The Fuse
Equity futures are modestly higher this morning as the world awaits the ‘huge’ September employment report. Overnight saw a nice surge in European shares as their inflation data is starting to improve.
Interest Rates are up slightly on the long end of the curve, we’ll see how much movement there is following the labor report and consumer credit.
Fed Governor Chris Waller speaks later on this today.
The jobs report will be out this morning, consensus is looking for about 170K on the headline with wages up modestly. We think the latter number will be looked at carefully as job growth continues to keep the labor market very tight.
Levi was out last night with a miss and horrendous guidance, telling us another story about weakness by consumers in the economy, or perhaps just a fickleness in brands.
More hawkish comments by the Fed speakers this week, talking up more hikes in the coming months. So far, the futures market is not seeing it the same way.
Breadth was weaker again though it was far worse early than towards the end. Technology shares were mixed but the focus remains on the poor performance in staples, which are being hampered by news and a potentially weaker economy.
Lighter volume yesterday which is understandable, commitment being rather short in front of today’s job report. We may see turnover rise later today, and if volatility stalls and drops the bulls will be back in a hurry.
With a good-sized drop by midday it appeared markets were going to retreat towards the 200 day moving average, but that might have been too much to ask for, especially since volatility was not moving much. It in fact ended about flat. Support and resistance remains in place, below the 200 ma is a much steeper drop..
What’s it mean?
Let’s call it the ‘calm before the storm’. The jobs report later this morning is likely to be a big market mover. The VOLD hasn’t moved too much the last couple session, not like earlier in the week. VIX may have peaked Wednesday above 20% but still remains elevated, Put/calls are spiking here and again finished abov 1.
That is a sell signal. We’ll be paying close attention today, but mind you we could see the markets have ‘sharp elbows’ and hurt both bulls and bears with the jobs report news.
The Dynamite
Economic Data:
- Friday:NFP for September, consumer credit, vehicle sales
Earnings this week:
- Friday:
Fed Watch:
A huge week for fed speakers. No less than thirteen speeches/appearances this week, mostly talking about the same stuff. Even Chair Powell is out speaking on the dais. We don’t expect much different than an array of opinions, but mostly hawkish.
Issues/Stocks to Watch this Week
Interest Rates – Rates continue to rise as we see inflation just not going away. The Fed is likely now to raise rates in November after Congress avoided a shutdown.
Crude Oil – The strength in crude has been impressive, but the high $100 mark will be strong resistance. However, hanging out above $90 would be very bullish for this market.
SPX 500 – As mentioned above, there is good support at the 4,200 level. We could see a strong test down there but that would break last week’s lows and create a very oversold condition, an a nice bounce opportunity.
