US stocks are up, fueled by AI hope for chipmakers and broad tech. Treasuries are up, as traders cross their fingers that the debt ...
Every media outlet seems to be reporting that negotiators are close to an agreement to raise the debt ceiling in exchange for ca...
Fitch Ratings warned that the US’s AAA rating may not hold because of the debt ceiling delay. Treasury-bill yields matur...
There is no debt-ceiling deal as of the time of writing this note. There are no additional meetings scheduled. They’re a...
Only they know how truly “productive” the Monday night discussions were. Meeting for an hour or so doesn’t seem very...
Biden and McCarthy will meet again today. We don’t expect any big moves unless it seems clear that there’s an outcome (go...
That’s what we’re seeing. Open interest figures for e-minis popped, suggesting that investors felt compelled to chase the ...
The company beat on 1Q23 top and bottom lines plus increased 2023 guidance. Solid advertising sales and grocery. Another examp...
That’s what we’ve got this morning, with McCarthy telling the world that he doesn’t think the US will default. Biden...
She’s back at it, freaking everyone out about June 1. Treasury Secretary Yellen is warning that “time is running out” an...
If you’re wondering when we’re going to start to see the credit crunch, it’s here now. Vice Media filed for bankruptcy. K...
It’s not just politicians and the debt ceiling in a stalemate—the market seems to be in one too. Bulls can’t seem to ...
Headlines are about Disney+ losing 4mm subscribers, mostly from India, in 1Q23. In the US and Canada, it lost 600k. Its total (...
The CPI figure was just shy of expectations (4.9% versus 5.0%). Next month, the print will be released roughly a day ahead of t...
They’re still at an impasse on the debt ceiling discussions, and we don’t expect a resolution until the clock is striki...
Per our video last week, Tyson cut its annual revenue target by roughly $2-3bn and trimmed its cap ex budget too. Beef, pork, and...
The Jobs Report today showed increases in hiring and wages last month, adding to the probability that rates stay higher for longer....
Remember those good old days of the VIX declining down into the 15’s? Well, we’re back above 20 today on the heels of Fed and P...
It’s all about Powell’s Q&A today and forecasted dissent within the ranks. 2pm ET report. 2:30pm ET Q&A. He’s got his work cu...
Yellen is warning everyone that the X date could be as soon as June 1. Next week Biden is meeting with top Congressional leaders...
We may learn on Wed whether the Fed has the appetite for just one rate hike in May or also another in June. Over in the EZ, m...
Inflation (PCE) for Mar came in at 0.3% m/m, which roughly matched expectations. So, we expect 25bps from the Fed in May, as...
1. Supporting equities: data on US economic growth slowed more than forecasted last quarter, giving bulls something to cheer as they hope t...
$MSFT is up 8% after posting solid cloud reacceleration at Azure and good results across the board (LinkedIn, gaming, software, etc...
Monday’s stock action was pretty pathetic, as the “miles driven” dropped to a low for non-holiday periods in the last ...
With Tom Cochrane’s “Life is a Highway” on the radio this morning, we’ll stay in the Auto Zone today as we head deepe...
Day traders’ passion for zero-day options (options that expire <24 hrs) looks like a money pit. German researchers estimat...
Revenues down + costs up = margins and cashflow down. We’re seeing a number of companies learn the math this earnings season, ...
That’s what BBG is serving up this morning, explaining that US markets have never bottomed before a recession, in ...
One of our brokers is seeing 55/45 better to buy with factor flows showing a risk-on profile (think cyclicals, banks, platinum, ...
Put your seatbelts on. In addition to earnings season heating up, you’ve got prints for
(i) China GDP, retail sales, industr...
Hedge funds with long/short books have their lowest positioning in Financials since Mar 2020. So, if we see any positive news, ...
Applications for jobless benefits rose to their highest level in >1yr (+11k to 239k w/w), but they’re still are low le...
