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As We Approach The Open. - 9/14/21

Sep. 14, 2021 9:25 AM ET
Cbus Neil profile picture
Cbus Neil's Blog
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Please excuse typos. As a side note, after talking with some followers, I'm going to try to make this a little more digestible for those who are not as familiar with the markets, lingo, etc. Feel free to leave your thoughts in the comments section, they are appreciated.

Will start a small glossary at the start also.

SPX = S&P 500

Naz = Nasdaq Composite

NDX = Nasdaq 100 (100 largest stocks in the Naz)

RUT = Russell 2000 (smaller stocks)

DMA = Daily Moving Average (the moving average over the given time period (20, 50, 100, 200 days normally)).

MACD = Moving Average Convergence Divergence (basically a trend indicator)

RSI = Relative Strength Index (basically what it sounds like)

BBG = Bloomberg

WSJ = Wall Street Journal


As We Approach The Open... - 9/14/21

As we approach the open of US equity trade in NY, U.S. equities global equities look to start the day higher after a "mild" (depending on how you look at it) CPI report. Pretty even gains with SPX, NDX, and RUT all indicated up between three and four tenths.

In today's U.S. corporate news (Argus):

Apple (AAPL 149.81, +0.26): +0.2% ahead of its product event at 1:00 p.m. ET. Oracle (ORCL 86.75, -2.14): -2.4% despite beating EPS estimates and guiding the mid-point of NovQ EPS above consensus. Intuit (INTU 558.65, +1.23): +0.2% after confirming an agreement to acquire Mailchimp for approximately $12 billion in cash and stock. Dow Inc. (DOW 61.03, +0.31): +0 .5% after the stock was initiated with an Overweight rating at Piper Sandler.


Major equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: +0.7% Hong Kong's Hang Seng: -1.2% China's Shanghai Composite: -1.4% India's Sensex: +0.1% South Korea's Kospi: +0.7% Australia's ASX All Ordinaries: +0.2%.

In news, Reserve Bank of Australia Governor Lowe said that Q3 GDP is expected to be down at least 2.0% and could be "significantly" lower, adding that bond purchases are likely to stop next year. Japan's outgoing Prime Minister Suga may travel to the U.S. before leaving office. China now faces another outbreak in the southeastern province of Fujian and has locked down the city of Xiamen.

In economic data, Japanese IP declined in July, S Korean import and export prices accelerated on a y/y basis, Australian August confidence improved somewhat.

Japan's July Industrial Production -1.5% m/m, as expected (last 6.5%); -3.4% y/y (last 6.2%)

South Korea's August Import Price Index 21.6% yr/yr (last 19.5%) and Export Price Index 18.6% yr/yr (last 17.4%)

Australia's Q2 House Price Index 6.7% qtr/qtr (expected 6.0%; last 5.4%). August NAB Business Confidence -5 (last -7) and NAB Business Survey 14 (last 10).  Aus ANZ Roy Morgan Weekly Consumer Confidence Index: 103.1 (prev 100) 

India's August WPI Inflation 11.39% yr/yr (expected 10.75%; last 11.16%)

China To Sell 7.38Mln Barrels Of Crude From Reserve September 24

And the Evergrande situation in China continues to look like a restructuring is coming. This definitely has the eye of the government as it's caused nationwide protests as many Chinese have investments in or with the firm. BBG.

And China cautions against travel during the upcoming holidays.


Major European indices trade near their flat lines. STOXX Europe 600: -0.1% Germany's DAX: -0.1% U.K.'s FTSE 100: -0.3% France's CAC 40: -0.6% Italy's FTSE MIB: +0.3% Spain's IBEX 35: +0.1%.

In news, The Bank of France raised its 2021 GDP growth forecast to 6.3% from 5.8% and lowered the outlook for 2022 to 3.7% from 4.1%. The European Commission approved France's request to use EUR3 bln for recapitalization of companies impacted by lockdowns.

In economic data, employment in the U.K. returned to a pre-pandemic level in July. Wage growth remained strong. Spanish CPI was a little hot.

U.K.'s July Claimant Count -58,600 (last -48,900). July three-month employment change 183,000 (expected 178,000; prior 95,000), and July Unemployment Rate 4.6%, as expected (last 4.7%). July Average Earnings Index + Bonus 8.3% y/y (expected 8.2%; last 8.8%)

As is the case in the U.S. a lot of focus on open positions (from LiveSquawk):

Jonathan Athow, deputy national statistician for economic statistics, acknowledged the recovery to the employment outlook but noted the rebound remains uneven: “In hard-hit areas such as London and sectors such as hospitality and arts and leisure, the numbers of workers remain well down on pre-pandemic levels.”

