August 16, 2024 | Catalyst Vacuum

MARKETS

S&P 500: Up +11 points to 5554, VIX: 14.96

Asia: Japan +3.64%, China +0.07%, Hong Kong +1.88%

Europe: Euro Stoxx 50 +0.70%, FTSE -0.37%, DAX +0.77%

FX: USD (DXY) down 0.17%, EUR up 0.14%, GBP up 0.24%, JPY up 0.70%, CNY up 0.12%

Energy: WTI Crude down 2.37% to $76.28, Brent down 2.07% to $79.37

Cross markets: Terminal rate up ~1bp at 5.33, Implied rate cuts 2-years from terminal down ~19bp at 207bp, 5/10 yield spread +12bp

Treasuries: 2-year yields up ~1bp at 4.098%, 10-year yields down ~1bp at 3.904%, 30-year yields down ~2bp at 4.152%

WHAT WE'RE THINKING

Snapshot: US equities?are mostly lower after yesterday’s broad rally marked the sixth-straight daily gain for the S&P 500 (SPX) and Nasdaq 100 (NDX).??Position squaring into the weekend generates modest downside in yesterday’s strongest groups with Industrials and Tech lagging behind bond proxies and defensive sectors. TPR is the best performing name in the SPX after yesterday’s better-than-feared quarter results in a second day of short-covering. Shares of ULTA also rally for a second day after the retailer appeared as a new stake in BRK/B’s 13F filing on Wednesday. Semi-cap equipment is an area of weakness after beat-and-raise results from AMAT draws attention to its business in China. Shares of PANW are lower into Monday’s earnings print, while CSCO extends its earnings-induced rally from yesterday. Treasury yields are slightly lower after yesterday’s big backup.??The Dollar Index?slides on renewed yen strength. Gold is up ~1.5% to a record high after crossing above $2500/oz earlier this morning. Copper futures are little changed, while WTI crude trades lower after Qatar’s prime minister urged Iran to de-escalate tensions with Israel based on progress in Gaza ceasefire negotiations.??

• Equities consolidate recent gains in a quiet session ahead of August flash PMIs due next Thursday and Powell’s Jackson Hole address on Friday.?
• Today’s mixed data won’t change the resilient growth narrative that reemerged after yesterday’s retail sales print.??
• Preliminary August University of Michigan sentiment came in better than the forecast with 1 and 5-year inflation expectations unchanged at 2.9% and 3%, respectively.?
• July housing starts missed by a wide margin, hitting the lowest level since May ’20 with building permits also missing and June starts revised lower.
• Chicago Fed President Goolsbee warned the labor markets tend to worsen quickly in a tacit endorsement for a September rate cut.?
• There’s earnings-driven upside this morning in COHR, GLOB, HRB and MSGE, while AMCR and FLO trade lower.?

Narrative: Wednesday’s inline CPI report and yesterday’s improved retail sales number combined to temporarily reestablish the Goldilocks narrative that died in the wake of the 8/2 Jobs Report.??But the macro-fundamental debate is far from settled with next Thursday’s flash PMI data and August payrolls (9/6) as key near-term risks. The reinstated narrative was also partially attributed to WMT’s same-store-sales beat and improvement in general merchandise.??But WMT’s better-than-feared results came from share gains as the consumer often trades down during periods of stress.??TGT’s earnings report on Thursday will be the next input on the consumer.??A contraction in August PMIs and disappointing/underwhelming report from TGT on Thursday would challenge the narrative into a seasonally weak period.??

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SPX: Yesterday’s risk-on rally that pushed the SPX through technical resistance at 5447 was largely led by short-covering and CTA demand.??The sustained break above 5447 only eliminates the bearish technical pattern that developed after July payrolls and the absence of meaningful catalysts until Thursday should generate some near-term trend continuation – but that’s about it.??This week’s rally may cause long-only managers to take another look at strong fundamental stories, but macro doubts remain and the index will struggle to recapture sidelined cash.

FACT OF THE DAY

Biquette de Mauriac or Biquette the Grindcore Goat (c. 2003 - December 2013), was a rescued factory milking goat who would regularly attend underground heavy metal/punk rock shows in a communal French farmhouse. Biquette’s owner Flo suspected that she enjoyed the vibrations in the wooden floors. Biquette also developed human-like vices, particularly in the form of consuming/stealing alcohol and tobacco. ??

JSC IN THE MEDIA

Small caps could be in for a revival: Small and mid-cap stocks usually outperform during a cyclical recovery, that may come into view once the Fed begins its easing cycle. ?However, not all factors point to an imminent cyclical recovery. ?Andrew discusses what is missing and what to look for. Read More on CNBC

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AAPL Earnings Beat Despite Slip in iPhone Sales: Andrew Graham and CFRA’s Angelo Zino talk about Apple's (AAPL) earnings and what to expect from 'Apple Intelligence.' Watch Now

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Fox Business News: Andrew joins Charles Payne on Making Money to discuss risks to the soft landing scenario and factors necessary to sustain the current bull market. Watch Video

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See more of JSC in the Media.

THIS DAY IN HISTORY

June 1, 1449:??It was then revealed (www publicly available 8/6/91) that Martha Washington was on a $1 bill in 1891. But the first woman on any US currency denomination was actually Pocahontas, appearing on a $20 bill in 1865-1869.

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