A CPI reading hotter than expected woke up angry bears Tuesday morning, with indexes failing their 50-day moving average supports once again.  As a result, the U.S. dollar surged higher, and treasury yields spiked, adding pressure to an already hawkish FOMC.  September lows held as support so far, but with another inflation number, this morning with the PPI, uncertainty abounds.  So, prepare for another day of challenging price action as the battle to hold the Sept. lows begins.

Asian markets had a rough night in reaction to the U.S. inflation data, with the Nikkei leading the selling down 2.78%.  European markets trade mostly lower this morning as they cautiously wait for the PPI number.  However, U.S. futures try to put on a brave face ahead of the producer prices hoping for a hump day bounce after the Tuesday reversal.  Once again, anything is possible by the open, and keep in mind the Fed balance sheet runoff ramps up with an FOMC decision next week.

Economic Calendar

Earnings Calendar

As we slide toward the end of the quarter, earnings report numbers continue to dwindle, with only eight confirmed reports today.  Notable reports include DOOO & TNP.

News & Technicals’

Rather than fuel, food, shelter and medical services drove costs higher in August, slapping a costly tax on those least able to afford it.  As a result, the food at home index, a good proxy for grocery prices, has increased 13.5% over the past year, the most significant rise since March 1979.  For medical care services, the monthly increase of 0.8% was the fastest monthly gain since October 2019.  Veterinary care was up 10% from a year ago.  The consumer price index rose 9.9% annually, according to estimates published Wednesday by the Office for National Statistics.  Last week, new British Prime Minister Liz Truss announced an emergency fiscal package capping annual household energy bills at £2,500 ($2,881.90) for the next two years.  President Joe Biden and several Cabinet secretaries have been in talks with the railroad unions and the companies for months to try to avert the strike.  However, two of the largest unions, representing half of railroad union workers, are still negotiating.  That leaves about 60,000 workers ready to strike if a deal is not made.  About 40% of the nation’s long-distance trade is moved by rail.  If the unions strike, more than 7,000 trains would be idled. 

About 40% of the nation’s long-distance trade is moved by rail.  If the unions strike, more than 7,000 trains would be idled.  As a result, JPMorgan can adjust its cost structure not only by cutting jobs but also by reducing the size of employee bonuses, he said.  Trading has provided a welcome boost this year, however.  JPMorgan said market revenue was headed for a 5% increase from a year earlier, as strong activity in fixed income offset lower equities trading revenue.  Treasury yields continued to rise Wednesday, with the 6-month at 3.72%, the 12-month at 3.87%, the 2-year at 3.78, the 5-year at 3.61%, the 10-year at 3.43%, and the 30-year at 3.51%.

The CPI report woke up some angry bears Tuesday morning, reinforcing aggressive rate increases by the FOMC as food and medical cost increases stepped up to drive inflation.  The selling created technical damage as the indexes once again failed their 50-day moving averages.  However, September lows are held as price support as we face another inflation this morning with the PPI.  The morning’s question is, can the Sept. lows continue to hold after the producer prices come out?  We will soon find out, but traders should continue to expect challenging price action.  The rising dollar and the sharp increases in bond yields also present a substantial stumbling block for the U.S. market and the global market conditions.  Plan for more uncertainty with Fed balance sheet runoffs and rate increases around the corner.

Trade Wisely,

Doug

Analysts and talking head pontificators suggest a wide range of possibilities when the CPI number releases at 8:30 AM eastern.  Some say prepare for a powerful rally, while others suggest new market lows are on the way.  Still, others say the numbers will be confusing with contradictory results from the monthly to core numbers.  So, although the entire world is waiting and watching, the only thing that matters is how the market reacts to the data!  Plan for the price action to be initially volatile and dangerous except for the most experienced day traders.  After that, anything is possible but keep in mind the bigger picture of a slowing global economy and an aggressive FOMC rate increase just around the corner.

While we slept, the Asian market rose slightly with cautious hope waiting on the U.S. economic numbers.  European markets see modest gains across the board as they watch the U.S. inflation data report.  But, with bold anticipation, U.S. futures point to a substantial gap up open ahead of the CPI report.  However, anything is possible as the world reacts to the data.  So, expect some wild and challenging price action that could include some big point whipsaws as investors digest the numbers.

Economic Calendar

Earnings Calendar

Tuesday is another very light day on the earnings calendar with just 12 confirmed reports, most of which are tiny small caps companies.  So, the only marginally notable report will be from CNM today.