The most striking development in the report was the high level of vacancies. The ONS estimated the number of open positions in June to August at 1.03 mln, the first time this metric has exceeded the million mark since records began, leaving it 249,000 above the pre-coronavirus pandemic level in January to March 2020.

Annual wage growth, although still elevated, slowed in the three months to July for both total and ex-bonus categories. Average weekly earnings three-month, year-on-year increased 8.3%, which was above the 8.2% forecast but off from the 8.8% previously. Excluding bonuses, the rate of 6.8% was in-line with forecasts but below June’s 7.4% read.

HSBC senior economist Elizabeth Martins noted, “We said last month that the June print probably marked the peak of UK wage growth in annual terms. That partly reflects base effects, but the 3m/3m annualised rate has also slowed a little too. Indeed, the pandemic-driven compositional effect is now starting to subtract from wage growth.”

So, within the report, there is plenty to be encouraged by. However, estimates from both the government and the ONS suggest approximately 1.5 mln people still remain on furlough with the government scheme expected to end by the end of September.

HSBC’s Martins said, “We suspect this shortage of people played into the slowdown in growth in July. However, while the current conditions bode well for a relatively smooth end to the Job Retention Scheme at the end of September, we still think some rise in unemployment is likely.”

Spain's August CPI 0.5% m/m (expected 0.4%; last -0.8%); 3.3% yr/yr, as expected (last 2.9%)

Swiss August PPI 0.7% m/m (last 0.5%); 4.4% yr/yr (last 3.3%)

And more on the precarious European energy situation. WSJ.

Leading to another spike in prices this morning.

Which is leading to legislative action.

As UK recommends boosters for over-50.


Bonds - Trading around flat levels after the CPI data release with 10-year yields at 1.326%. 2-year yield is around flat levels as well at 0.211%.

Dollar (DXY) - Down after the CPI report but remaining above last week's lows. At $92.347. Technicals are mixed. No real support before $92.

VIX - Pulling back again this morning to 18.75.

Crude (/CL) - Continuing up after yesterday's break over the $70 WTI level, up just under 1% to $71.09. At highest level since Aug 3rd. Technicals remain positive on daily chart, next real resistance is August highs at around $74.25.

IEA monthly report is out. I haven't had to really look at it but headlines are that 2021 demand growth was lowered by 105kbd due to lowering Aug and Sept by 600kbd each, but raises 2022 by 85kbd to 3.2mbd (which is well below OPEC's estimate for 2022). Makes an explicit call that reserve releases from US and China will "fill the gap" of lost output from Ida which it estimates at 30mb. Still sees market getting balanced by October and oversupplied in 2022.

As $100 oil calls are back. I remember when this was the most heavily traded call price for Dec 2022 (still might be?) earlier this year.

And an interesting point that's missed is that peak oil demand still means a lot of oil is used. IHS sees peak demand in 2032 but it isn't until 2043 that we fall below 2019 levels (so more than we're using now).

Natural Gas (/NG) - After yesterday's 5% surge, up another 1% this morning to $5.288. It's now up over 40% since Aug 19th. Technicals remain positive but very overbought (RSI over 80 now).

Gold (/GC) - Continues to struggle with the 50-DMA and 1800 level, which it is trading just under this morning at $1799.7. Technicals are mixed on daily chart.

Copper (/HG) - Down three tenths this morning as it has given up much of Friday's big move up. Remains above the 100-DMA but has probed it already this morning. Technicals remain positive daily chart.

US Data

CPI data came out and showed some slowing m/m consistent with the PPI data last week, particularly with the core which came in at just +0.1% m/m. The headline increase was the slowest in seven months. The y/y numbers were still very high which will I'm sure capture some of the headlines (see below). Good to see BBG noting the m/m increase first. I'll have a deeper look out this morning.

US CPI (M/M) Aug: 0.3% (est 0.4%; prev 0.5%)

US CPI Ex-Food, Energy (M/M) Aug: 0.1% (est 0.3%; prev 0.3%)

US CPI (Y/Y) Aug: 5.3% (est 5.3%; prev 5.4%)

US CPI Ex-Food, Energy (Y/Y) Aug: 4.0% (est 4.2%; prev 4.3%)



We also had the NFIB out this morning which improved and beat expectations, which I'll also do a report on (mostly just a redaction of the report) today.

US NFIB Small Business Optimism Aug: 100.1 (est 99.0; prev 99.7)


Random stuff:

Canadian manufacturing sales (form of IP) declined in July.

Canadian Manufacturing Sales (M/M) Jul: -1.5% (est -1.0%; prev 2.1%)

And we noted yesterday but another story on spot shipping rates perhaps have peaked.BBG.

To see more content, including summaries of most major U.S. economic reports and my morning and nightly updates go to Cbus Neil's Blog Posts for more recent or Sethi Associates for the full history.

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