What Are We Talking About This Week?
What in the FOMC just happened… or was it something else?
Microsoft found the sweet spot… Meta found a sore spot.
I’ll defend the AAPL that fell far from the tree.
📡 Market Radar 🛰
Economic Reports
Payrolls is the most important. Counterintuitively, a strong jobs report could actually cause a sell-off if it pushes elevated yields higher.
Corporate Business
Tuesday, after markets close, is SPCX. First quarter as a publicly traded company a few days before 1.5x the current float is unlocked… I think there is a good probability the reaction provides a nice entry point for long term investors.
Monday
Macro
ISM Manufacturing Index (July)
Micro
AMC: Palantir (PLTR)
Tuesday
Macro
JOLTS Job Openings
Trade Balance
Micro
BMO: Caterpillar (CAT), Merck (MRK), McDonald's (MCD), Pfizer (PFE)
AMC: AMD (AMD), Amgen (AMGN). Space X (SPCX)
Wednesday
Macro
ADP Employment Report (July)
ISM Services Index
Micro
BMO: Eli Lilly (LLY), Disney (DIS), Uber (UBER)
AMC: SanDisk (SNDK), Western Digital (WDC), AppLovin (APP), MercadoLibre (MELI), Axon (AXON), Albemarle (ALB)
Thursday
Macro
Initial Jobless Claims
Challenger Job-Cut Report
Micro
BMO: ConocoPhillips (COP)
Friday
Macro
July Jobs Report (Nonfarm Payrolls, Unemployment Rate)
Micro
BMO: Oklo (OKLO), Vistra Energy (VST), Take-Two Interactive (TTWO)
Warsh wanted bonds to do the work for the Fed…
Careful what you wish for.
So… here's the funny thing. Warsh didn't do anything.
It was the bond market. Markets actually rallied coming out of the press conference. It was only as the 30Y Treasury pushed above a 20-year high that stocks reversed.
Why did the move in yields move stocks?
Whenever yields get out of control, it is a sign that something is seriously wrong.
Hold on. What is "out of control"? What is "seriously wrong"?
Out of control refers to the speed of the move more than the absolute level.
What's wrong depends on the context. In this case, it appears to be that the Federal Reserve isn't doing enough to address the upside risk to inflation.
The last time long-yields were this high was the GFC. Any time that acronym is invoked, it causes a bit of a panic. However, I do not see this as a harbinger of the next financial crisis. Sure, a rapid move in yields can break something in the real economy, but I don't think that is a concern at the moment.
Rather, it's another "be careful what you wish for" moment. Remember Powell's "higher for longer." While it was in reference to short-term rates (Fed Funds), it appears it may be coming to fruition on the long end. In today's market, there are two potential material ramifications:
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