Markets ripped a page right out of The Lego Movie songbook on Monday, with an “Everything-is-awesome,” session — the highest close for the Nasdaq
since August, and continued falling demand for 2-year Treasury bonds and gold.
It’s as if investors are watching the U.S. debt ceiling saga like “an American film knowing that there will eventually be a happy ending,” says Swissquote Bank’s Ipek Ozkardeskaya. For Tuesday, equity futures are pointing to some wobbles ahead for the S&P 500
though less so tech as Washington watch continues.
Onto our call of the day from Prometheus Research, which sees promise in a strategy that’s bullish on stocks and bearish on commodities.
“The combination of these bets is particularly interesting in a macroeconomic context— if they continue to trend, it will likely further current market pricing of disinflation,” says Prometheus, whose researchers use quantitative analysis to understand underlying mechanisms driving the economy that can indicate future market trajectories.
The below chart offers a summary of the potential long, short and neutral asset positions based on their trend process:
“Currently, we are seeing a range of potential trends — most of which are skewed the short side. The strongest signals are currently short commodities (WEAT
) and long equities (SPY
),” said the Prometheus team.
The takeaway is that if these trends keep up, investors could see the market keep pricing towards deflation. And their market regime monitor is indicating a rising probability of low growth, low inflation (third column over, in blue) ahead:
The Prometheus view fits with the economic outlook expressed by Steve Englander, head of North American macro strategy at Standard Chartered, who looked at tax receipts for May. “We think inflation and the economy are decelerating more than many in the market and at the Fed believe,” he said.
Also read: Stocks were the only positive asset class over the last decade, adjusted for inflation
are tilting negative, as bond yields
push higher, with the 10-year
up 4 basis points at 3.75%. Two-year bond yields are up a 9th straight session after hawkish Fed talk. Oil
is flat and gold
are falling as the dollar
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stock is down after the home-improvement retailer cut full-year guidance, citing lower demand, while BJ’s Wholesale Club
is lower after confirming its outlook, but disappointing on sales, and AutoZone
is dropping on disappointing sales from the car-parts retailer. Dick’s Sporting Goods
stock jumped after an earning and sales beat. Also coming, Urban Outfitters
and VF Corp.
due after the close.
Read: Parade of retailers to face inflation doubts while Nvidia and Zoom answer questions about tech
are up 13% after the Wall Street Journal reported that an activist investor is pushing the company to consider a sale to boost its value.
is buying GIF and stickers group Giphy from Meta Platforms
for $53 million in cash. Neither company’s shares are moving much in premarket.
set a 1-for-15 reverse stock split. Shares are down 16% in premarket.
Cathie Wood’s ARK Investment loaded up on about $4 million worth of Palantir Technologies stock
across multiple funds on Monday.
“There is a subset of American consumers who will not drink a Bud Light for the foreseeable future,” says JPMorgan, which warns of trouble for Anheuser-Busch’s
The S&P flash U.S. services and manufacturing PMI surveys will be released at 9:45 a.m., followed by new home sales at 10 a.m. Ahead of that, Dallas Fed President Lorie Logan will speak at 9 a.m.
Read: Will AI cause mass unemployment? What history says about technology and jobs
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