01/16/2025 ES Trade Plan Worksheet

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Jan 162025
 

US stocks surged higher on Wednesday after strong bank earnings and Core CPI climbed 0.2%, an easing from November’s 0.3%.  It was the first time since July the CPI price growth decelerated.  The report showed vehicle, grocery, appliances, electronics, and rental car prices down while auto insurance, airfare, rent, housing, education, and restaurant prices are up.

The Dow Jones rose 700 points (1.6%), while the S&P 500 climbed 1.8% and the Nasdaq soared 2.5%.  The 10-year Treasury shed 13 basis points, dropping the yield to around 4.65%.  Rate sensitive small-cap Russell 200 Index rose almost 2%.  FedWatch shows markets pricing a possible rate cut in June.

JPMorgan Chase (JPM), Goldman Sachs (GS), BlackRock (BLK), Wells Fargo (WFC), and BNY (BK) all beat optimistic analyst expectations.

A phased ceasefire deal between Israel and Hamas was completed on Wednesday.  The initial phase is 6 weeks which includes gradual withdrawal of Israeli forces from the Gaza Strip and the release of hostages taken by Hamas in exchange for Palestinian prisoners held by Israel.

Taiwan Semiconductor Manufacturing Co. (TSM) projects their quarterly sales and capital expenditures will beat analyst estimates as AI hardware spending remain robust and resilient.  The company sees spending $38B to $42B on technology and capacity improvements, which is about 19% higher than expected.  They predict $25.8B in revenue for the March quarter which is 6% above current estimates.

Corporate earnings premarket include UnitedHealth Group Inc (UNH), Bank of America (BAC), Morgan Stanley (MS), PNC Financial Services Group, Inc (PNC), U.S. Bancorp (USB), MBT Bank Corp (MTB), and First Horizon Corp (FHN).  Earnings after the bell include J.B. Hunt Transport Services, Inc (JBHT) and Bank OZK (OZK).

The economic calendar includes Retail Sales, Unemployment Claims, Philly Fed, and Import prices @ 8:30am ET, Business Inventories, and NAHB Housing Market Index @ 10:00am ET.  Fed speakers include New York Fed President John Williams @ 11:00am ET.

Volatility jumped higher on the CPI reaction.  The ES 5-day average daily range is now 83.5 points.

Whale bias is leaning bullish into the 8:30am ET economic numbers on light overnight large trader volume.

 

 Posted by at 5:56 am

01/15/2025 ES Trade Plan Worksheet

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Jan 152025
 

The market focus is squarely on this morning’s 8:30am ET Consumer Price Index numbers, the latest read on inflation.  A resurgence of inflation likely pushes Fed rate cuts out which is bullish for Treasury yields and bearish for stocks.  Currently, it appears inflation has stalled above the Fed’s 2% target.

With gas prices on the rise and food prices ticking up, Core CPI is expected to have risen 3.3% over last year.  Shelter costs, life insurance, medical care, airfares, and lodging costs are keeping inflation stubbornly high.

With the Trump administration taking the reins next week, many economists fear a resurgence in inflation.  Citi economists recently wrote, “Trump’s policies entail a complicated mix of favorable and adverse supply shocks and demand shocks…  Bottom line, the uncertainties surrounding Trump’s policies are significant.”

The Fed’s December meeting minutes also revealed that the Fed is also on edge.  They are worried about the uncertainty surrounding the “scope, timing and economic effects of potential changes in policies affecting foreign trade and immigration…”

Bank of America has revised their outlook to zero rate cuts in 2025 and think the Fed may shift back to tightening this year.

Semiconductor and chip manufacturer trade groups sent a private letter on Monday to President Biden complaining that the new chip export controls were rushed through without consulting the industry.  The groups say the chip export controls will have long-term impacts with economic and international significance.  Some of the new rules appear to reverse previous rules and will greatly impact revenue of US semiconductor companies.

Big Banks kick off earnings season.  On deck this morning is JP Morgan Chase & Co (JPM), Wells Fargo & Company (WFC), Goldman Sachs Group, Inc (GS), BlackRock, Inc (BLK), Citigroup, Inc ( C ), and The Bank of New York Mellon Corp (BK).  Earnings after the bell include Synovus Financial Corp (SNV).

