The Fuse
Equity futures are rallying one more time but there is a monetary policy decision to deal with later on today. The Fed’s 7th meeting of the year concludes with likely a rate cut and a Powell press conference. He may talk about the lack of data for the committee and how they may have to keep more moves on hold until such time that they have more information.
Interest Rates are up slightly this morning as the Fed finishes up their meeting today. Rates on the short end are likely to be lower, the 2 year remains below 3.6% and is seeing more cuts coming down the pike. High yield remains very tight was spreads narrow, fed funds looking for a cut today.
Stocks are poised to open higher this morning following some strong earnings news from big companies (see below). However, the Fed meeting and decision might throw a wrench into the plans of the bulls. Stocks in Europe were flat but the FTSE gained .4%< the dollar index climbed .1%, gold is rallying as is silver again, crude oil may break $60 soon. Stocks in Asia were higher, Japan up by 2.2%, Shanghai gained .7%. German and US treasury yields held steady.
Earnings last night from Seagate were terrific, a beat and raise with strong cash flow. Visa’s numbers wee also strong, this one may be a delayed response. Bloom Energy ripped the cover off the ball. This am strong metrics from Boeing and Caterpillar are lifting the Industrials higher. Big night of earnings with Microsoft, Meta Platforms, Alphabet, Chipotle, ServiceNow, Carvana, Starbucks and Mercado Libre.
It certainly looked as if the indices would start to break away but gravity always takes hold in those situations. Even though the indices did hit all-time closing highs, they did finish off their best levels of the day. That is not a horrible thing though, the price action remains bullish and buyers are responding. More bubble talk though, and what is best to ignore it until the signs are there of a pullback.
Poor breadth followed up very good breadth, so we have a net zero situation. That is not a tragedy though, breadth indicators are still clinging to buy signal so we could keep this indicator bullish for a bit longer. Oscillators are positive but less so from Monday, new highs just crushing new lows again, this intermediate term indicator remains strong.
Strong turnover on the industrials and Nasdaq was very good as these indices as they notched an accumulation day. That’s important as it solidifies the trend and supports the strong price action of the last few sessions. More heavy volume expected later in the week is the forecast.
We continue to see positive action in the indices and that means no pullback to test lower levels yet. Eventually that will come but for now we’ll just ride the wave.
The Internals
What’s it mean?
The internals were pretty ugly yesterday but one could understand the lack of participation before the Fed’s decision today. Given the fact Monday was so strong it is difficult to have back to back bullish sessions, but we did. The internals just did not confirm it, VOLD was ugly as was the ADD and ADSPD. Ticks were mostly distributed but heavily red end of day, VIX rose up.
The Dynamite
Economic Data:
- Monday:Durable Goods
- Tuesday:home price index, consumer confidence
- Wednesday:trade balance, inventories, pending home sales, FOMC rate decision
- Thursday:jobless claims, GDP, Bowman speaks
- Friday:PCE, income/spending, employment cost, fed speak
Earnings this week:
- Monday:WM, KDP, SIFY, CDNS, WHR, CR, CLS, RMBS,CAR, BBBY
- Tuesday:SOFI, UNH, UPS, GLOW HSBC, JBLUE, DHI, RCL, W, ENPH, BE, OKE, BKNG, STX, V, ERTS, CAKE
- Wednesday:VZ, BA, CVS, CAT, FI, CNE, ETSY, FHC, ADP, PSX, META, MSFT, GOOGL, CMG, CVNA, NOW, SFM, MELI, SBUX
- Thursday:LLY, MRK,, CMCSA, OWL, RBLX, BAX, AAP, AMZN, AAPL, COIN, RDDT, MSTR, WDC, RKT, IOT, NET, ROKU
- Friday:CVX, XOM, ABBV, LYB, CHTR, CBOE, NINE, LIN
It’s a huge week for the Fed with some fed speakers later in the week, but the spotlight is on the committee and Chair Powell. The FOMC is expected to cut rates one more time at this week’s meeting, bringing the funds rate down to 3.75%. That is a path the committee talked about at the last meeting with their projections indicating this to be the action. How many more cuts is now the question, Chair Powell may address that in the press conference.
Stocks to Watch
Gold – The yellow metal remains quite volatile and we’ll be looking for gold to make more big moves this week. Gold volatility is extremely high and causing the severe moves up and down, silver as well.
Apple – Always have one eye on the big Apple as they report earnings this coming week. How is the iPhone 17 doing so far, will they run out of product? How about services and other items to drive margins? The anticipation and expectations are high, the stock may fade if there is not enough left into the future for investors.
Google and Meta – We are focusing on these two names here as they are both reporting on Wednesday. Google hit a new high Friday while Meta is still floundering, I expect to see both move sharply following their earnings release.