News and Technicals’

Peloton announced Monday that co-founder John Foley is resigning as executive chairman.  Chief Legal Officer Hisao Kushi, another co-founder, is also departing.  Uber veteran Tammy Albarrán will replace him.  The changes come as CEO Barry McCarthy orchestrates a massive transformation plan for the fitness company.  Nintendo said sales of Splatoon 3 in Japan surpassed 3.45 million units in the first three days since its Sept. 9 launch, marking a new record.  Nintendo shares rose 5% on Tuesday after the announcement.  Later Tuesday, the company will also hold its Nintendo Direct event, where it will reveal details of future games, which will help keep up the momentum for its aging Switch console.  Oracle came up short on profit, but its revenue met expectations.  The company closed its $28 billion acquisition of health data software maker Cerner in the quarter.  According to a statement, revenue growth in the quarter ended Aug. 31 accelerated from the 5% it posted in the prior quarter. 

Credit Suisse expects the Federal Reserve to pause interest rate hikes sooner than widely expected due to tumbling inflation.  As a result, according to the firm’s chief U.S. equity strategist, it will launch a powerful market breakout.  The August consumer price index will be released Tuesday at 8:30 AM.  ET, and it is expected to show inflation is moderating.  The report could be confusing because economists surveyed by Dow Jones expect headline CPI to decline by 0.1%, but it is expected to rise by 0.3%, excluding energy and fuel.  The report is seen as key guidance for next week’s Federal Reserve rate decision.  Still, economists say it is also critical for the longer-term view on interest rates since it could show whether some causes of inflation are receding.  Treasury yields moved very little early Tuesday, with the 12-month at 3.60%, the 2-year at 3.52%, the 5-year at 3.40%, the 10-year at 3.32%, and the 30-year at 3.48%. 

According to the vast amount of pontificators, the CPI number could plunge the market to new depths or send us into the stratosphere with a powerful rally!  But, no matter the number, the most important thing is how the market reacts.  One thing we can most likely count on is the reaction will likely create significant volatility rewarding some and punishing others at the open, which could be anything!  But, despite how the market reacts, it’s unlikely to deter the Fed from raising rates aggressively in the coming FOMC meeting but may affect future decisions.  In addition, the weakening global conditions and geopolitical issues will continue to be stumbling blocks we will have to deal with moving forward.  So, fasten your seatbelt, plan carefully and get ready for the fireworks to begin.

Trade Wisely,

Doug

After such a long stretch of selling, the current relief rally is a welcome sight, but with significant price resistance overhead, be careful getting caught up in the enthusiasm.  Anything is possible with the T2122 indicator quickly reaching an overbought condition and a week full of market-moving economic data.  Keep in mind the Fed has been clear about its intentions to raise rates, and the worsening economic conditions in China and Europe should not be ignored.  Long story short, enjoy the rally but try not to drink too much of the Kool-aid!

Overnight Asian markets rallied, with the tech-heavy HSI leading the bullishness up 2.69%.  European markets trade green across the board this morning with a cautious eye on U.S inflation data.  U.S. futures look to extend the relief rally indicating a gap up open as we wait for the CPI number Tuesday morning.  With so much data coming out way, expect price volatility and watch for clues of bear activity as we near price resistance levels. 

Economic Calendar

Earnings Calendar

We have a light day of earnings to kick off the new trading week with just 14 confirmed reports, most of which are very small-cap companies.  So, the only notable report for today is ORCL reporting after the bell.

News & Technicals’

JPMorgan Chase has agreed to acquire a payments startup called Renovite to fend off threats from fintech firms, including Stripe and Block, CNBC has learned.  While JPMorgan is often content to partner with fintechs and takes relatively small stakes in them, the bank felt that Renovite’s product was too important not to own outright, according to a JPMorgan executive.  The acquisition, reported first by CNBC, is the latest in a string of recent fintech deals made under CEO Jamie Dimon.  The bank has acquired at least five fintech startups since late 2020.  Spending by big retailers, including Walmart and Target, is way up this year, despite big earnings declines.  As a result, technology spending is a top priority, while other costs are more likely to be cut.  In addition, store refreshes are a focus for some brands as new investments reflect changes in how customers shop.  With expectations for sluggish consumer income to rebound in 2023, future market share is on the line.  The Biden administration plans next month to broaden curbs on U.S shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said.  The Commerce Department intends to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies — KLA, Lam Research, and Applied Materials, the people said, speaking on the condition of anonymity.  The letters, which the companies publicly acknowledged, forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain Commerce Department licenses.  Treasury yields ticked slightly lower early Monday, with the 12-month at 3.61%, the 2-year at 3.54%, the 5-year at 3.42%, the 10-year at 3.330%, and 30-year at 3.45%.

