The Fuse
Equity futures are getting smacked around hard this morning as word of more China retaliation hits the wires. Stocks are not responding well here to the news flow and if the tariffs lead to more lows, then that is what we have to deal with.
Interest Rates are climbing again as bond holders continue to let go of fixed income. The stagflation horns are getting louder by the day. There is little reason for the Fed to cut rates though and that means the market will have to deal with the volatility on its own.
Stocks overseas were under pressure with Europe lower across the board. China accused the US of unilateral bullying with tariff policy. Rates are still on the rise, chances for more rate cuts sooner are being priced in now, that is not in alignment with Fed thinking. Gold is ripping higher, above 3,400 per ounce and is heading to 4K soon. Cin
Earnings will be full monty this week with a slew of names from various sectors including IBM, Intel, Google, Tesla, AT&T, ServiceNow and GE.
We’ll be watching closely for some clues to business prospects for the remainder of 2025.
It’s all about earnings this week, the market will be focused on the biggest week so far and looking for clues. No doubt if a company cannot beat they will blame supply chain issues, tariffs and bad policy initiatives.
Breadth was really good on Thursday, better than 3-1 positive but that often happens before a three day weekend. Oscillators are back in positive territory as well but not overbought, but if they get knocked over this week that will set up a very bearish scenario, the biggest of bull traps. New lows still expanding over new highs.
Volume was okay for a pre-holiday trading session. Stocks are still struggling within a very wide range, and there is little reason to show a larget commitment to stocks. Heavy turnover on the down days simply means there is institutional selling, big money distribution that is moving capital out of stocks into other asset classes.
A retest is likely sooner rather than later, and that means the SPX 500 makes a run down toward 4,800 again. That is not necessarily a killer move, but penetrating those lows is certainly bearish. The Industrials look the worst at the moment, dropping 6% last week. Support down near 38K, The Nasdaq may see a bit of support at 17.2K.
The Internals
What’s it mean?
Some positive action heading into the long weekend but it certainly feels like a bear trap to me. Yes, the internals showed strength but it smells bad, and that means we could lose this latest rally and then some. Ticks were pretty strong Thursday, ADSPD nearly had a trend up day while put/calls ratcheted lower. VOLD finished near highs of the day but it was not a dominating performance. Monday is not starting off well but let’s see how things go.
The Dynamite
Economic Data:
- Monday:Leading indicators
- Tuesday:Fedspeak x 3
- Wednesday:More Fedspeak, flash PMI, New home sales, fed beige book
- Thursday:jobless claims, durable goods, existing home sales, Minny Fed President Kashkari
- Friday:Consumer sentiment
Earnings this week:
- Monday:WRB, CMA, MEDP, CADE, AGNC
- Tuesday:VZ, GE, LMT, RTX, DHR, DGX, HAL ELV, SYF, KMB, TSLA, ISRG, ENPH, SAP, COF, BKR, RRC, WFRD,STLD
- Wednesday:BA, T, VRT, APH, NEE, CHKP, PM, GEV, VIRT, ORLY, ALK, IBM, NOW, CMG, CCS, NEM, TXN, LRCX, LVS
- Thursday:AAL, FCX, NOK, LUV, MRK, PEP, NDAQ, VLO, UNP, INTC, GOOGL, CLS, TMUS AEM BYD, VALE, DOC, SKX, WY
- Friday:SLB, ABBV, PSX, CL, POR, SAIA, CNC, CHTR, LYB
Fed Watch:
With a potential for stagflation in our midst it makes sense fed officials are going to be more cautious. They still see evidence of inflation remaining a problem and even bolstered by tariffs. A slew of fed speakers out this week will hopefully give us some clarity.
Stocks to Watch
Earnings – This weeks starts the heaviest week of earnings for Q1 and we’ll get a nice sampling from various sectors. As beaten up as the stock market is this month it’ll be important to listen to these firms to get a clue of how worried they are about the economy going forward.
Tesla – After a horrendous Q4 report investors are hoping for a rebound. Yet, some estimates seem to believe the company did not have a great first quarter, it’ll be interesting to hear what Elon Musk has to say and tries to spin the news towards a favorable tone.
Volatility – Once again we are watching the VIX closely along with other risk off assets like gold, silver and bonds. The VIX retreated recently but still remains elevated with so much uncertaintly about.
