A September to Not Remember… It’s a Bloody Monday to start the week, with the market suddenly viewing a slew of “old” risks (the upcoming election, US-China tension, eco-data slowing) in a much more concerning light, but the primary driver of today’s dour mood is the threat of renewed lockdowns in the UK as the virus reemerges (just look at ZM +5%, GRUB +1%, PTON +5%). Tech/Semis are holding up relatively well amid the uneasiness as investors look to the old lockdown favorite for shelter (more below), and defensives Utilities and Food Retail are faring better. On the flipside, more Cyclical sectors Autos, Cap Goods, and Materials are handing back some of their rotationary gains. Energy is also lower as DXY strength and Libya resuming some oil exports delivered a blow to crude. And then there’s Banks… the perennial punching back is being bruised again on back of the ICIJ suspicious transactions report involving several global players.

Tick Tock, Tick Tock… The clock is slooowly counting down to the weekend, which can’t come soon enough for US stocks as Tech keeps tick-ticking lower and tick-taking everything else with it. Early on it looked like the sector might use the quad-witching Friday as a chance to bounce out of a busy Fed week, but instead it has steadily slid as the session’s gone on. News that Tik-Tok’s own clock is ticking isn’t helping: the Commerce Dept announced it will block US downloads of the China-founded app starting Sunday, stirring doubt over Oracle’s (ORCL – 0.9%) deal with parent ByteDance will be approved. Second wave virus concerns are also weighing, with data from Europe showing the largest jump in daily cases in months from countries like France and Germany spilling cold water on Travel/Leisure and Airline names (CCL -4.5%, MGM -2.6%, UAL -3.8%). Still signs of rotation are around, with Autos clinging to green and Banks/Financials and non-airline Transports outperforming as well. US indices have attempted to put in a bottom over the last 30 mins (S&P went through 3300) but  it could be a bumpy ride into expiry at the close…     

After Merger Monday Comes… Tech Tuesday? Ok not the cleverest bit of alliteration but the usual gang of Tech, Media, Semis & co are leading the charge once again, though Apple (AAPL +1.4%) is off its highs as its September product event has yielded few surprises. It should be noted the optimism continues to spill over into to pretty much every sector too (besides Banks/Financials), including reopening/recovery spaces (XLB new all-time high, TRAN index nearly the same, SML back above the 50-DMA). Many labeled the early September Tech wreck as an inevitable removal of froth, and the somewhat broader rally of the last 2 sessions provides some hope that the market isn’t simply “re-frothing”, but still a look at FANG concentration shows that the short-term plunge was barely a blip on the longer-term radar. There’s a long way to go before it can be said that investors are spreading the love…

Buy the Dip Just a Blip?… US stocks got off to a strong start in trying to add to yesterday’s big bounce but since then it’s been a bumpier ride. The usual suspects FAAMG / Tech / Semis were hot once again out of the gate but have stumbled as investors are struggling to forget the recent correction. Indices are have spent the afternoon in the red but are hovering near the lows of the day; the DXY rising back near positive territory on the day as the Brexit worries crush the GBP hasn’t helped their cause. Still there are bright spots, including Casinos names (LVS +4.2%, PENN +12%) which are benefitting from broker upgrades and Apparel names, with Nike (NKE +0.8%) making fresh all-time price and relative highs. Autos, which fared relatively well through the Tech plunge, and Energy are the laggards (crude lower once again following surprise US inventory builds). It seems investor confidence in buy-the-dip strategy is only so strong at the moment. Comparisons to Tech bubble of 1999 are all the rage these days, so interesting to note just how many dramatic 10% drops the that S&P Information Tech sector experienced that year before the bubble popped…

Aftershock… Nothing like a gut check before a long weekend. Markets appeared to have steadied after yesterday’s Tech-led turbulence was explained away as end of summer profit taking / a clearing out of “frothiness,” and all 3 major indices opened in the green following a headline beat on August non-farm payrolls (more on that below). But a wake-up call as violent as yesterday’s isn’t easy to shrug off, and a similar “sell the winners” stampede has dragged stocks lower through the morning. Equities have attempted to steady themselves after the Nasdaq bounced off its 50-DMA and are off their lows heading into the afternoon, with cyclical/value sectors like Banks, Autos, and Cap Goods all in the green once again. Still it’s ugly out there once-sizzling Media/Software/Tech crew, which will keep a lid on any attempted S&P turnaround unless sentiment really shifts into the close. The word perspective is being thrown around to remind that despite the optically horrific charts, it’s too early to call this a true trend reversal (sorry Value), but still the weekend can’t come quickly enough….