Friday was a good day for the bulls gapping up and finding the energy to push higher to test price resistance and technical levels of the index charts.   With significant overhead price resistance levels just above and a busy week of economic data that includes CPI, PPI, and Retail Sales numbers, expect considerable volatility.  Although the Fed has entered its quiet period ahead of the FOMC meeting, committee members have been clear and consistent about their intentions to raise rates.  As the T2122 indicator nears an overbought condition, be careful overtrading long positions and watch for clues of bear attacks.  However, with so many clues of a worldwide economic weakening, it’s nice to have and enjoy the benefits of the current relief rally.

Trade Wisely,

Doug

Although they had a slow start, the bulls finally returned to work, raising hopes for a relief rally and defending index price supports.  Unfortunately, we still have some questions due to the light volume if the bulls have the commitment to follow through with the technical resistance of the 50-day average above and significant price resistance.  Moreover, with light day earnings, an ECB rate decision, Powell comments, and energy reports, it could be difficult for the market to find much bullish inspiration.  Therefore, expect price action to remain challenging and markets to be sensitive to the news cycle. 

While we slept, Asian markets traded mixed though the Nikkei surged 2.31% in reaction to the Wall Street bounce.  With an ECB rate decision just around the corner, European market trade mixed but essentially flat as they wait on the decision.  U.S. futures at the time of writing this report had recovered from overnight losses suggesting a flat to modestly bullish open as we wait to hear from Jerome Powell and react to the ECB decision.  Continued relief or disappointment is at stake for the market sentiment!

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have more than 30 companies listed, with less than 20 confirmed.  Notable reports include AOUT, BILI, DOCU, FCEL, LOVE, FIZZ, RH, SWBI, ZS, & ZUMZ.

News & Technicals’

Europe was already facing a difficult and unpredictable winter regarding its energy supplies as it looked to phase out all Russian imports.  But Russian President Vladimir Putin on Wednesday threatened to stop all energy supplies to Europe completely.  The comments could mean that European nations must introduce energy rationing in winter.  Last week, Nvidia disclosed that the U.S. would require the chipmaker to get a license for future export to China for specific products to reduce the risk the Chinese military uses them.  “We believe this will not have an impact on our business operations,” William Li, founder, chairman, and CEO of Nio, said via the company’s translator during an earnings call Wednesday.  That’s according to a StreetAccount transcript.  The Nvidia Drive Orin chip has become a core part of assisted driving tech for Nio and other electric car companies in China.  The pandemic fundamentally changed how audiences consume media, leading to smaller foot traffic at movie theaters, says former Disney CEO Bob Iger.  “I don’t think movies ever return, in terms of moviegoing, to the level that they were at pre-pandemic,” the veteran media executive said during a panel at Vox Media’s Code Conference in Beverly Hills, California, Wednesday.  He noted that consumers became more comfortable with streaming services while in lockdown and grew to enjoy the content on these platforms and the flexibility of being able to choose what to watch and when.

India’s Prime Minister Narendra Modi said Wednesday that he is keen to boost ties with Russia, even as the country has become an international pariah following its invasion of Ukraine.  Modi spoke of a “special partnership” between the two countries and expressed particular interest in bolstering their cooperation on energy and coking coal.  Speaking in an online address to the Eastern Economic Forum in Vladivostok, Russia, Modi also called for “diplomacy and dialogue” to end the Ukraine war.  Fed Vice Chair Lael Brainard vowed Wednesday to press the fight against inflation that hurts lower-income Americans the most.  However, Brainard said the Fed needs to remain vigilant without committing to a specific course of action.  Bond yields held steady in early Thursday trading.

