The thinking goes like this: a strong jobs report is bearish for stocks because it might delay the Fed’s eventual pivot; while, a weak report would be bullish because it might accelerate the Fed’s pivot.
The futures are on the fence, but not for long.
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OPEC+ threw the party they said they would. Everyone was talking about it. But, nobody came.
CL and RB had already celebrated in the days leading up to the meeting and we were left with a non-event with CL stuck at a channel top and RB slamming into its 50-day MA. Might there be an after party?
It matters because the 10Y is in a dicey position – bouncing off its TL, but without a clear engine for more upside.
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If the enemy of my enemy is my friend, is the friend of my enemy my enemy? The relationship between the US and the Saudis has been through plenty of ups and downs, but it’s been years since it was as fraught as it is now.
The West is trying to put the screws to Russia, which in turn is trying to put the screws to the eurozone by enlisting the help of the Saudis, who are arguably US allies… Around and around it goes, with a decision due out later today that might spell a 2MM bpd (about 2%) cut in production.
Will it be enough to revive the correlation between oil/gas prices and interest rates? ES is positioned to at least backtest its SMA10.
Stay tuned.
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When COMP bounced at 10,572.33 on Friday, a mere 7.19 above its June 16 lows, it might have struck some as a coincidence. It wasn’t.
It was a well-coordinated effort to ensure that new lows were avoided – at least for the time being.
The usual culprit: VIX. For the 6th session in a row and the 12th time since Jan 24, 2022, VIX tested and retreated from the same trend line – an occurrence the algos have been well trained to respond to with a bounce. 
The June 13 test went further, producing a huge bounce because it also broke below two significant trend lines of support as well as producing a bearish (bullish for stocks) alignment in moving averages.
Yesterday’s huge plunge in VIX similarly wreaked havoc with moving averages – postponing (at least) an imminent 50/200 cross. Will this short squeeze rally follow the same playbook?
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Futures are up about 1%, backtesting the June lows as we approach the opening bell.
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PCE came in hotter than expected: 4.9% versus 4.7% expected/previous. Futures, which were up nicely overnight, are back in the red and testing the June lows again on the last day of Q3
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The third Q2 GDP estimate came in the same as last time: -0.6%. Q1 GDP was unchanged at -1.6%. In other words, 2 quarters of negative GDP – a recession in most folks’ minds. The deflator ticked higher to 9.0%, making a pretty good case for stagflation. The only missing ingredient is worsening employment numbers…
Futures were already off, but this didn’t help.
Our equity outlook remains unchanged.
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That didn’t take long. 
After watching the pound drop below its 1985 all-time lows, the Bank of England decided 10.1% inflation isn’t that big a deal after all. 
This is disastrous policy piled on top of disastrous policy. But, it was enough for the pound to recover – at least for now.
And, because if one central bank can blink they all might, it was enough to jolt futures back to green after they sank below their June lows.
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As we’ve discussed several times over the past month, VIX’s trend line from Jan 24 was overdue for a revisit. Now that we’ve got it, will VIX nosedive as usual or are we in for something decidedly less bullish?
The algos are geared up for a bounce.
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For months, VIX has facilitated higher equity prices – plumbing new lows, breaking down, refusing to rise in cases of obvious market distress. Today, it reached a trend line off the previous highs, all of which corresponded with sizeable bounces in the equity markets. It’s an extremely important test for bulls.
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