October 14, 2024 | Performance Chase

MARKETS

S&P 500: Up +37 points to 5852, VIX: 19.87

Asia: Japan +0.57%, China +2.07%, Hong Kong -0.75%

Europe: Euro Stoxx 50 +0.74%, FTSE +0.47%, DAX +0.69%

FX: USD (DXY) up 0.31%, EUR down 0.27%, GBP down 0.12%, JPY down 0.48%, CNY down 0.29%

Energy: WTI Crude down 2.46% to $73.68, Brent down 2.30% to $77.20

Cross markets: Terminal rate unch at 4.83, Implied rate cuts 2-years from terminal up ~10bp at 152bp, 2/10 yield spread unavailable

Treasuries: closed for Columbus Day?

WHAT WE'RE THINKING

Snapshot: US equities are broadly higher with S&P 500 (SPX) hitting a fresh intraday high.??This follows a +1% gain last week fueled in part by Friday’s solid start to the CQ3 earnings season.??Tech and Utilities do most of the heavy lifting this morning as the AI data center capex theme gains traction.??Semi-cap equipment is strongest within Tech, while independent power producer, VST leads the list of SPX outperformers. Banks extend earnings-driven gains from Friday, while P&C insurers and reinsurers continue their post-hurricane rebound.??Materials, capital goods and China-exposed themes underperform after Saturday’s MOF press conference lacked specificity.??The US bond market is closed for Columbus Day with the Dollar Index advancing on dovish developments out of Europe and China.??Commodity prices are mostly lower with gold, copper and WTI crude pulling back.

• Fedspeak is in focus with Minneapolis'?President Kashkari repeating calls for a gradual pace of rate cuts as inflation appears to be in the final stages of getting back to ~2%. Fed Governor Waller is scheduled to speak today at noon PT.??
• There’s no major macro data on the calendar until Thursday when we get retail sales, jobless claims, industrial production, Philadelphia Fed manufacturing and the NAHB housing market index. September retail sales will likely have the greatest influence on markets with consensus looking for the headline number to be up +0.3% MoM after a +0.1% gain in August. Retail sales for the control group are expected to increase +0.4% after a +0.3% gain in August.??
• It's a quiet day of corporate news as the pace of CQ3 earnings reports starts to pick up tomorrow.??Last Friday’s group of reporting companies all posted EPS ahead of expectations with positive outlooks from FAST, JPM and WFC attracting the most attention.
• China’s MOF press briefing on Saturday failed to deliver specifics with the size of any fiscal package requiring NPC approval.??There was also no mention of direct support for consumption with incremental measures focused on risk mitigation (hidden debt, housing and banks).
• China September economic data also fell short of expectations with trade and inflation data missing consensus. September exports rose +2.4% YoY vs. consensus for +6%, while September PPI deflation worsened, coming down -2.8% YoY vs. -1.8% in August.??
• Reports elsewhere focused on the potential for Eurozone inflation to fall below the ECB’s 2% target as growth data in the region remains lackluster.??Reports also discuss widening cracks in the Eurozone jobs market, while Fitch cut its credit outlook on France to negative from stable.
• ADBE is holding an analyst meeting today with shares higher during early presentations.??There are no earnings reports scheduled for this afternoon but tomorrow morning brings results from BAC, C, GS, JNJ, PGR, PNC, SCHW, STT, UNH and WBA.?

SPX: Bank earnings on Friday helped build confidence in the Goldilocks narrative, which carries into today.? The signal quality from today’s price action is somewhat degraded with the bond market closed for the holiday. ?SPX sector performance on Friday was skewed towards cyclical groups with Tech, Industrials and Financials all outperforming while defensive groups including Utilities lagged.? We’re seeing similar sector performance trends today with the exception of Utilities that outperform without the influence of bond yields. ?The lack of cross market signaling from bond yields temporarily removes sticky inflation and policy uncertainty from the list of concerns with Friday’s earnings prints kicking off a performance chasing rally.? The SPX is now trading above technical resistance near 5810 with the pain trade aimed at sidelined cash.? We keep a near-term bullish bias on closing levels north of ~5600.

FACT OF THE DAY

There is a palm tree and pine tree planted next to each other at the midpoint of California on Highway 99 in Madera.? The palm tree signifies the entrance to Southern California, while the pine tree…you get it. The exact origins of the landmark are unknown but have been there since the 1920s. But ‘The 99’ (how you say it if you live in So Cal) is scheduled to be widened in that area next year so the trees are being removed and eventually replaced with 15 trees of each species. That’s exciting.

JSC IN THE MEDIA

Markets react as tensions rise in the Middle East: Andrew comments on recent events in the context of a market that is richly valued and therefore more sensitive to shocks of all kinds. Read on Reuters

?

Breaking Down FedEx Earnings: Speaking on Bloomberg Television, Andrew shares his take on FedEx’s latest earnings report. Watch Now

?

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

?

See more of JSC in the Media.

THIS DAY IN HISTORY

October 14, 2012: Two days after arriving at Los Angeles International Airport, the space shuttle Endeavour reached its final destination, the California Space Center; its 12-mile journey through the city had required trees to be cut down and signs to be removed.

CATALYST CALENDAR

Tomorrow: 1) Japan’s industrial production for August; 2) Eurozone industrial production for August; 3) The Empire Manufacturing index for October; 4) New Zealand’s CPI for Q3 and; 5) earnings before the US open: ACI, BAC, C, GS, JNJ, PGR, PNC, SCHW, STT, UNH, WBA. After the close: EPAC, HWC, IBKR, JBHT, Rio Tinto, SGH, UAL. EU earnings: LVMH.

?

Wednesday: 1) US import/export prices for September; 2) Japan’s imports/exports for September; 3) Australia’s jobs report for Sept Wednesday and: 4) Earnings before the open: ABT, CFG, FHN, MS, PLD, SYF, USB. After the close: AA, CCI, CSX, DFS, EFX, HOMB, KMI, PPG, REXR, SLG, SNV, STLD.

?

Thursday: 1) US retail sales for September; 2) Philadelphia Fed for October; 3) ECB decision; 4) US weekly jobless claims; 5) US industrial/manufacturing production for September; 6) US business inventories for August; 7) the NAHB housing index for October; 8) Japan’s national CPI for September; 9) China GDP for Q3; 10) China retail sales/industrial production for September and; 11) earnings before the open: BMI, BX, CBSH, CMC, ELV, HBAN, INFY, KEY, MAN, MMC, MTB, SNA, TCBI, TFC, TRV, TSM. After the close: CCK, FNB, ISRG, NFLX, OZK, WAL, WDFC. EU earnings: Nestle, Nokia.

?

Friday: 1) US housing starts/building permits for September and; 2) earnings before the open: ALLY, ALV, AXP, CMA, FITB, PG, RF, SLB. EU earnings: Volvo AB.

?

Sunday: China’s 1/5-year Loan Prime Rate decision.

Jackson Square Capital produces Inside Markets. We also offer financial planning and investment management services. Learn more here and catch up on our recent media appearances.

Investment Advisory Services offered through Jackson Square Capital, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.