Though it took time in the morning session to get organized, the bulls finally returned work defending price supports, raising hopes of a relief rally.  However, while the rally was immensely encouraging, the volume was suspiciously light, raising questions about their commitment to follow through.  One bullish day does not make a trend, and let us not forget we still have to deal with overhead price resistance and the technical resistance of the 50-day average to get through.  Furthermore, this morning the ECB is expected to raise rates by 75 basis points to combat inflation, and they’re rapidly weakening Euro against the dollar.  Finally, we will get comments from Jerome Powell and get both natural gas and petroleum reports with a light day of earnings inspiration.  Fingers crossed, the bulls find the energy to follow through but be prepared because the bears are unlikely to give up easily.

Trade Wisely,

Doug

Although the bulls enthusiastically started the day with a relief rally in mind, the shrinking global PMI figures quickly took the wind out of their sails.  As a result, the indexes remain in a short-term oversold condition with price support levels failing and the technical damage piling on insult to injury.  Though we are overdue for some relief, we face a wave of Fed speakers today and an ECB rate decision tomorrow, followed by Jerome Powell.  Will the bulls find inspiration there, or will the rate increase fears continue to fuel the bears?  We will soon find out but expect the price action to remain challenging and volatile.

Asia markets traded mostly lower overnight as China’s trade data missed expectations.  With an ECB rate decision in sight and growing fears of recession, European markets trade in the red across the board this morning.  With little market-moving data from earnings, U.S. futures indicate a flat to slightly bullish open filled with Fed speak and the Beige Book later this afternoon.  So, fasten your seatbelts tightly and stay focused because anything is possible.

Economic Calendar

Earnings Calendar

On the midweek earnings calendar, we have about 30 companies listed with less than 20 verified reports.  Notable reports include ASO, AVAV, AEO, CASY, PLAY, GIII, GME, KFY, NIO, REVG, & VRNT.

News & Technicals’

Russian President Vladimir Putin slammed the West again on Wednesday, saying sanctions imposed on Russia for its invasion of Ukraine are a “danger” to the world.  Putin said the current global geopolitical crisis had been precipitated by the U.S.’s “slipping dominance” in global politics and economics.  He said the West had been reluctant to recognize “irreversible tectonic shifts” in international relations, particularly a pivot east.  U.S. President Joe Biden has called Putin a “war criminal.”  Google and Alphabet CEO Sundar Pichai gave more details about how he is thinking of making Google run “on fewer resources” as it faces a slew of challenges to its businesses.  Pichai said he hopes to improve efficiency by 20%.  He gave past examples of cutting down a team and merging two products into one.  Bitcoin traded below $19,000 on Wednesday, hitting its lowest level since June following a global drop in stock markets and the U.S. dollar’s continued strength.  The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board saw a sell-off.  Policy tightening by the Fed has strengthened the U.S. dollar, which has weighed on risk assets.  Bitcoin has traded in correlation to stocks, so if equities fall, in general, so does cryptocurrency.

A recession is inevitable, says the CEO of Deutsche Bank, and Germany must cut its reliance on China.  Sewing said Russia’s invasion of Ukraine had shone a spotlight on the dangers of becoming too dependent on individual countries and regions.  “When it comes to dependencies, we also have to face the awkward question of how to deal with China,” he said.  European economies are facing an energy crisis and soaring prices over the coming months.  There have been concerns in some quarters that the increasing cost of charging an EV will disincentivize uptake among consumers.  “The cost advantage for electric vehicles versus a gasoline car is fast diminishing here in Europe, and I’m wondering to what degree that will begin to impact EV sales,” Saxo Bank’s Peter Garnry tells CNBC.  Treasury yields pull back slightly in early Wednesday trading, with the 12-month at 3.57%, the 2-year at 3.47%, the 5-year at 3.42%, the 10-year at 3.32%, and 30-year at 3.48%.

The bulls tested the waters for a relief rally only to run into the shrinking global PMI report and quickly lost the edge to the bears.  Unfortunately, the price action and technical damage continue to grow as supports give way to additional selling as the short-term oversold condition extends.  Perhaps traders extending their holiday played a part, but the slowing global economy and fears of rate increases have taken a toll on sentiment.  Today we will get a reading on International Trade followed by a wave of Fed speakers.  Keep in mind the ECB is expected to raise rates by 75 basis points tomorrow, and then we will hear from Jerome Powell.  Plan your risk carefully!

Trade Wisely,

Doug

Hot employment data continues to worry the market about aggressive Fed rate hikes.  Though the bulls triggered hopes of a relief rally yesterday, we have the Employment Situation to deal with this morning.  Analysts suggest the number could come in hot but will the bulls continue to defend yesterday’s low, or will it inspire the bears?  Traders could be thinking about an early getaway to extend the 3-day weekend, so don’t be surprised if volume quickly drops off after the data-driven volatility of the open. 

