Wake Up Wall Street (SPY) (QQQ): Rollercoaster ride set to continue as equities head back lower
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Subscribe to PremiumHere is what you need to know on Wednesday, June 21:
Equity markets in the US look set for a lower opening on Wednesday after a surge of holiday weekend enthusiasm set markets on a higher path on Tuesday. While 2022 has been a bearish one with all indices now in bear market territory it has also been notable for the choppy reversal days we see within the same week. Nervousness among the investor community is not being helped by the flip-flop decision-making from the Fed which keeps changing its mind as to the latest direction of monetary policy.
Also read: Walmart Deep Dive Analysis: Hold WMT to play defense vs upcoming US recession
In this regard we like to keep an eye on the lesser followed volatility measure, MOVE. This is the bond market VIX. Given yields and inflation are what is driving markets currently, the higher MOVE moves (!) the riskier things get and so we follow with equity declines.
Year-to-date MOVE, Bond market volatility
We could overlap the S&P 500 on the above chart, but I'm sure you can already see the inverse correlation. So we note with interest that MOVE is up 4% this morning and so equities are lower. This is despite yields being lower on Wednesday morning across the curve. All this growing talk of an imminent recession is leading rates lower. Not only across the curve but the globe as European and UK money markets also look a tad more dovish this morning. That was despite the UK registering an eye-watering CPI print this morning at over 9%.
This week will see Fed speakers take to the airwaves to try and explain their sudden and leaked pivot to a 75 basis point move. The market is pricing in a continuation of this 75 bps for July so commentary needs to be closely watched. In that regard, Fed Chair Powell is up before the Senate Banking Committee later on Wednesday.
The Japanese yen continues to be the only show in town in currency land as it squeezes to just under 137 for USD/JPY while the dollar index is flat at 104.50. Gold price is $1,845 while oil drops massively to $103 on global growth fears while Bitcoin price is lower but still just above $20,000.
European markets are lower this morning: Eurostoxx -1.5%, FTSE -1%, and Dax -2%.
US futures are also lower: S&P -1.7%, Dow -1.6% and Nasdaq -1.8%.
Wall Street top news (SPY) (QQQ)
UK CPI surges to 9.1%.
IEA says the current investment is not enough to meet energy crisis.
Moderna (MRNA) to build a new vaccine site in the UK.
Disney (DIS) new Lightyear film attendance numbers are lower than expected.
Winnebago (WGO) is up on strong earnings and growing margins.
Revlon (REV) up over 30% in premarket.
Korn Ferry (KFY) is up on strong earnings.
La-Z-Boy (LZB) up on strong earnings.
Exela Tech (XELA) up on custoemr win.
Rockwell Medical (RMTI) is down on CEO departure.
COIN is down 8% in premarket.
Bed Bath and Beyond (BBBY) was downgraded by UBS.
Upgrades and downgrades
Source: WSJ.com
Economic releases
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Here is what you need to know on Wednesday, June 21:
Equity markets in the US look set for a lower opening on Wednesday after a surge of holiday weekend enthusiasm set markets on a higher path on Tuesday. While 2022 has been a bearish one with all indices now in bear market territory it has also been notable for the choppy reversal days we see within the same week. Nervousness among the investor community is not being helped by the flip-flop decision-making from the Fed which keeps changing its mind as to the latest direction of monetary policy.
Also read: Walmart Deep Dive Analysis: Hold WMT to play defense vs upcoming US recession
In this regard we like to keep an eye on the lesser followed volatility measure, MOVE. This is the bond market VIX. Given yields and inflation are what is driving markets currently, the higher MOVE moves (!) the riskier things get and so we follow with equity declines.
Year-to-date MOVE, Bond market volatility
We could overlap the S&P 500 on the above chart, but I'm sure you can already see the inverse correlation. So we note with interest that MOVE is up 4% this morning and so equities are lower. This is despite yields being lower on Wednesday morning across the curve. All this growing talk of an imminent recession is leading rates lower. Not only across the curve but the globe as European and UK money markets also look a tad more dovish this morning. That was despite the UK registering an eye-watering CPI print this morning at over 9%.
This week will see Fed speakers take to the airwaves to try and explain their sudden and leaked pivot to a 75 basis point move. The market is pricing in a continuation of this 75 bps for July so commentary needs to be closely watched. In that regard, Fed Chair Powell is up before the Senate Banking Committee later on Wednesday.
The Japanese yen continues to be the only show in town in currency land as it squeezes to just under 137 for USD/JPY while the dollar index is flat at 104.50. Gold price is $1,845 while oil drops massively to $103 on global growth fears while Bitcoin price is lower but still just above $20,000.
European markets are lower this morning: Eurostoxx -1.5%, FTSE -1%, and Dax -2%.
US futures are also lower: S&P -1.7%, Dow -1.6% and Nasdaq -1.8%.
Wall Street top news (SPY) (QQQ)
UK CPI surges to 9.1%.
IEA says the current investment is not enough to meet energy crisis.
Moderna (MRNA) to build a new vaccine site in the UK.
Disney (DIS) new Lightyear film attendance numbers are lower than expected.
Winnebago (WGO) is up on strong earnings and growing margins.
Revlon (REV) up over 30% in premarket.
Korn Ferry (KFY) is up on strong earnings.
La-Z-Boy (LZB) up on strong earnings.
Exela Tech (XELA) up on custoemr win.
Rockwell Medical (RMTI) is down on CEO departure.
COIN is down 8% in premarket.
Bed Bath and Beyond (BBBY) was downgraded by UBS.
Upgrades and downgrades
Source: WSJ.com
Economic releases
Like this article? Help us with some feedback by answering this survey:
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