The print today reflected a slowdown in the growth rate of inflation (+0.1% in Mar or +5% y/y) and a consensus figure of core C...
VIX remains low, given holidays and spring breaks. But tomorrow we get a bunch of CPI stats, and right now consensus is for ...
Treasury yields are down this morning and the USD is up, in response to Friday’s job growth slowdown. The 10-yr yield is down t...
Consensus for next week’s Core CPI print on Wed and Ave Hr Earnings is still hot, so any weakening of these metrics could c...
ADP. The 2-yr UST yield is down -8bps after US employers added only 145k jobs in March, versus an expected figure of 210k. Gold ...
That was the message in Jamie Dimon’s annual letter, warning of repercussions from the banking crisis for “years to come."...
Versus bonds, equities are showing low vol, with the VIX below 20. In fact, volatility has dropped back to pre-banking crisis ...
Citi raised its US equities call from underweight to overweight. GS is calling for the S&P to increase more, at least through Apr...
Investors are betting that (i) we’re nearing peak interest rates and (ii) the banking crisis is under control. Tech is up. Ret...
Former UBS CEO Ermotti is back in the saddle to manage the combination of UBS and CS. Current CEO Hamers will depart on Apri...
There’s been a lot of crowding into tech/digital economy/longer duration lately. BBG even noted that the gap between growth a...
First Citizens is popping today because it is going to purchase around $72.5bn SVB assets at a discount of $16.5bn, plus they ente...
Deutsche Bank is in focus this morning after a spike in its cost of insuring it against default. DB announced it would redeem a ti...
yesterday here in the US. Inflation prints in the UK are still hot, so the two central banks appear to be on the same trajectory-...
Overnight international markets were up, driven by positive US markets yesterday and additional progress towards securing gl...
Too many to share today. Goldman suspended its research rating on $FRC. JPM is advising $FRC on strategic options while being ...
MS’ Wilson is calling for a painful and vicious end to the US bear market as credit tightening pressures growth. A bear at h...
$FRC is still on shaky ground today with investors, even after proposals for $30bn in ad from big bank peers, the largest of ...
Front-end UST yields fell -25bps, and the broad curve steepened +18bps as US UST yields followed their DM peers lower amid a...
CS is down to hit another all-time low for a second day in a row after Saudi Natl Bank (it’s biggest backer) said it won’t ...
US Core CPI increased by +0.5% in Feb and +5.5% y/y, so underlying inflation is going in the wrong direction for the Fed. ...
The various lifelines being given to financial institutions matter a lot. Underwater positions in portfolios only hit capital acco...
SVB Fin’l is in talks to sell itself after failing to raise the necessary capital to remain independent. In case you’ve ...
US market futures reversed losses this morning, and UST yields declined, after applications for US unemployment benefits rose to t...
It was clear that Powell wanted to deliver a hawkish message yesterday during his testimony. Now, investors are extrapolating a potential 6% top on rates with the potential for 50bps rate hikes, versus the prior expected consensus of 25bps at upcoming meetings. Whether or not the Fed delivers these ...
Read moreInvestors will be scrutinizing Powell’s testimony to Congress for hints on any updated economic outlook or rate path. Certainly, he’ll be discussing inflation, labor strength, growth, and everything else that is keeping investors on edge. If he coos like a dove at all, expect total reversal of s...
Read moreKey labor stats (mentioned in pic below) will shine a light on whether Jan’s strength was a blip or a trend. Also, put on your seatbelt for Powell’s semi-annual testimony to Congress....
Read morePowell will be delivering his semi-annual address to the Senate Banking Committee on Tuesday, and given his history of off-record talking moving markets, we would make sure to be in your seat. Yesterday we saw how the buy button got hit after Bostic simply said he would support a 25bps hike in Mar. ...
Read moreThe S&P kept above its 200 DMA to backstop recent weakness for a 2nd time this week. But intraday we’ve seen weakness since Feb, and if you get research from a variety of providers like we do, you’ll find that the “calls” out right now range from prioritizing US markets to shorting them. Ses...
