between staff from both parties, but with no clear sign of a breakthrough. The federal government could face a default on its obligations as soon as early June if Congress does not raise the debt ceiling, which limits how much the government can borrow to pay its bills. Biden and McCarthy have been at odds over how to address the issue, with Biden calling for a bipartisan solution and McCarthy insisting that Democrats act alone.

Home Depot, the largest home improvement retailer in the U.S., reported disappointing results for the fiscal first quarter of 2023. The company missed analysts’ estimates for revenue and lowered its outlook for the full year, citing weaker demand for big-ticket items and smaller home improvement projects. Home Depot’s Chief Financial Officer Richard McPhail said that customers are spending less on items such as patio sets and grills, which typically drive sales in the spring season. He also attributed the lower revenue to colder weather and falling lumber prices, which reduced the average ticket size.

China’s crackdown on due diligence consultancies, such as Capvision, has raised concerns among foreign investors about the country’s openness and transparency. Capvision is the latest firm to be accused of violating national security laws by providing sensitive information to overseas clients. This follows the recent restrictions on foreign access to China’s data and information platforms, which have hampered the ability of investors to conduct research and analysis. Some experts argue that China’s enforcement of its anti-espionage law is arbitrary and vague, as the term “national security” is not clearly defined or delimited.

Despite a terrible Empire State Mfg. number the indexes experienced another day of chop ending the day slightly positive about exactly where they began the day.  Retail giants, HD, Target, and Walmart prepare to report their earnings and lawmakers will meet this afternoon hoping to reach a deal on the debt limit. The Nasdaq led the gains among the major indexes, while the S&P 500 Index and Dow Jones also advanced. Treasury yields edged up, with the 2-year Treasury yield approaching 4.0% again. However, yields are still well below their early March peaks. The market expects the Fed to lower rates by September but that thought process does not seem to be shared by the voting members of the Fed.  We shall see!  Oil prices also rose slightly, with WTI crude oil recovering above $71, but still down by about 11% this year. Today before the bell we have the market moving Retail Sales figures followed by Industrial production, Inventories, Housing Market along with several Fed speakers. 

Trade Wisely,

Doug

The bulls and bears battled for dominance last week with the QQQ trend remaining bullish while the other indexes continue to chop in the same price range they have been stuck in for weeks.  Unfortunately, regional banking outflows continued last week which is a troubling problem as the economy continues to slow.  Today we have to deal with Empire Stae MFG numbers, several fed speakers, and a declining number of earnings reports to find inspiration for movement.

While we slept Asian markets mostly rallied with Hong Kong leading the way up 1.79%.  European markets also trade with modest gains across the board this morning as they monitor Turkish election results.  U.S. futures recover from overnight losses to suggest a bullish open despite the uncertainties in the regional banking sector. Watch for a possible morning whipsaw with substantial resistance levels above for the DIA, SPY, and IWM.

Economic Calendar

Earnings Calendar

We have a retail theme on the earnings calendar this week.  Notable reports for Monday include CTLT, RIDE, TSEM, & NVTS.

News & Technicals’

Vice Media, a digital media company that produces news, culture, and entertainment content, has filed for bankruptcy protection and agreed to sell most of its assets to a group of lenders led by Fortress Investment, Soros Fund Management, and Monroe Capital. The deal, which values Vice at $225 million, will allow the company to shed some of its debt and restructure its business amid declining revenues and audience. 

The pandemic has led to a surge in the average age of cars and trucks on U.S. roads, reaching 12.5 years in 2023, according to S&P Global Mobility. This is the largest annual increase since the financial crisis of 2008-2009 when people delayed buying new vehicles due to economic uncertainty. The aging of the vehicle fleet benefits aftermarket parts retailers such as AutoZone, O’Reilly Automotive, and Advance Auto Parts, who can expect more demand for their products and services. The number of vehicles in operation in the U.S. also rose slightly to 284 million in 2023, from 283 million in 2022.

Some crypto companies are threatening to leave the U.S. if the SEC does not ease its regulatory pressure on the industry. They are trying to use their influence and leverage to persuade the SEC to adopt a more favorable approach to crypto innovation and adoption. However, it is unclear if they will follow through on their threats, as the U.S. is a major market for crypto, with more than 50 million Americans owning some form of digital currency.

Markets were lower on Friday as the bulls and bears battled for dominance amid regional bank worries. The outperformance this week comes from the communication services and consumer discretionary sectors, while areas like energy, materials, and financials all underperformed. Treasury yields remain well below the fed funds rate, with the 2-year Treasury now just under 4.0%. This comes as markets continue to price in Fed rate cuts by the September FOMC meeting. Meanwhile, the number of earnings decline provided less inspiration though there is a retail theme this week.  Furthermore, traders will have decisions to make based on Empire State MFG. numbers with several fed speakers yacking it up throughout the day.

Trade Wisely,

Doug