Asian markets traded mostly lower as we slept with worries about the FOMC’s next decision.  However, European markets trade decidedly bullish with cautious eyes on the U.S. jobs report.  With no earnings inspiration this morning, U.S. futures suggest a flat to slightly lower open, pensively waiting on the Employment Situation number before switching gears and heading into the long holiday weekend.  Consequently, it could be a wild morning session followed by light and choppy price action as traders get away early and extend their weekend plans. 

Economic Calendar

Earnings Calendar

Although we have about 20 companies listed on the Friday earnings calendar, only one report confirmed from GB that’s not particularly notable.

News & Technicals’

Stocks have been selling off, and bond yields have risen ahead of Friday’s August employment report, providing a critical reading of the labor market.  It is a particularly important report because it is expected to be one of the last big economic reports the Federal Reserve will consider before it raises rates at its late September meeting.  According to Dow Jones, economists expect 318,000 jobs  added in August, and the unemployment rate held steady at 3.5%.  In addition, on Thursday, a National Labor Relations Board official recommended that Amazon’s objections to a historic union election in New York be rejected.  In April, workers at Amazon’s JFK8 warehouse voted to form its first U.S. union.  Amazon has until Sept. 16 to appeal the NLRB official’s recommendations.  Starbucks on Thursday named Laxman Narasimhan as its next chief executive officer.  Narasimhan most recently served as CEO of health and hygiene company Reckitt.  He’ll join Starbucks in October, learning about the company and its reinvention plan, before assuming the top job in April.  Morgan Stanley analysts laid out an economic scenario for China if authorities do not provide enough funding and other support to stabilize the real estate market.  The analysts said Chinese stocks would plunge, GDP would slow, and unemployment would rise.  However, they said spillover from real estate to the rest of China’s economy “remains manageable so far.”  Between April 2020 and June 2021, solar panels at Amazon fulfillment centers caught fire or experienced electrical explosions at least six times.  “The rate of dangerous incidents is unacceptable and above industry averages,” an Amazon employee wrote in an internal report viewed by CNBC.  Rooftop solar is part of Amazon’s overall plan to zero emissions by 2040. 

Thursday again saw the bears dominate early trading as hot employment data continues to worry investors about aggressive rate hikes from the Fed.  However, the bulls finally staged a bit of a comeback at the end of the day, raising hopes of a relief rally.  Unfortunately, we have the Employment Situation number before the bell this morning that analysts suggest could also come in hot.  So, I guess the question is will it inspire the bears, or will the bulls stand their ground supporting yesterday’s lows?  After we pass the data-driven morning volatility, traders will begin thinking about the long weekend ahead and the uncertainty it may provide.  I don’t think we can rule out the possibility of light choppy price action or pile-on selling to reduce risk as we slide into the 3-day weekend.

Trade Wisely,

Doug

Early bullishness faded quickly on Tuesday after the JOLTS report came in hot, re-engaging the bears with the expectation of an aggressively hawkish Fed.  Yesterday added to the technical damage of index charts with the DIA, SPY, and QQQ closing the day below their 50-day moving averages.  Sadly the 9.1% inflation report out of Europe is piling on to the bearish attitude this morning and could make it difficult for the bulls to begin an overdue relief rally.  We face a lot of economic data the rest of the week as we slide toward the uncertainty of a 3-day weekend. 

Ason markets closed mixed overnight, with China’s declining factory activity adding to the worry of their slowing economy.  European markets see red across the board as they struggle with rate tightening fears after hearing their inflation rate hit 9.1%.  U.S. futures have seesawed in pre-market trading, wanting a relief rally despite the piling on of adverse economic data from here and around the world.  Expect the volatile and challenging price action to continue with earnings and economic reports just around the corner.

Economic Calendar

Earnings Calendar

The mid-week earnings calendar has a few more companies listed than Tuesday, with around 20 confirmed.  Notable reports include BF.B, COO, DBI, FIVE, MDB, OKTA, PSTG, SMTC, VEEV, & VRA.