Read moreISM factory activity for Feb was 47.7. Below 50 is in contraction. The median estimate was 48 pre-release. ISM new orders rose in Feb, by the most since 2020, yet bookings were still below 50. Prices paid for materials was up to 51.3, meaning that costs are up. ISM labor data showed a decline in hea...
Read moreCiti reported that investors increased their short bets in both US and EZ equity futures, given a more bearish sentiment. This comes on the heels of trader pricing in US rates to peak at 5.4%, versus closer to 5% last month. Treasury yields are up today, with the 10-yr UST heading toward 4%, a level...
Read moreThe S&P’s 50-day moving average (DMA) failed to hold last week, yet the 200 DMA is still holding. We’re also watching the 4Q22 floor of 3765. We’ll be watching for the incoming Jobs Report, CPI figures and Fed decision (including the updated dot plot) in mid-Mar. With Friday’s hot PCE data, ...
Read moreThat’s what the hotter-than-expected inflation reading pointed to this morning, driving the futures to retreat pre-market. UST yields rose and equities declined, with long-duration (e.g, tech, bonds) getting hit the hardest. The 2-yr UST yield, which is more responsive to Fed hikes, increased to t...
Read moreReal GDP was revised downward slightly (from 2.9% to 2.7%) due to higher inflation figures. Labor is still fairly strong, with initial unemployment claims down by 3k to 192k last week (below estimates). Continuing claims also declined by 37k, the greatest decline since Dec for the prior week’s da...
Read moreOne of the areas we cautioned clients about was the potential for reduced dividends and share repurchases, and Intel unfortunately is one data point making the case. Intel cut its quarterly dividend by more than 65%, just weeks after announcing $3bn in projected cost savings measures for 2023. Its s...
Read moreA backup in UST yields and weak guidance by Walmart and Home Depot followed an 8th consecutive weak EZ PMI reading. Stocks decidedly down to start the day. 4Q Earnings Recap Bernstein noted that during 4Q earnings season, beats on top + bottom lines resulted in 60bps of return on the print, versus ...
Read moreHawkish commentary by both US and EZ central bank leaders have increased rate-hike bets in the past few days, with messaging around investors’ lack of appreciation for the strength of inflation that will drive rates higher for longer. The USD is up (pretty much erasing losses for YTD), equities ar...
Read morePPI reported above expectations (+0.7% m/m and +6% y/y versus an expected 0.4% m/m), flagging the message we’ve been delivering for some time. Business’ high profit margins are out of sync with the disinflation storyline, and surprisingly they increased even more in Jan. So, something’s gotta ...
Read moreUS retail sales rose in Jan by the most in almost 2 yrs (+3%). All 13 retail categories improved last mo. Leaders were vehicles, furniture and restaurants. Seems like the strong labor market is keeping the retail party going here in 2023, and the Fed will definitely be watching. Thus, the US markets...
Read moreWhile the inflation print this morning was a bit more than “expected,” a lot of folks were already expecting that…so we’re not seeing markets tank at the open here. In fact, they’re up. OER (owners equivalent rent) is getting better, slowing m/m and looking like it has hit a top over the p...
Read moreThat’s when the US CPI print comes out. Option costs around the event are up; options are pricing in a +/- 1.8% move. A few weeks ago, traders placed the top Fed rate at 5%. Last week that moved up to 5.2%. Philly Fed Prez Harker said he believes rates will be above 5%, and Minni Fed Prez Kashkari...
Read moreWe’re back to “good news is bad news” this morning. US consumer sentiment is at a high, supporting the stronger growth story (and hence the higher rates for longer story). If stocks stay pressured today, we’ll see the S&P stop its 2-week bounce. The S&P was in the green this AM but red now, ...
