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“My approach to every game was to try to erase the games that were before and try to focus on the game at hand.” – Cal Ripken, Jr.
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Equities are starting the week off on a down note, but the losses are limited at this point. S&P 500 futures are down just 0.16% while the Nasdaq faces larger losses with futures trading 0.5% lower. Oil prices aren’t the culprit behind this morning’s losses as WTI trades down over 2% to $85 per barrel. It isn’t interest rates either; the 10-year yield is 3 bps lower to 4.7% after CNBC reported that the Treasury could use its nearly trillion-dollar General Account to fund bond buybacks. Gold prices are modestly higher, and Bitcoin held last week’s gains over the weekend and now trades above $78K as bulls hope $80K isn’t far off on the horizon.
Asian markets started the week in the red with the Nikkei down 0.7% while Hong Kong fell 1.9%, onshore China fell 0.6%, and the KOSPI dropped 3.1%. European stocks are getting off to a more mixed start, with the STOXX 600 up 0.1% while Germany and France trade marginally lower.
In the US today, the only report on the calendar is the Chicago Fed National Activity Index. That report is never a market mover, but Treasury Secretary Bessent’s 1 PM press conference outlining the economic D-Day plans for Iran could cause some volatility. Let’s just hope it’s nothing like the widely anticipated Liberation Day press conference from the President in April 2020.
Outside of this afternoon’s press conference, the big areas of focus this week will be on PCE price data Wednesday morning and Nvidia (NVDA) earnings after the close. Fed Chair Kevin Warsh will speak in Jackson Hole on Friday, and leading up to that speech, we’re also likely to hear from numerous Fed speakers in scheduled and unscheduled media appearances.
It was a mixed showing for individual sectors last week. Health Care, Energy, and Materials both rallied well more than 1%, and all three finished the week in overbought or ‘extreme’ overbought territory. On a year-to-date basis, the Energy sector ETF (XLE) is up over 40% and well ahead of the next closest sector. At the other end, Technology, Utilities, and Industrials all fell more than 3%. The decline was especially steep in the Utilities sector as it finished deep into ‘extreme’ oversold territory.
The Utilities sector was already weak heading into Friday’s session as it was trading well below its 50- and 200-day moving averages as higher interest rates make the sector’s relatively large dividend yields marginally less attractive. On Friday, though, the bottom fell out for the sector as it declined more than 2% even as the S&P 500 traded higher on the day. The decline also broke notable support at the lows from selloffs throughout May and late July into early August. The sector closed out the week at its lows for the day, the lows for the week, the lows for the month, and the lowest level since February 3rd.
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