Markets

Daily Markets: Busy Week Ahead for Equities

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Today’s Big Picture

Equity markets in Asia-Pacific that were open today finished trading on a positive note, with Japan’s Nikkei closing up 0.7% and South Korea’s Kospi gaining 0.1%. Markets in Australia, mainland China, and Hong Kong were closed today for holidays. By midday trading, the major European equity indices were mostly higher, even though British Prime Minister Boris Johnson is expected to announce an extension to Covid-19 restrictions later today amid rising infections from the coronavirus Delta variant.

U.S. futures are modestly in the green, hinting at some positive movement when those markets open later today. While we have a relatively quiet day today on the earnings and economic data front, the news flow will pick up tomorrow with several key monthly economic reports including Retail Sales and Industrial Production, but the spotlight will be on the Fed’s latest monetary policy meeting that concludes Wednesday afternoon. Leading up the Fed’s post-meeting press release, which will include its latest economic forecast, and presser, the consensus view is the central bank will stick with its dovish playbook. As we tend to do, when both happens, we’ll be parsing the Fed’s and Chairman Powell’s words carefully for clues as to what may come next and when. We strongly suspect we will be far from alone in this endeavor.

Data Download

International Economy

The G7 group of advanced economies, meeting in the UK over the weekend in person for the first time in two years, announced their support for the Tokyo Olympic Games due to begin July 23. They also announced a pledge of over 1 billion vaccine doses to help poorer nations and vowed to do more to fight climate change and while they were at it, backed a minimum tax of at least 15% on large multinational firms. And you thought your weekend was busy. The group called on China to respect human rights and fundamental freedoms in Xinjiang, where it has been accused of committing serious human rights abuses against the Uyghur monitory and in the semi-autonomous city of Hong Kong.

Israel’s Parliament approved a new government on Sunday and a new prime minister for the first time in 12 years on a whopping margin of 60-59.

Japan’s Industrial Production jumped 15.8% YoY in April vs. the 3.4% YoY gain in March while Capacity Utilization rose to 99.3 MoM in April from 98.2 in March and February’s reading of 93.0.

Industrial Production for the Eurozone soared 39.3% YoY in April compared to the upwardly revised YoY gain of 11.5% in March and the expected reading of 37.4% for April.

Domestic Economy

The TSA reported over 2 million people passed through security checkpoints at airports on Friday, the first time the 2 million mark has been passed in a single day since March 2020.

Friday’s University of Michigan Consumer Sentiment Survey came in mixed with Current Conditions at 90.6, up from 89.4 in May, but below expectations for 92.3. Consumer Sentiment for June came in at 86.4, up from the prior 82.9, and ahead of expectations for an increase to 84. Inflation expectations 5-year out fell to 2.8% from 3.0%.

Congressional lawmakers return to the Capitol today and bipartisan negotiations on infrastructure reform are set to continue.

Later today we will get Consumer Inflation Expectations for May, which clocked in at 3.4% for April. The Treasury is holding a 6-month and a 3-month bill auction.

Markets

Equity markets were fairly calm last week. The Nasdaq Composite rose 1.9%, the Russell 2000 added 0.7%, the S&P 500 gained a whopping 0.4%, but the Dow fell 0.8% but sitting at a new high. The iShares 20+ Year Treasury bond ETF for 1.7%, one of the strongest performers of the week. The VIX dropped below 16 to a new post-pandemic closing low. Bitcoin surged over 10% on Sunday after Elon Musk said that Tesla (TSLA) will resume bitcoin (BTC) transactions after confirming that there is “reasonable ”clean energy usage by crypto miners.

Stocks to Watch

The Columbus, Ohio-based mall owner Washington Prime Group (WPG) filed for bankruptcy protection yesterday. The group is the owner of about 100 shopping malls in the U.S., and it, along with 88 affiliated debtors, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The company has said that tenants went out of business leading to rents drying up since the start of the pandemic.

Facebook (FB) acquired BigBox VR, the creators of breakout virtual-reality battle-royale game Population: One.

Alphabet (GOOGL) announced all of the company's three billion-plus existing users across consumer, enterprise, and education have access to Google Workspace, including Gmail, Chat, Calendar, Drive, Docs, Sheets, Meet, and more.

Spotify (SPOT) is reportedly close to a deal to lock up top podcast Call Her Daddy and producer Alexandra Cooper in an exclusive arrangement that would come with a $20 million-plus licensing deal and a first-look arrangement for other projects.

Amazon’s (AMZN) 2021 Prime Day will span June 21-22 and the event is expected to generate $12 billion in gross merchandise sales worldwide vs. $10.4 billion worth of goods on Prime Day 2020 and $7.2 billion in 2019, according to Digital Commerce 360 estimates. Looking to go head to head with the two-day event this year, Target (TGT) will hold its own three-day deal event on June 20-22, while Walmart (WMT) will hold sales events from June 20-23.

Royal Caribbean Cruises (RCL) isn’t changing its sailing plans this summer despite reporting two positive Covid-19 cases aboard its Celebrity Millennium cruise ship last week.

Microsoft’s (MSFT) much-anticipated Halo Infinite will be out this holiday season. The game will feature a standard single-player campaign mode and a multiplayer component that will be free to all players, even if they don’t buy the game

Cano Health (CANO) acquired University Health Care and its affiliates for $600 million.

Helios Technologies (HLIO) announced it will acquire NEM S.r.l. for undisclosed terms. NEM is a hydraulic solutions company providing customized material handling, construction, industrial vehicle, and agricultural applications to its global customer base, predominantly in Europe and Asia.

After today’s market close, there are no companies expected to report their quarterly results. Those looking to get a jump on reports in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

  • June 15: Retail Sales, PPI, NY Empire State Manufacturing, Industrial Production, Business Inventories, NAHB Housing Market Index, Tic Flows, Foreign Bond Investment, Weekly API Crude Oil stock
  • June 16: Building Permits, Housing Starts, Import/Export Prices, weekly energy stocks, FOMC Economic Projections, and Interest Rate decision
  • June 17: Weekly Jobless Claims, Philadelphia Fed Manufacturing
  • June 21: Chicago Fed National Activity Index
  • June 22: Existing Home Sales, Weekly API Crude Oil Stock
  • June 23: Current Account, Markit Manufacturing & Service PMI, New Home Sales, EIA Energy Stock
  • June 24: Durable Goods Orders, Wholesale Inventories, Weekly Jobless Claims, GDP Price Index Q1, Goods Trade Balance, Corporate Profits Q1
  • June 25: Personal Income & Spending, PCE Price Index, Michigan Consumer Sentiment

Thought for the Day

“The great challenge of adulthood is holding onto your idealism after you lose your innocence.” ~ Bruce Springsteen

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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