Read moreInvestors cut $300bn of bearish stock positions, and currently they are closer in-line with historical periods. So, folks who were underweight are now weighted closer to the ave of the prior decade, per NOSO. It’s the closest to neutral positions since 2Q22, per JPM and DB data....
Read moreUsed-vehicle prices increased by 2.5% in Jan, per auctioneer Manheim. We wonder if we’ll hear Fed folks with a vote talk about sticky inflation today, on the back of Powell’s dovish comments yesterday, or whether we’ll get more coos from Williams, Cook, Barr, Kashkari and Waller....
Read moreThe Fed’s Powell is going to speak publicly today at 12:30pm ET at the Economic Club of Washington, which means that the market could swing either way, depending on which Powell we get today: dove or hawk. We’ll see if he talks about Friday’s Nonfarm Payrolls strength and lower Unemployment Ra...
Read moreThe VIX is showing around 19.5 this morning pre-market. It was around 18 just last week. Might be a good time to reduce a bit of exposure if you were riding high in the past few months. As JPM pointed out, investors are more comfortable chasing the market these days. There’s a rebound in the Bull-...
Read moreAs Groundhog Day was yesterday (and we are expecting six more weeks of winter), US hiring increased significantly in Jan, with the jobless rate falling to a 53-year low. Nonfarm payrolls increased by 517k, after a revised figure of 260k in Dec. The unemployment rate dropped to 3.4%, the lowest since...
Read moreThe more he talked, the higher the market went. The Fed hiked by 25 bps and, try as he might to be strong and talk about high inflation for services ex housing, talked a lot about moderating inflation otherwise as the “disinflation process has started.” Sure, he mentioned strong labor, but overa...
Read moreWe’ll see how he wields it today in the Q&A after, most likely, raising rates again another 25bps. If there is a surprise 50bps hike, then I should have titled this note When Doves Cry. The fun starts at 11am PT and 2 pm ET. As a reminder, though, March is the bigger meeting because the Fed releas...
Read moreThe Labor Dept released data showing that US employment costs increased more slowly than expected in the final months of 2022. This ties to a moderating inflation theme that investors are hoping the Fed considers. The employment cost index, which is a gauge of wages and benefits, increased by 1% in ...
Read moreThis week we’ve got: Tues: China PMIs along with Eurozone GDP and US Consumer Confidence Wed: The Fed along with Eurozone CPI, Unemployment Rate, and various Manufacturing data points Thurs: The ECB with the BOE, and then US employment data. Plus, even though they’re not macro data points, Apple...
Read moreTrading session ranges mostly have waffled between fairly narrow and extremely wide. So, anyone trying to make sense of trends is stuck pontificating about by a few extremely anticipated news items. Not a huge confidence builder to sustain rallies on. Next up are (i) the Fed’s hike and comments an...
Read moreThat’s the 200 DMA that has been a sticky top for the S&P. Technicians point to 4100 and 4325 as hurdles before investors can have a sustained rally. We point to slowing growth and sticky inflation as the culprits. Advanced GDP Investors are happy with the number, which shows the economy is growin...
Read moreAs of this morning, we were 92 companies into the 500 reporting for the S&P during earnings season. Per 42Macro, results overall have beaten consensus (rev +0.5%, EPS +2.2%), but those are the lowest levels of this biz cycle, and so are their tracking growth rates (+5.5% and -2.4% y/y, respectively)...
Read moreYesterday, the S&P closed above both (i) its 200 DMA and (ii) its natural resistance at 4000. We caution not to get too excited about buying dips until we get past the summer peak of 4325. We’ve seen this movie before and know volatility can move markets in either direction until we get a more con...
Read moreWe’ve got a lot of big-name earnings again this week, from $MSFT to $TSLA. An NABE survey states that almost 20% of US firms expect to reduce headcount in the next few months, and we expect we’ll continue to hear about reductions from the tech side. $SPOT just announced a 6% cut too. RBC noted ...
