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“We can no longer afford to be second best. I want people all over the world to look to the United States again” – John F Kennedy
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Equity futures surged overnight with the Nasdaq indicated to be up nearly 1.5% while the S&P 500 is poised to open higher by 0.75%. The only major catalyst in the US was a strong earnings report from Micron (MU) which surged over 16% after reporting an earnings triple play. The big news once again came out of China where the government said that it would undertake the necessary spending necessary to meet this year’s growth targets. That was also accompanied by reports that the government was prepared to pump $150 bln into the country’s largest banks. All of this news pushed stocks in the country firmly higher for the third straight day of 1%+ gains, and the impact has dispersed out to the rest of the global equity market.
In Europe, stocks have piggybacked on the overnight gains out of China, and the STOXX 600 has rallied over 1%.
Here in the US this morning, it’s a busy day for economic data with revised GDP, Personal Consumption, Core PCE, Durable Goods, and jobless claims all at 8:30. The most notable of these in our view was initial jobless claims, which once again confirmed that the surge earlier this summer may have been more seasonal than anything else. The only other report on the calendar is Pending Home Sales at 10 AM. If all this economic data isn’t enough, there are a ton of Fed speakers scheduled to speak, so many in fact that we couldn’t even fit them all on page one.
After another strong night for Chinese stocks, the Shanghai Composite has now rallied over 9% in the last three trading days with a bulk of the gains coming on Tuesday and today, even as Wednesday’s gain was a not-so-modest 1.2%. As shown in the chart below, the current run ranks as the strongest since July 2020, and before that August 2015. During the financial crisis, there were multiple occurrences, and then before that, there were a handful of occurrences in the years after China entered the WTO at the end of 2001.
The chart below shows each time the Shanghai Composite rallied over 9% in three days with no occurrences in the prior three months. Besides the current period, there were only six other occurrences, and the two that stand out most came right in the middle of major bear markets.
