The Fuse
Futures are mixed this morning after a rollercoaster session overnight. At one point SPX futures were down 22 handles but they have managed to scrape their way back to a smaller loss. Volatility sellers are trying to push the VIX lower.
Interest Rates are falling slightly after last week’s surge in yield. We could have the makings of double top in rates in the 2 year and 10 year.
That spread by the way has been narrowing and is now under 100bps.
Plenty of economic data coming up this week with June CPI and PPI midweek.
Pepsi later in the week along with United Health,Delta and Cintas, then banks start reporting – Wells Fargo, JP Morgan, Citi, Blackrock, State Street.
A handful of Fed speakers out this week as they try and explain policy in the current economic environment.
Breadth was pretty strong and remains on a buy signal. However, the rollercoaster ride was masked by strength in the R2K, but the numbers were good overall. Nasdaq breadth suffered, something to watch for.
Volume trends were pretty strong Friday and actually all week long. After a holiday-shortened week we should see better volume coming into the markets, especially with earning season getting underway.
Failing to break 4,500 or 4,450 on a close was bad news for the SPX 500. However, good support lies below at 4,350 and 4,330 if the market corrects even further. The weekly close under 4,400 was not a positive but can be corrected this week.
The Internals
What’s it mean?
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The Dynamite
Economic Data:
- Monday: Wholesale Inventories, Consumer Credit
- Tuesday: NFIB Small Biz Optimism
- Wednesday: CPI, Beige Book, Mortgage Apps
- Thursday: PPI, jobless claims
- Friday: Import/export prices, Michigan Sentiment
Earnings this week:
- Monday: HELE, PSMT
- Tuesday:
- Wednesday:
- Thursday:CTAS, DAL, FAST, PEP
- Friday: JPM, BLK, C, WFC, UNH, STT
Fed Watch:
Several fed speakers this week talking about the economy and fed policy before a blackout week prior to the next fed decision. July fed futures predicting a 93% chance of a rate hike to 5.25%. We’ll hear from Mary Daly, Michael Barr, Loretta Mester and Raphael Bostic during the week.
Issues/Stocks to Watch This Week
Banks/Financials – This group starts reporting their Q2 earnings this week. Financials have been rather weak since last quarter, we’ll see if they can snap out of their funk.
Interest Rates – We saw a big rise in rates last week, the 2 year above 5% again. If that continues we could see equities shed some value.
For now it appears that 5% level and 4% level on the 10 year should be a peak.
Semiconductor Stocks – On Monday, Taiwan Semi stated their revenue would be down significantly in June. This smacks at recent talk of bullish trends, so we’ll have to see how this group responds.