Read moreAAII revealed that investors who classify themselves as “bullish” increased to the 2nd highest reading since Aug. As of yesterday, though, the S&P fell to roughly the midpoint between its Dec trough and Jan’s top. The recent equity decline reflects a market landscape that makes it more difficu...
Read moreThe debt ceiling negotiations are the political version of David Simon’s classic tv show. Rational folks want to find a path before the estimated June time bomb explosion, when the US could default on payment obligations. Today we’re reaching the $31.4 trn debt ceiling, so the Treasury will depl...
Read moreThe good news is that inflation is easing. Dec producer prices declined -0.5%, “better” than consensus, meaning that inflation is declining faster. Also, retail sales in Dec declined more than expected at -1.1%. Interestingly, 10 of 13 retail categories declined. But, unfortunately inflation is ...
Read moreConsensus has margins rising at 66% of companies, with EBIT margins expected to increase by 100bps between 4Q22 and 2H23 for the S&P ex Fins/Energy. As we have warned, even though energy costs may have abated, labor and other costs are up—so it is unlikely companies will be able to push through pr...
Read moreStocks were down in the morning with Big Banks’ earnings season boofs. Yes, boof is a word…looked it up this morning. $C reported adj EPS below consensus but set FY23 rev guidance above consensus; the co’s 4Q profit declined by -21%, and they stashed some cash for credit losses. $WFC reported ...
Read moreInvestors were hoping for a greater deceleration of inflation that would pressure the Fed to slow/pause hikes. CPI was down -0.1% m/m, and up 6.5% y/y (chart below). Lower energy costs helped drive the move. Given various messaging in the past week, including Fed’s Harker and Collins, it looks lik...
Read moreInvestors are waiting for the Thurs CPI print (another lovely countdown below). So, today is a good day to get things done, before tomorrow’s macro-driven market moves. This morning, stocks are up slightly, bond yields are down, oil and nat gas are up. Long duration plays are outperforming. Accord...
Read moreUS markets pared pre-market losses as Powell refrained from pontificating on rate hikes during his talk in Stockholm. There’s always the Q&A, right?! To fill his shoes, Blackrock and Fidelity are warning that markets are underestimating inflation and peak rates. Plus, JPM’s Dimon said rates migh...
Read moreJust a refresher—last week China Reopening was a leading theme. The gov softened tech regulation banter and supported the real estate sector. China Internet was up big. Gold Miners, airlines, travel/leisure—also up big. Laggards until Friday were SaaS/software, cyber security, de-SPACs, unprofit...
Read moreThe Jobs Report is causing the market bounce this morning. What slowed? Private sector employment growth, private sector hourly earnings growth, private sector ave weekly hours, and thus a private sector labor income slowdown. On the flipside, various unemployment rates also moved down slightly, and...
Read moreStocks in the US reversed and UST yields rose after US labor market data showed continued strength this morning. Hiring topped estimates in private payrolls. New claims for unemployment benefits fell last week. Powell is feeling vindicated with his second cup of coffee. Then Bostic said the Fed has ...
Read moreUBS is out with a slew of downgrades: $MSFT because of slowing Azure growth (px target to $250 down from $300), plus industrials $EMR and $HON, and $CHRW. WF downgraded $TGT to hold from buy, given deceleration (px target $142 from $170). CS downgraded $DLR after data center checks. BofA upgraded $M...
Read moreIMF head Kristalina Georgieva projects that one-third of the world may suffer from recession, if the US, EU, and China all slow as expected. Not to be outdone by negative forecasts on investors’ first day back at work in the new year, Scion Asset founder Michael Burry projects that the US will hav...
Read moreEnergy was the standout this year of challenging markets. WTI and Brent increased by >4% and >7%, respectively, for YTD22 after jumping >50% in 2021. Farm commod also were strong, notching a fourth annual increase—the longest stretch since the early 90’s. Tech obviously got pummeled, with the NA...
