Critical information for the U.S. trading day
There’s no near-term respite in sight for stocks as a new week begins, with futures tumbling ahead of what many see will be a firm foot by the Fed “on the brake pedal this week.”
Technical analysts are warning that markets are poised to retest June lows, with 3,640 on the S&P 500 (SPX) in the spotlight.
“Investors have become much less comfortable with this tighter liquidity environment, with many realizing it will stay in place for a much longer period of time than initially expected, which ultimately leads to the current decreasing appetite for riskier assets,” said Pierre Veyret, technical analyst at ActivTrades.
One result has been a steady push by investors into the dollar, which Citigroup strategists have described as “one of the only places to hide.” While the greenback is looking overvalued and a turning point is inevitable, Citi says either “global growth expectations need to turn or the Fed needs to pivot,” for that to happen.
Our call of the day comes from Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist, who thinks the Fed will drag the dollar lower sooner than many think.
Emanuel tells clients in a note that last week’s FedEx (FDX) profit gloom and the inverted yield curve between the two- and 10-year Treasurys are red flags for a global recession reaching U.S. shores.
With that, Emanuel expects “the Fed could (and should) guide markets on Wednesday that ‘data dependency’ for the central bank’s Nov. 1-2 FOMC decision is 0-75bp in hikes, not 50-75.” Given the Fed will be assessing enormous tightening already in place and potential for messy midterm elections, the strategist thinks U.S. dollar will “continue to temper its strength.”
The dollar index is up about 1.3% so far for September, after a blistering 2.6% gain in August.
The Evercore team offers up a list of “Dollar-Down Denominators” — S&P 500 (SPX) names that could outperform in case of a dollar pull back, alongside “Buck Backsliders” equities that could underperform amid a weakening dollar.
From the “Denominators” list are export-oriented sectors with more than 70% foreign revenue exposure and high short interest, that have underperformed their peers in 2022. NVIDIA (NVDA), Linde (LIN), Mondelez International (MDLZ) and Estee
Lauder (EL) are just a few of those names.
On the “Backsliders” list are Verizon Communications (VZ), AT&T (T), Union Pacific (UNP) and Lockheed Martin (LMT) , to name a few.
So far for Monday it’s dollar up.
Hear from Ray Dalio at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The hedge-fund pioneer has strong views on where the economy is headed.
It’s not just stock futures (ES00) (YM00) (NQ00). Oil (CL.1)
is dropping, while bitcoin (BTCUSD) and Ethereum (ETHUSD) prices are getting hit particularly hard, following the latter’s so-called “merge” last week. Bond yields (BX:TMUBMUSD02Y) (BX:TMUBMUSD10Y) are steady, while gold prices (GC00) are down.
Best of the web
The ordinary heroes invited to the Queen’s funeral.
Losing macro hedge fund offers investors the chance to exit, recoup some losses.
Nobel Prize–winning economist Peter Diamond says workers have the power.
China tells citizens not to touch foreigners over monkeypox threat.
Some 2,000 global dignataries, along with perhaps a billion people worldwide have been watching the funeral of Queen Elizabeth II. Follow along with our live blog.
The National Association of Home Builders sentiment index is due after the market open in a week that will see plenty of data on the sector, with existing home sales and housing starts. Apart from the Fed decision on Wednesday, the end of the week will bring PMI data for September.
A hacker who claims to be behind the recent Uber (UBER) data breach may have leaked dozens of gameplay videos from the upcoming “Grand Theft Auto VI” videogame from Take-Two interactive’s (TTWO) Rockstar Games.
President Joe Biden declared the pandemic over in a Sunday interview, to the surprise of some of his health advisers. He also said the U.S. would defend Taiwan against a China invasion.
Zoom Video Communications (ZM), has not just been a “poster child” for stocks hitting new lows on the Nasdaq, “but one of the greatest leading indicators of where the market is going overall,” says Michael Kramer, the founder of Mott Capital Management.
The video-conferencing group that surged during the pandemic, made a new low on Friday, and “probably isn’t finished falling either, with the following significant support at $76.45 and then $70. “
Here’s his chart, and full blog post.
These are the top-searched tickers as of 6 a.m. Eastern Time:
AMC Entertainment preferred shares
Queue actually. Couple meets while waiting to view Queen.
Farmer finds stunning Byzantine-era mosaic while planting olive trees.