New & Technicals’

Eurozone inflation hit a new record high in August at 9.1%.  The rate was above expectations, with a Reuters poll of economists anticipating a rate of 9%.  It is expected that gas flows via Nord Stream 1, which runs from Russia to Germany via the Baltic Sea, will be suspended from Aug. 31 through to Sept. 3.  The temporary supply halt reflects a deepening gas dispute between Russia and the European Union.  It underscores both the risk of a recession and a winter shortage.  “Europe is in full bunkering mode and taking no chances with Russian supplies heading into the winter,” said Wei Xiong, senior analyst at energy consultancy Rystad Energy.  In addition, analysts told CNBC that Iraq’s political turmoil could bring about a considerable risk to global oil markets.  “While Iraqi production is usually fairly resilient to unrest, the current political environment is extraordinarily toxic and poses a considerable risk to the oil sector,” said Fernando Ferreira, a director at Rapidan Energy Group.  Those concerns come on the heels of escalated protests in Iraq on Tuesday after powerful Shiite Muslim cleric Muqtada al-Sadr announced his resignation from politics.  EV maker BYD falls more than 12%, dragging down Hang Seng Index on Wednesday.  According to a filing, Warren Buffett’s Berkshire Hathaway trimmed its stake from 19.92% to 20.04%.  Yang Liu of Atlantis Investment says this is a “common trend,” warning “maybe we’ll see more” of such trims.  Treasury yields tick higher in early Wednesday trading, with the 12-month at 3.42%, the 2-year at 3.48%, the 5-year at 3.30%, the 10-year at 3.14%, and the 30-at 3.25%. 

Futures began the morning pushing for some gains, but after the jobs-opening report came in hot, the bears returned to work expecting an aggressive hawkish Fed.  Unfortunately, the selling created more technical damage in the index charts closing the DIA, SPY, and QQQ below their 50-day averages.  If there is a silver lining in the clouds, it would be that the T2122 indicator suggests a short-term oversold condition, and a relief rally could begin at any time.  However, the bearish data is beginning to pile on as world economies slow and inflation remains persistent.  Though I will be watching for clues of an oversold rally, the 9.1% inflation reading out of Europe has reversed early bullishness and could keep the bears engaged.  We have a lot of economic reports coming our way the rest of the week, so plan carefully and remember we also face the uncertainty of a 3-day weekend.

Trade Wisley,

Doug

Though Thursday brought us another negative GDP, sharply rising bond yields, and declining corporate profit figures, the bulls said I don’t care, get out of my way so I can buy something.  Their effort held index price support levels, and the VIX indicated fear continues to diminish.  Although the number of earnings declines sharply today, inspiration will come in from economic reports and the Jerome Powell speech from Jackson Hole at 10 AM Eastern.  With the Chairman expected to deliver a hawkish tone, how the market might react is anyone’s guess, so plan carefully and expect some wild price volatility.

Asian market mostly rises, with only Shanghai seeing a little red to close the week.  However, European markets see mostly red in a choppy session as they cautiously wait for Powell’s comments.  Likewise, U.S. futures point to a bearish open with pending economic data and all eyes on the Jackson Hole speech from the Chairman and what it might mean for the future market direction!  So, buckle up the show is about to begin!

Economic Calendar

Earnings Calendar

The number of earings drop off shrply today with only 13 listed and just 5 confrimed.  Notable reports include JKS, & SNP.

News and Technicals’

Fed Chairman Jerome Powell speaks Friday at 10 AM.  ET in a much-anticipated appearance at the Federal Reserve’s annual Jackson Hole, Wyoming, symposium.  Fed watchers do not expect a new message from the Fed chairman, just a tougher version of the central bank’s promise to slow inflation by raising interest rates.  Powell is likely to emphasize that the Fed is unlikely to quickly reverse course after it reaches an end rate, as the futures market has been expecting.  “I think we only need 100 basis points more,” Wharton business school professor Jeremy Siegel told CNBC’s “Squawk Box Asia.” “The market thinks it’s going to be a little more — 125, 130 basis points more.  My feeling is we won’t need that much because of what I see as a slowdown.”  “If you want to do it all at once, or you want to do it over a period of two to three meetings — it won’t make that much of a difference,” he said.  U.S. Federal Reserve Chair Jerome Powell is slated to speak at Jackson Hole later on Friday, where he’s likely to emphasize that the Fed will use all the firepower it needs to snuff out inflation.  U.K. energy bills to rise by 80%!  The new cap will be in effect from October 1 to the end of the year, which is expected to rise further.  The government is under pressure to announce greater support for households and a wide-ranging plan to oversee the energy supply industry through a crisis.  However, the candidates to be the new prime minister have said a comprehensive strategy needs to wait until the leadership election on Sept. 5.  A Chipotle Mexican Grill restaurant in Lansing, Michigan, became the chain’s first location to vote to unionize.  Workers at the store voted 11 to three in favor of unionizing under the International Brotherhood of Teamsters.  The win for Chipotle organizers in Michigan comes on the heels of more than 200 Starbucks cafes in the U.S. voting to unionize in the last ten months.  Treasury yields ticked moved higher in early Friday trading, with the 12-month at 3.26%, the 2-year at 3.38%, the 5-year at 3.20%, the 10-year at 3.07%, and the 30-year at 3.28%.

