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