The Fuse
Futures are mixed this morning as traders eagerly await more inflation data. Today we’ll have the release of July PPI, which could move markets.
Interest Rates are flat across the curve today as buying interest in bonds has dried up for the time being.
Not much in the news flow overnight, President Biden called China’s economy a ‘ticking time bomb’, SF Fed President Mary Daly suggested the Fed has more work to do on interest rates.
Solid earnings yesterday from upstart name IONQ as the slower period of earnings releases begins.
Stocks were on a rollercoaster ride following mildly positive CPI report. Volatility spiked again and collapsed down during the day as there remains little fear in being long risk assets.
Breadth strong early but weakened all session long and finished poorly. Sell signals on breadth remain for now but this indicator is getting oversold. New lows on the Nasdaq continue to pile up.
Another day of distribution as volume swelled more than Wednesday and now we have a series of institutional selling. Eventually that will lead the market into a corrective period, if it is not already there today.
We continue to see the markets flopping around under 4,500 on the SPX 500. Nasdaq is trying to hold onto 15K but that is going to be tough with interest rate still elevated.
What’s it mean?
Stocks were up/down yesterday, look at the VOLD top left and you can see the volatile action. VIX pushed up again but fell following the news, TRIN also fell sharply while the put/calls continue to rise. ADD fell hard all day long and finished near its lows. The market is jostling right now.
The Dynamite
Economic Data:
- Friday: PPI, Michigan sentiment
Earnings this week:
- Friday: SPB
Fed Watch:
We heard from Fed Governor Bowman this week who said rate hikes need to continue, as did Mary Daly from San Francisico, while Philadelphia Fed President Harker said maybe hikes are done. It’s hard to know who to believe, and of course the next meeting will be one where these different views are highlighted.
Stocks/Issues to Watch this Week
Interest rates – A huge pop this week has started to flatten the yield curve, which could be bearish for markets. If yields retreat then stocks may become attractive.
VIX – A spike in the volatility index this week surprised everyone, and markets fell sharply. This indicator could see a move up to 20% before it’s all over.
Disney – Earnings this week from the ‘house of mouse’, the stock has been a huge disappointment for months. I don’t expect any relief here but the stock is probably done going down.