With a negative reading on the GDP, declining corporate profits, and mixed earnings results, the bulls said don’t care, get out of my way so I can buy something, as they defended the index chart price supports.  Can they keep up that enthusiasm while likely facing a hawkish Jerome Powell speech from Jackson Hole?  We should also remember that on Sept. 1^st, the Fed will tighten the money supply by rolling off 90 billion from their balance sheet.  So far this week, the market has largely ignored the weakening economic reports, so how they react to today’s International Trade figures, Personal Income and Outlay, Inventory data, and Consumer Sentiment is anyone’s guess.  I would, however, suggest we could see substantial price volatility around the Chairman’s speech at 10:00 AM Eastern so plan carefully.

Trade Wisley,

Doug

The bulls squeaked out a win on Wednesday, defending index price support levels in an otherwise mostly choppy day despite the declining Durable Goods and Pending Home Sales.   This morning’s uncertainty will be the latest reading on GDP and Jobless Claims before the talking heads at Jackson Hole circulate a lot of hot air.  So, expect some volatility as they put their particular spin on the market and the overall economic conditions.  We also have our most important day of earnings this week to keep us on our toes and provide inspiration to the bulls or bears.  Let’s get ready to rumble!

Asian markets rebounded while we slept, with the Hang Seng surging a whopping 3.63% by the close, even with expectations of a Hawkish Fed statement at Jackson Hole.  Likewise, European markets trade cautiously in a choppy morning session with eyes on Jackson Hole.  Nevertheless, futures point to a bullish open with a full day of talking head spin, a busy earnings calendar, and pending market-moving economic reports before the bell.  However, anything is possible by the open depending on the pre-market data’s reaction. 

Economic Calendar

Earnings Calendar

We have a more hectic day on the Thursday earnings calendar with about 60 companies listed but less than 30 confirmed.  Notable reports include ANF, AFRM, BURL, COTY, DELL, DG, DLTR, FTCH, GPS, HAIN, HIBB, MRVL, OLLI, PTON, SAFM, TITN, TD, ULTA, VMW, & WDAY.

News and Technicals’

According to an internal memo on Wednesday, Amazon is shuttering its telehealth service, known as Amazon Care.  Amazon Care launched in 2019 as a pilot program for employees in and around the company’s Seattle headquarters.  However, it’s unclear how much traction Amazon Care had gained.  Sony on Thursday raised the recommended retail price of its PlayStation 5 games console in several international markets citing the global economic environment, including high inflation.  The Japanese gaming giant said that the price hikes are effective immediately except in Japan, where they will begin on Sep. 15^th.  Sony is not raising the price of the PS5 in the U.S.  Energy consultancy Auxilione estimates the price cap, currently at £1,971 a year, could climb to as high as £6,089 next April as Britain’s cost-of-living crisis worsens.  Around one in seven working adults in the U.K. worked from home between April 28th and May 8th.  However, that number could decrease as bills surge, according to Sarah Coles, the senior personal finance analyst at Hargreaves Lansdown.  Nvidia reported second-quarter earnings that missed Wall Street expectations for revenue and earnings per share.  The disappointing report aligned with Nvidia’s preliminary earnings two weeks ago.   Nvidia said that the miss was because of lower sales of its gaming products, primarily graphics cards for PCs facing “challenging market conditions.”  Salesforce beat quarterly expectations but came short on guidance for the current quarter and the full fiscal year.  The enterprise software maker is raising prices on Slack after acquiring the team communications app last year.  Salesforce said its board approved $10 billion on the company’s first buyback program.  Treasury yields dip slightly ahead of Fed comments at Jackson Hole, with the 12-month at 3.26%, the 2-year at 3.37%, the 5-year at 3.19%, the 10-year at 3.09%, and the 30-year at 3.30%.