In addition to the CPI numbers @ 8:30am ET, the economic calendar includes Empire State @ 8:30am ET, Oil @ 10:30am ET, and the Fed Beige Book @ 2:00pm ET.

Fed speakers include Barkin @ 9:20am ET, Kashkari @ 10:00am ET, Williams @ 11:00am ET, and Goolsbee @ 12:00pm ET.

Volatility ticked down on Tuesday but the CPI numbers reaction could drive directional volatility today.

Whale bias is leaning bullish into the 8:30am ET CPI numbers on relatively light overnight large trader volume.

 

 Posted by at 6:34 am

11/23/2023 Thanksgiving Holiday

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Nov 232023
 

US stock markets are closed today, Thursday, November 23 for Thanksgiving.  US stock markets will be open tomorrow for a shortened, morning session with likely little volume.  Most US based traders take this as an opportunity for a 4-day weekend.  Happy Thanksgiving!

 

 

 Posted by at 7:58 am

09/26/2022 ES Trade Plan Worksheet

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Sep 262022
 

As global central banks raise and lower (as the case with Turkey) interest rates, global currencies are taking a wild ride.  While American tourist are enjoying the strong dollar, retirement accounts, institutional portfolios, corporate earnings, and crypto holds are feeling pain caused by the currency movements.

Strong tech companies are feeling pain.  Nvidia is down 57% YTD, AMD is down 52% YTD, and Amazon is down 32% YTD, all primarily due to interest rates and the currency markets.

It’s rare times when a premier company like FedEx misses earnings by $2 and announces cost cuts of $3 billion.  Nike (NKE) posts earnings on Thursday and given they are a global company like FedEx, currencies will likely negatively impact the current and foreseeable future earnings.

The pound has hit a historic low of 1.0327 after release of last week’s new Conservative government ‘mini-budget’ and the euro has hit a 20-yuear low of 0.9689 against the dollar.

Oil prices continue to weaken as $100/barrel seems far in the rear-view mirror as prices return to Jan 2022 prices.  WTI for November hit $78.49/barrel while Brent contracts are trading around $85.50.

There are no corporate earnings of note for Monday.

The economic calendar is light with Chicago Fed @ 8:30am ET and Dallas Fed @ 10:30am ET.  Boston Fed President Susan Collins speaks @ 10:00am ET.

Volatility remains high.

No Whale bias as large traders leaned bearish overnight but not with enough volume to be significant.

 

 Posted by at 7:26 am

09/23/2022 ES Trade Plan Worksheet

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Sep 232022
 

Fed Chair Jerome Powell could shake up the markets once again this afternoon.  He is set to give the opening remarks for a Fed Listens event in Washington D.C. @ 2:00pm ET.  Given the fireworks his press conference generated on Wednesday, there is potential for more this afternoon.

The Securities and Exchange Commission (SEC) has decided that zero-commission brokerages are not ripping their customers off and will allow brokerages to continue being paid for order flow (PFOF) from market makers like Citadel Securities or Virtu Americas.  Rather than an all-out PFOF ban, the SEC thinks more price transparency and requiring brokers to execute at the best possible price at the time will reduce the problem of small investors paying too much and allow commission-free brokerages like Robinhood to exist.  One study showed that the differences in prices between fee brokerages and commission-free brokerages cost investors up to $34 billion per year.

Stocks are down overnight with some global markets hitting 2-year lows as global central banks crank up the rate hikes.  German PMIs showed a deep contraction in manufacturing.

In the US, the Atlanta Fed’s GDPNow tool is forecasting third quarter growth of 0.3% and the bond market continues to give recession warnings with the 2-year rising to 4.19%.  Meanwhile, Goldman Sachs cut their full year target for the S&P 500 to 3600.

Speaking of big banks, they got Congressional pressure on Thursday to raise savings interest rates.  While Fed rates have increased significantly, big bank savings interest rates have not moved from 0.01%.  The banks are posting 10s of billions in quarterly profits, around 25% of gross revenue, catching the ire of lawmakers.  Many regional banks now paying 2% or more on savings accounts.

Costco (COST) is down over 3% premarket after beating earnings but warning of narrowing profit margins.

Corporate earnings include Carnival (CCL).

The economic calendar focus is the Flash PMIs @ 9:45am ET.

Volatility remains high.

Whale bias is short into the US session open on decent large trader volume.

 

 Posted by at 7:27 am