Market Wrap
Narratives
While the S&P 500 has held up, buoyed by mega cap strength, it may not be the most reliable indication that the macro backdrop remains robust. The copper-gold ratio, transports relative performance, crude prices and the China PMI have all receded recently — at odds with the more resilient growth outlook currently implied by the durability of the major equity indices. If US growth is resilient, it implies a tight labor market and stickier inflation, dynamics that likely would not prompt the Fed to cut rates in 2023. In contrast, in the event deteriorating growth conditions do prompt the Fed to cut rates this year (which is not our economists’ view), that would likely be risk-off for equities anyway from a tactical standpoint — Mike Wilson, Morgan Stanley
Week Ahead
Additionally, the debt ceiling standoff will remain in the spotlight. Although the earnings season is coming to an end, there are still several corporate reports to follow, including those of The Home Depot, Walmart, Cisco Systems, Take-Two Interactive Software, Applied Materials, and Deere & Co.
Regarding data releases, retail sales in April are expected to have increased by 0.7% after two consecutive months of decline, while industrial production is expected to stall. Other economic data covers new residential construction numbers, existing home sales, business inventories, homebuilder sentiment, and regional activity indexes such as the NY Empire State Manufacturing Index and Philadelphia Fed Manufacturing Index
Earnings
Metric | UpDn | This Week | Prior Week | Baseline | Baseline TF |
---|---|---|---|---|---|
Forward 12-mo Estimate | 🔵 | 226.28 | 225.91 | 228.39 | January 1, 2023 |
Forward 12-mo PE | 🔵 | 18.7 | 18.5 | 17 | January 1, 2023 |
Nominal Earnings Yield | 🔵 | 5.47 | 5.42 | 5.86 | January 1, 2023 |
Options
Metric | UpDn | This Week | Prior Week | Net CHG | % CHG |
---|---|---|---|---|---|
SPX Implied Volatility | 🔴 | 13.69 | 14.2 | -0.51 | -3.59% |
SPX GEX Flip | 🔵 | 4,127.5 | 4,122.5 | 5 | 0.12% |
SPX Skew Adjusted GEX | 🔴 | -1,620,815,867 | 5,235,353,531 | -6,856,169,398 | -130.96% |
Equity Put/Call Ratio (CBOE) | 🔵 | 0.7 | 0.69 | 0.01 | 1.45% |
VIX Put/Call Ratio (CBOE) | 🔴 | 0.49 | 0.57 | -0.08 | -14.04% |
SPX/W Put/Call Ratio (CBOE) | 🔵 | 1.38 | 1.29 | 0.09 | 6.98% |
OEX Put/Call Ratio (CBOE) | 🔴 | 0.22 | 0.54 | -0.32 | -59.26% |
Futures
Bull v Bear
This Week (30d ATM 13.27% v 14.04% p)Bulls will seek to break WHI 4167.00 and ideally recapture WHI.1 4206.25. Upside: > YTD HI 4208.50 (+1.7%); HH 4217.25 (+1.92%) are within +1σ (W) 4222.25 (+2.04%).Bears will seek to extend 1TFD < WLO 4111.75 on a closing basis. Downside: < 4100(-0.92%); APR LO 4068.75 (-1.67%); WLO.1~50d MA 4062.25 (-1.83%) are within -1σ (W) 4057 (-1.96%).
Last Week (4138.00 JUN23 -0.3%)Bulls will seek to break Thursday’s HI 4167.00 and ideally recapture WTF 1TFU > 4206.25. Upside: > YTD HI 4208.50 (+1.4%); HH 4217.25 (+1.61%) are within +1σ (W) 4235.50 (+2.05%).Bears will seek to recapture DTF 1TFD < 4111.50 (-0.93%). Downside: < 4100(-1.21%); WVAL 4082 (-1.64%) are within -1σ (W) 4068 (-1.98%). 50d MA 4060 (-2.17%) retest just below.