Despite declining Durable Goods and Pending Home Sales., the bulls won another mostly choppy day  Volume remained noticeably anemic as the bulls worked to hold price support levels in the index charts.  Although NVDA and CRM disappointed after the bell, names like ADSK and NTAP jumped higher on a mixed afternoon of earnings results.  Today begins the Jackson Hole Symposium, so expect a glut of talking heads hitting the news cycle to put their particular spin on the market and economic condition.  However, before all that hot air gets circulated, we will get a reading on GDP and Jobless Claims to add a dose of uncertainty before the open.  As you plan forward, remember we have the Fed’s favorite measure of inflation, the PCE, coming out Friday morning before the Jerome Powel comments at 10 AM Eastern.

Trade Wisley,

Doug

Although the bears came out slightly on top by the end of Tuesday trading, it was a choppy hurry-up and wait session with pending Durable Goods numbers just around the corner.  With some potential market-moving earnings reports and analyst consensus that Durable Goods and Pending Home Sales could decline, it could be a volatile morning session.  Index charts are at or near critical support levels, so much is at stake as the bulls and bears battle for control.   As you plan forward, remember that we have a GDP number before the bell Thursday.  Buckle up anything is possible!

Asian markets closed mixed but mostly lower, with the tech-heavy HSI leading the selling down 1.20%.  European markets trade flat to slightly lower this morning as global growth, and potential Fed rate action raises concerns.  Finally, with a substantial morning of potentially market-moving earnings and economic reports, U.S. futures point to a slightly lower open, but in truth, anything is possible at the open as the details are revealed.  So, prepare for some price volatility and another waiting game in the afternoon for the GDP number.

Economic Calendar

Earnings Calendar

For the Wednesday earnings calendar, we have less than 30 companies listed, most of which have been confirmed.  Notable reports include ADSK, BOX, CRM, EAT, DY, GES, IIVI, NTAP, NVDA, WOOF, SNOW, SPLK, VSCO, & WSM.

News and Technicals’

Packable, the parent company of top-ranking Amazon seller Pharmapacks, is laying off employees and ceasing operations, according to documents viewed by CNBC.  The health and beauty product retailer was the largest seller on Amazon’s third-party marketplace.  Packable is liquidating after a failed effort to go public through a special purpose acquisition company.  Nordstrom slashed its financial forecast for the entire year as the department store chain faced a glut of inventory.  The retailer’s lowered forecast came even as it reported fiscal second-quarter earnings and sales ahead of analysts’ estimates.  Xpeng’s Hong Kong-listed shares plunged more than 12% on Wednesday after the Chinese electric vehicle maker reported a wider-than-expected loss for the second quarter.  Xpeng said it expects to deliver between 29,000 and 31,000 electric vehicles in the third quarter, representing a year-over-year increase of around 13% to 20.8%.  Xpeng said it is confident that the launch of the G9 SUV in September and two new models in 2023 will help it enter a “growth cycle.”  It’s been six months since Russia began its invasion of Ukraine, an act that shocked the world and one that was almost universally condemned.  Russia was widely perceived to have been preparing to claim a quick victory in Ukraine, but hopes of swiftly overthrowing Volodymyr Zelenskyy’s pro-Western government soon evaporated.  Six months on, the invasion is now facing a long, grinding “war of attrition” that causes widespread death, destruction, and displacement in Ukraine — and is costly for Russia too.  Treasury yields ticked slightly lower in early Wednesday trading, with the 12-month at 3.24%, the 2-year at 3.29%, the 5-year at 3.16%, the 10-year at 3.04%, and the 30-year at 3.25%.

Tuesday proved to be a choppy hurry-up and wait for the Durable Goods numbers coming before the bell on Wednesday.  Although the bears won the day with all but IWM slightly lower, the volume was very light, with the VIX hovering just above the 24 handles.  Today could be an exciting day with the consensus suggesting a weakening Durable Goods number with Pending Home Sales expectations likely declining, adding to the concerns of a slowing economy.  However, we also have several potential market-moving earnings reports that will keep the bulls and bears locked in a battle near index price support levels.  Expect price volatility through the morning session but don’t be surprised if the afternoon becomes light and choppy as we wait for NVDA earnings and the pending GDP report Thursday before the bell.

Trade Wisley,

Doug