Full Speed Ahead… What looked to be another runway ahead day for Tech/momentum has become a bit more muddled, though indices aren’t complaining with the S&P, Dow, and Nasdaq all continuing to push higher into the afternoon. YTD laggards Utilities and Autos are at the top of the sector chart, with the latter rising mid-morning after Autodata showed industry sales topped 15M vehicles in August. Semis are also separating themselves, led by Nvidia (NVDA +4.0%) receiving more applause for their gaming chip rollout, and strong set of earnings from Jack-Daniels maker Brown-Forman (BF/B +11%) has Food/Bev riding high. Tech is the big underperformer thanks to Apple (AAPL -2.3%) taking a breather (otherwise all S&P Tech names green), and Energy is negative as Crude sinks following data showing weaker gasoline demand. The risk-on tone of the session has gotten an extra boost from more positive commentary from Fauci on vaccines, as well as new reports that steroids can significantly reduce mortality rates among severely ill Covid patients. Still the exuberance has felt overdone for a while now and signs of strain are still afoot: VXN (the VIX of NDX) continues to quietly climb higher even as the NDX notches record after record…

•Flipping the Script – In a week that was wholly leveraged towards today’s Jackson Hole ‘conference’, even a telegraphed move by Powell and Co seemed to catch the market off guard some. The Fed is adjusting to a world where wage inflation had been persistently sluggish in response to low unemployment and inflation had persistently under shot the 2% target. Covid-19 has only served to tilt these trends in a much more deflationary direction. As a result, the Fed will allow inflation to overshoot the target – if it can – for a potentially prolonged period of time. The USD reacted like a yo-yo but currently resides where it did pre-Powell; it remains below our concern for risk level @ 94. Ultimately the lower for longer regarding rates and continuing accommodating narrative had equities holding gains, while bond traders have been more inclined to sell in the face of a future inflationary environment, TIPS specifically.

Well It WAS Looking Like a Pre-Fed Snoozefest… With futures in a holding pattern pre-market, but it should be no surprise by now to see the S&P and Nasdaq shooting towards another record close on back of the usual Software / Media / Tech workhorses. Salesforce (CRM +27%) is providing a little extra giddy-up for the space after topping off its inclusion in the Dow with a monster earnings beat, but the rest of the Big 5 are throwing their weight around as well. Retail is also in the outperformers mix, buoyed by all-time highs for Home Depot, Lowe’s and Ulta Beauty ( to name a few) as non-S&P names Dicks Sporting Goods (DKS +15%) and Urban Outfitters (URBN +19%) delivered their own impressive results. The mini-rotation to Value at the end of last week seems to be decidedly over, with Energy, Banks, and Industrials all in the red. The 10-year Treasury yield is remains elevated near June levels along with the USD, both rising in anticipation of a bit of inflation ahead as Powell is expected announce in his speech tomorrow morning that the Fed will be more tolerant of inflation above its usual 2% goal in deciding when to raise rates (again, they said they’re “not thinking about thinking about it”).

Reaching For a Record… Don’t roll that B-roll footage of smiling NYSE floor traders just yet…the S&P and Nasdaq are currently poised to notch yet another record closing high but it hasn’t been an easy trek. The optimism that reigned pre-market as investors took a trip Phase One memory lane has been leveled out, as a disappointing August Consumer Confidence data offset some of the enthusiasm born from July Retail Sales data earlier this month. Still, Housing data continues to burn red hot, though Homebuilders (ITB -1.0%) are taking a dip into their impressive ytd gains (ITB +27% ytd). Tech hasn’t been its usual self today as Apple’s pre-split surge has cooled a bit, though Media is being propelled higher after Facebook (FB +3.9%) announced it’s pushing further into the e-commerce world. Otherwise Value isn’t having its best day, apart from Banks which are enjoying the 10-year yield moving back near 0.7%

Helpful Halitosis… Going on a date? Bad breath is a problem… But hoping for new all-time highs on the major US indices? Bad brea(d)th isn’t gonna hold you back. Despite another morning of soggy sentiment pre-market, indices are in the green thanks to who else but Tech / Semis dragging them higher, as the majority of S&P stocks sit in the red (Invesco S&P Equal Weight ETF RSP -0.3%). Pre-opening futures suggested we were in for a jittery Friday, however strong US PMI’s and a sizzling Home Sales number reassured that at least the US economic recovery remains on track. Still, the data allowed the USD has held onto to its gain gains earned (DXY still below resistance at 94) amid some repositioning in the crowded short $ trade, which has weighed on Gold and Oil. It seems nearly every market conversation these days revolves around the question “How much longer can this go on?” and we clearly have not found that answer just yet…