Market Wrap
Sentiment
Monetary policy remains a key focus, with expectations for the Federal Reserve to begin easing rates in December 2024. However, there's debate over the pace and extent of future rate cuts. Risks include a sharper-than-expected economic slowdown, persistent inflation, or weakening consumer spending. The June employment report, though softer than expected, showed continued job growth and a slight rise in the unemployment rate to 4.1%, largely due to increased labor force participation. This cooling in the labor market is seen as a positive, potentially easing inflation without causing significant harm.
Technical thresholds under observation include the percentage of S&P 500 stocks above their 50-day and 200-day moving averages and the number of stocks at 52-week highs versus lows. These indicators will be monitored over weeks to months for confirmations or divergences from major indices.
While a "soft landing" scenario is plausible, significant uncertainty remains. The interplay between labor market dynamics, inflation trends, monetary policy, and market performance will be crucial in shaping economic outcomes in the coming quarters. The key question, therefore, is whether this week’s CPI release will add to that emerging theme (i.e. of weaker growth and inflation – and therefore expectations of looser Fed policy) — Claude 3 Opus (Sources: Yardeni Research, Bank of America, Goldman Sachs, LSEG, Nomura, Oppenheimer)
Week Ahead
In addition, Fed Chair Powell will deliver his semiannual testimony on monetary policy before Congress, and other Fed officials are also scheduled to speak during the week. Preliminary figures for the Michigan consumer sentiment and the NFIB Business Optimism Index will also be in the spotlight.
Finally, the earnings season will kick off with results from major banks including JPMorgan, Citigroup, Wells Fargo, and Bank of New York Mellon. PepsiCo is also set to report — Trading Economics
Earnings
Metric | UpDn | This Week | Prior Week | Baseline | Baseline TF |
---|---|---|---|---|---|
Forward 4-qtr Estimate | 🔵 | 261.39 | 252.85 | 243.98 | January 1, 2024 |
Forward 4-qtr PE | 🔴 | 21.2 | 21.7 | 20.16 | January 1, 2024 |
Nominal Earnings Yield | 🔵 | 4.72 | 4.64 | 5.19 | January 1, 2024 |
Options
Metric | UpDn | This Week | Prior Week | Net CHG | % CHG |
---|---|---|---|---|---|
SPX Implied Volatility | 🔴 | 10.01 | 10.38 | -0.37 | -3.56% |
SPX GEX Flip | 🔵 | 5,487.5 | 5,462.5 | 25 | 0.46% |
SPX Skew Adjusted GEX | 🔴 | -3,732,645,952 | -208,670,202 | -3,729,775,085 | -12,918.07% |
Equity Put/Call Ratio | 🔴 | 0.56 | 0.64 | -0.08 | -0.08% |
VIX Put/Call Ratio | 🔵 | 0.58 | 0.3 | 0.28 | 0.28% |
SPX/W Put/Call Ratio | 🔵 | 1.43 | 1.2 | 0.23 | 0.23% |
Futures
Bull v Bear
This Week: 30d ATM IV 9.90% v 30d HV 7.10% +2.80%Bulls will seek to maintain price acceptance above 5588 and ideally extend WTF 1TFU on a closing basis. Upside: +123.6% PO 5678.25 (+1%) is within +1σ (W) 5705 (+1.49%).Bears will seek to cause a perceived breakout failure (< 5588) and ideally close below WMID 5564.25 (-1.02%). Downside: Naked MVPOC 5532 is just beyond -1σ (W) 5540.50 (-1.44%).
Last Week: 5621.50 SEP24 +1.69%Bulls will seek to recapture last week’s midpoint 5547.75 (+0.48%) on a closing basis. Upside: Price acceptance > ETH Absolute High 5588 (+1.2%) is within +1σ (W) 5603 (+1.48%).Bears will seek to extend DTF 1TFD and ideally break and hold below 5500 (-0.39%) on a closing basis. Downside: ESM24 Roll Gap 5437.50 (-1.52%) is justbeyond-1σ (W) 5442.00 (-1.44%).