Friday, December 16, 2022
The horses are out of the barn this morning — this pre-market slide we’re seeing isn’t because of anything new this week. We’ve gotten plenty of data that, in aggregate, has helped the markets sell off this week (for what’s looking like a third week in a row down, after we started this week so well), and we’re not going to see this remedied today, holiday spirit or no.
Remember last week when we were looking to collect on a big Santa Claus Rally to end the year with? Those were the days, weren’t they? Instead, Fed Chair Jay Powell pooped the party with his “bad news” that 5% interest rates are in our economy’s future, whether a recession happens as a result or not. It’s repeating on market participants like a bad meal; Powell’s discussion happened two days ago already.
The only economic data we’re awaiting today comes after the opening bell: S&P Manufacturing & Services PMI. Both indices are expected to be sub-50, indicating the crux between expansion and contraction, with Services expected to improve somewhat month over month but Manufacturing to remain flat. It’s a minor metric, however, compared to this past Tuesday’s CPI report and the Fed’s 50 bps rate hike (and new “dystopic” dot-plot going forward).
Next week’s biggest economic print comes a week from today — Christmas Eve Eve, or the fifth day of Hanukkah — with the comprehensive Personal Consumption Expenditures (PCE) report for November. Close attention gets paid to this report, especially by the Fed, and year-over-year PCE is following October numbers of +6.0% headline, +5.0% core. A big drop here could signal better times ahead — and the Fed’s draconian endless 5% interest rate may be a fabric of our collective imagination.
Other than that, we’ll get housing numbers next week, but we already know those are hurting. Whereas inventories a year ago were putting a premium on homes being sold, higher mortgage rates (although they’ve come down recently) are keeping many potential buyers out of the market at this time. It constitutes a big portion of the economic inflation that’s already been tamed; the bad news for housing is that it’s going to have to take the ride lower, with the rest of the economy.
The Dow has shed another -300 points in today’s pre-market, with the S&P 500 -40 points and the Nasdaq -60. We’re down roughly -2% across the board over the last five trading sessions, and it doesn’t look like there’s anything big enough on today’s agenda to change this trajectory. So we may as well light us a fire and put our feet up — the holiday season comes but once a year.
Questions or comments about this article and/or its author? Click here>>
Image: Bigstock
Pre-Markets Continue to Slide Ahead of Weekend
Friday, December 16, 2022
The horses are out of the barn this morning — this pre-market slide we’re seeing isn’t because of anything new this week. We’ve gotten plenty of data that, in aggregate, has helped the markets sell off this week (for what’s looking like a third week in a row down, after we started this week so well), and we’re not going to see this remedied today, holiday spirit or no.
Remember last week when we were looking to collect on a big Santa Claus Rally to end the year with? Those were the days, weren’t they? Instead, Fed Chair Jay Powell pooped the party with his “bad news” that 5% interest rates are in our economy’s future, whether a recession happens as a result or not. It’s repeating on market participants like a bad meal; Powell’s discussion happened two days ago already.
The only economic data we’re awaiting today comes after the opening bell: S&P Manufacturing & Services PMI. Both indices are expected to be sub-50, indicating the crux between expansion and contraction, with Services expected to improve somewhat month over month but Manufacturing to remain flat. It’s a minor metric, however, compared to this past Tuesday’s CPI report and the Fed’s 50 bps rate hike (and new “dystopic” dot-plot going forward).
Next week’s biggest economic print comes a week from today — Christmas Eve Eve, or the fifth day of Hanukkah — with the comprehensive Personal Consumption Expenditures (PCE) report for November. Close attention gets paid to this report, especially by the Fed, and year-over-year PCE is following October numbers of +6.0% headline, +5.0% core. A big drop here could signal better times ahead — and the Fed’s draconian endless 5% interest rate may be a fabric of our collective imagination.
Other than that, we’ll get housing numbers next week, but we already know those are hurting. Whereas inventories a year ago were putting a premium on homes being sold, higher mortgage rates (although they’ve come down recently) are keeping many potential buyers out of the market at this time. It constitutes a big portion of the economic inflation that’s already been tamed; the bad news for housing is that it’s going to have to take the ride lower, with the rest of the economy.
The Dow has shed another -300 points in today’s pre-market, with the S&P 500 -40 points and the Nasdaq -60. We’re down roughly -2% across the board over the last five trading sessions, and it doesn’t look like there’s anything big enough on today’s agenda to change this trajectory. So we may as well light us a fire and put our feet up — the holiday season comes but once a year.
Questions or comments about this article and/or its author? Click here>>