The Fuse
Equity futures are down modestly this morning, giving back some ground after Monday’s strong price action. The internals however were not impressive (see below), and if the bulls are running out of gas we might see a bit of a slide this week.
Interest Rates are down a bit this morning as the rate curve stabilizes. The dollar is up slightly while the euro and yen are lower. Bitcoin rose about 2.8% in overnight trading.
Inflation data is due out in the US tomorrow and Thursday. Overnight we saw stacks in Asia mixed and with China down. Oil is rising again and is near the highs of the year, gold is sliding as is silver. Thursday will be an ECB policy meeting.
Earnings from Oracle last night were mostly in line with elevated expectations. The company did guide higher but after rallying smartly over the last six weeks sellers were out in droves overnight. We look for the stock to settle and then move back into the 120’s range before long.
Apple’s big event is today, this is called Wonderlust. The company uses these presentations to introduce new and updated products. We expect to hear about iPhone 15, perhaps a new watch and other services offered. Apple stock is often volatile during the day.
The stock market Monday was dialing it back a bit, seeming to be suspended in animation. Volatility was nil, the VIX started up and actually ended in the red. Technology names started strong, gave some back but managed to close strong. Breadth was barely positive again, the bulls will take a win where they can.
An accumulation day for the QQQ but that was the only index with better volume than Friday. The IWM finished up but it was the least impressive, and we expect to see much more turnover by the end of the week, which is a big options expiration.
Could we see the SPX 500 make a run to 4,500 by the end of the week? That is a distinct possibility, the money flows have been pretty strong leading into an expiration week. The Nasdaq is doing its part to help guide the markets up, but the IWM is choking. Bulls need to see unison in buying, for at least a couple of sessions.
The Internals
What’s it mean?
A rather ho hum day again with the VOLD higher but barely. For the markets to be up more than .5% one would think good strong turnover, but it was not to be. This leaves the markets vulnerable here. Put/call though is heading lower while the TRIN had a sharp nosedive, hence quite bullish on this indicator. VIX was barely down but well of the highs of the day, and the ticks were mostly negative, something to watch for later in the week.
The Dynamite
Economic Data:
- Tuesday: Small Biz Optimism
- Wednesday: CPI, crude inventories
- Thursday: PPI, jobless claims, Retail Sales, Business Inventories ECB rate decision
- Friday: Import/Export Prices, Empire Manufacturing, IP and Cap Utilize, Michigan Sentimen t
Earnings this week:
- Tuesday: N/A
- Wednesday: CBRL, LOV
- Thursday: KFY, ADBE, LEN
- Friday:
Fed Watch:
Several Fed speakers out last week reiterating their hawkish views, though a couple may have hinted the Fed is much closer than everto ending rate hikes. That simply means the economy and monetary policy will be in a new phase of tightening, and that could last awhile longer. No Fed speakers this week as the committee members enter a quiet period. Currently about an 8% chance of a hike at the Sept 19th meeting, but the market is pricing in 2 hikes slightly by the end of 2023.
Issues/Stocks to Watch this Week
Apple – The company’s latest event called Wonderlust starts Tuesday, and it is assumed they will unveil their latest iPhone creation, new watches and perhaps some other new products. Always something to watch.
Inflation – The headline reading for August is expected to be quite high, a 9.5% annualized rate. That is unacceptable, but is mostly driven by higher energy and food prices. Core levels are still elevated though and should remain so. These numbers will be important before next week’s Fed meeting.
ECB – The central bank of Europe will have their rate meeting this week, they have been aggressive with policy in trying to rein in their high inflation. They are likely to raise rates at least once more before the end of 2023.