Read moreThat’s what inflation swaps are pricing in, hoping for rate cuts in late 2023. Investors believe inflation will moderate, with headline CPI growing at around 2.5% y/y at 2023-end. This would enable the Fed, in their eyes, to at least pause and maybe cut if the economy and labor weaken....
Read moreEquity markets are down roughly -20% this year globally, and BBG is reporting that an index of global bonds is down around -16%. The USD is up 7% (a lot), and the UST 10-yr moved from 1.5% to above 3.8%. Markets appear to be up this morning based on investor optimism for China’s reopening. But vol...
Read more$NET published its Cloudflare Radar 2022 Year in Review. After a dip mid-year, worldwide Internet traffic has grown from Aug through Dec 2022. They note the recent increase due to early holiday e-commerce shopping and the World Cup....
Read moreEurope’s Stoxx 600 is up so far (+0.17%), hoping to close out a first up week in three. As of writing, the MSCI World hadn’t moved much, Asia Pac was down around -1%, and EM was down around -1%. Investors are digesting the PCE deflator, an inflation data point tracked by the Fed, which, expected...
Read moreFood and drink prices in the UK are rising at the fastest pace since 1989, according to the Telegraph. To ease some pain, the gov stepped in to cap a rail price hike, making it the biggest gov intervention in rail fares in history, capping the rise below inflation to mitigate passenger impact....
Read morePrez Zelensky is headed to DC to chat with Congress about getting that $2bn in aid plus Patriot missiles to fight Russia this winter. You can imagine Putin is having a bad day today as he watches the besties help each other out....
Read moreBOJ Gov Haruhiko Kuroda shocked markets by doubling a cap on 10-year yields (+50 bps versus +25bps), fueling a jump in the yen (+3% vs the USD) and a slide in government bonds. Potential impacts? UBS did a good outline back in Sep. For fixed income, it’s the markets were Japanese investors have th...
Read moreNot to be overshadowed by Wednesday’s Dance (still not sure why this keeps popping up in my ads), Friday’s market dance brought the S&P down -1.1% and below its 50 DMA (3864) for the first time in 5 weeks. The eq volume (17.9bn) was the highest in 6 mo, although the triple witching and index reb...
Read moreA few levels of support for the SPY fell during yesterday’s decline. The 100 DMA fell in the morning, and the 3900 technical level fell mid-day with a low of 3879. Most investors were not hopping in for holiday bargain shopping, probably just taking a stiff drink and hoping that 2023 re-sets soon....
Read moreThe median Fed “Dot Plot” for 2023 increased 50 bps to 5.125%, versus an expected 25bps move upward. The Fed Fund Futures curve didn’t translate the dots in the same fashion. The expected terminal rate if 4.75-5.00%. Investors just don’t buy the Fedspeak when growth is slowing, and inflation...
Read moreThat’s what yesterday’s market felt like here in the US. The S&P failed to stay above its 200 DMA after hitting it in the early trading session. (E-Minis jumped more than 3% on the soft CPI print yesterday, and then derivatives desks saw unwinding into the rally). The magic number seems to be 41...
Read moreLots for the doves to love. US Nov CPI softer for both headline (+0.1%) and core (0.2%) versus expectations for both at 0.3%. Up 7.1% y/y but down from 7.7%. Fuel, energy services, used cars, and airline fares were down. Apparel was only up a bit at 0.2%. Food away from home, which up, was only 0..5...
Read moreEuro Parliament is now investigating a Greek lawmaker/VP as well as a former Italian deputy after seizing a suitcase full of 50 euro notes worth just shy of $800k. Qatar and Morocco were cited as potential sources of the cash. Kind of uncomfortable when Euro govs are trying to buy nat gas from Qatar...
Read moreVanda Research estimates that retail investors lost $350bn this year, with their ave portfolio down -30% YTD2022 versus the S&P at -17%. The group tended to own more high-fliers that crashed and bought dips in the bear market. Case in point, they estimate that the ave self-directed portfolio held ...
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