Futures are off moderately this morning as investors prepare for FOMC minutes and NVDA earnings tomorrow.
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Tag: FOMC
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Retail Sales Warn of Economic Woes
Retail sales plunged 0.8% in January, far below estimates of -0.2% and last month’s +0.4%. The miss can’t be attributed solely to seasonality, as the Jan 2023 print was a massive +3.7% gain. The annual gain from Jan 2024 was a meager 0.6%.
It has been a tough week for economic data. Inflation higher than expected and retail sales much lower than expected – sounds like a recipe for stagflation. With the UK officially sliding into recession, can the US be far behind?
Futures have given up some of their slight overnight gains.continued for members… (more…)
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Oh So Close…
The S&P 500 came within 11 cents of 5,000 yesterday, marking a remarkable 43% run since the October 2022 lows and 22% return since the October 2023 lows.
The month of February has a mixed track record over the past 10 years, with gains and losses evenly split. Stocks frequently pause at big, round numbers – which conflicts somewhat with the fact that stocks usually melt up into CPI prints.
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NFP Soars
Nonfarm payrolls soared by 353,000, more than twice the 175,000 expected. Average hourly wages also beat at +0.6% (+4.5% YoY) versus +0.3% expected. Unemployment remained at 3.7%. Forget about a March rate cut. Bulls will be lucky to get one in May.
The overnight ramp job has completely disappeared, with futures struggling to remain positive. AAPL‘s meltdown hasn’t helped.
Factory orders and Michigan consumer sentiment are due out at 10ET.continued for members… (more…)
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No Pivot, No Punch Bowl
Powell said what many of us have been thinking: There’s no reason to rush into a rate cut. The part he didn’t say (but implied) was that there was a clear risk to cutting rates at this time.
The market, which has been fueled for months by rate cut expectations, was quite disappointed. SPX shed 1.5% and closed at the bottom of the acceleration channel it’s been in since October. It was only a little bit scary.
Futures fell to slightly below our initial downside target before rebounding overnight on the usual algo nonsense.
Does yesterday’s action change the overall picture? Maybe.continued for members… (more…)
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FOMC Day: Jan 31, 2024
It has been a long time coming, with expectations of a rate cut ranging from “certainly” to “not a chance in hell.”
Futures are taking their cues more from GOOGL and MSFT than the FOMC at the moment.
Will we finally get a real backtest? Our potential downside targets are getting very lonely.continued for members… (more…)
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Will They or Won’t They?
Futures are off moderately as investors place their bets on tomorrow’s FOMC rate decision.
This follows yesterday’s pop in prices which was reported as motivated by a better than expected treasury report, but was in reality driven by [drumroll please] more algo funny business in VIX.
In any case, SPX was finally pried off its 2.24 Fib extension just in time for tomorrow’s FOMC decision.
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Charts I’m Watching: Jan 29, 2024
Futures are flat as we enter a data-laden week accented by Wednesday’s FOMC interest rate decision.
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PCE in Line, Home Sales Beat
PCE increased 0.2% MoM and 2.6% YoY in December, in line with most estimates. Core PCE increased 2.9% YoY. This is the smallest gain since Mar 2021. Drilling down, goods rose 1.1% (durable goods 1.5%) in December while services rose 0.3%.
Real PCE rose 3.2% YoY, with the goods category growing 5% and durable goods rising 8.5%.
At 0.7% MoM, personal spending rose substantially more than the 0.4% estimates (and prior.) Spending rose 4.2% YoY, a slight decrease from November’s 4.4%.
December pending home sales far outpaced estimates at +8.3% versus 2.0% and -0.3% prior. The annual increase was much less frothy at 1.3%. The monthly beat was paced by 11.9% and 14.0% gains in the South and West respectively. Sales dropped 3.0% in the Northeast.
Futures are off slightly after rebounding from their overnight lows.
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Charts I’m Watching: Jan 19, 2024
Keep an eye on home sales, due out at 10am ET. Shelter has been one of the more problematic categories of inflation for the Fed, showing a 6.2% annual increase in December. Without a doubt, it remains the biggest impediment to getting inflation back down to 2%.
Like yesterday, the overnight ramp has faded as we approach the open. The housing data could determine whether we see a more robust backtest or new highs.
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