Econ. data lookahead, Fed rates, volatility: Morning Brief

Markets (^DJI, ^IXIC, ^GSPC) are shooting for the stars Monday coming off of tumultuous trading last week. Seana Smith and Madison Mills break down the biggest stock market stories as Wall Street awaits the release of several economic data points this week, including the Producer Price Index (PPI) and Consumer Price Index (CPI) inflation prints.

Kace Capital Advisors managing partner Kenny Polcari comes onto the Morning Brief to elaborate on why he believes a 50-basis-point interest rate cut in September would be "a mistake" for the Federal Reserve. Vice President and presumed Democratic nominee Kamala Harris communicated her intentions to let the central bank operate without interference from the executive branch.

22V Research President Dennis DeBusschere and Sanctuary Wealth chief investment strategist Mary Ann Bartels also join the program to discuss what investors should be prioritizing while navigating an oversold market.

Other top trending tickers on the Yahoo Finance platform include Disney (DIS), Starbucks (SBUX), Barrick Gold (GOLD), and Monday.com (MNDY).

This post was written by Luke Carberry Mogan.

Video transcript

It's not am here in New York City.

I'm Sean Smith alongside of Madison Mills and this is Yahoo Finance is like should show the morning brief stock futures are edging higher, offering some relief from last week's volatility.

As investors look ahead to the data, prin the inflation data and retail sales could offer investors more clarity on the health of the economy will bring you insight on how to navigate the market reaction to that data.

Let's get to it with the three things you need to know to start your trading day.

Yahoo finance is Jared, Jo and Rick Newman have more.

That's right.

Stock futures are higher this morning after a roller coaster of a week on Friday, all three major averages closed higher on the day.

But in the red for the week, the S and P 500 the NASDAQ compositor down four straight weeks.

Now, the S and P five Hundred's longest losing streak since September, some big tech names, Amazon alphabet, Microsoft and Tesla have closed lower five weeks in a row.

Stocks looking to snap these negative streaks this week.

As Wall Street looks to fresh economic data, we're going to get PP IC P I and retail sales along with a number of consumer centric earnings Bank of America, Ceo Brian Moynihan is urging the Fed to cut interest rates to ease the pressure on a slowing consumer.

In an interview with CBS face the nation on Sunday, Moynihan said the fed needs to be careful and start to talk rate cuts or risk dispiriting the American consumer.

Around half of traders are pricing in a 50% basis point cut in September.

That's according to CMEF watch to which tracks target rate probabilities.

And Vice President Kamala Harris is vowing to support an independent Federal Reserve telling reporters on Saturday, she would never interfere in the decisions of the central bank.

Her comments contrast with those of former president Donald Trump who said last week that the president should have a say in fed policy, Trump appointed fed chair Powell back in 2017, but he's been a vocal critic for years recently saying Powell has been a little too early and a little too late in terms of adjusting interest rates.

However, Trump did say in a Bloomberg interview last month that he would not fire Powell but would let him serve out his term.

Our top story this morning stock futures edging higher here as Wall Street anticipating a new slew of data that will clarify the health of the economy.

This week is especially critical after that weaker than expected jobs.

Data whip saw stocks leading the S and P to both its best and worst days of the year last week.

Now for this week, we've got on tap inflation, retail sales and retail earnings also have the producer price in out Tuesday.

But the big focus is that consumer price index print, headline inflation expected to grow 2/10 of a percent from the prior month and last month.

CP I print you can see here that year over year number coming in at 3%.

Moving forward here.

That is going to be a key thing to watch that 3% annual inflation number investors do anticipate a decline in the fed's preferred inflation metric to come this week.

The second thing to watch is retail sales and the big concern here for investors has been about growth.

So some are actually arguing that this print is just as important for the market as the inflation prints that we're getting here.

This week, expectations are for sales to rise 4/10 of a percent that would be versus the flat reading that we got back in June.

So a bit of an improvement is what is expected right now.

Investors are going to be closely watching this report and those two inflation prints to get a better idea on the timing and also potentially the likely size of the rate cut that we could be hearing from the fed in September.

And the third thing we're watching is those retail earnings will get results from big box retailers, Home Depot that's coming up on Tuesday and then Wal Mart out on Thursday, both will provide further commentary on the consumer and whether we're seeing any kind of slow down more broadly.

Let's kick it off with the markets because those key inflation data prints that are going to be out this week are gonna give us a little bit more insight maybe onto the fed's next moves on rates, Bank of America, Ceo Brian Moynihan, urging the fed to cut rates in September.

In an interview over the weekend, he said, quote, it's time for the fed to take the restrictions off joining us now to discuss what's next we want to bring in Kenny Polcari.

He is case capital advisors, managing partner, Kenny.

It's great to see you.

So let's just first take a step back coming off.

What was last week?

A very, very tumultuous week here for the markets.

We're setting up for what could be another volatile week here for stocks, what should investors be doing or anticipating here ahead of those key econ prints that we will be getting.

Well, a couple of things, right.

Good morning.

Nice to have you.

Nice to be with you.

Uh A couple of things right.

Last week was a very, very volatile week.

On Monday, there was a lot of internal damage done to the market.

So investors need to understand that it's gonna remain volatile and we're probably gonna have to retest those lows over some period between probably now and the end of the end of the month.

Tomorrow's C uh tomorrow's PP I and Wednesday's CP I gonna be key factors in inflation.

They are supposed to come in a little bit better than the expectation.

So that's gonna, you know, that's gonna help the argument that the fed needs to start cutting rates.

Does the fed need to start cutting them drastically by a half a basis point or three quarters of a ba basis point?

I don't think so.

I think a 25 basis point move uh is really what the market is expecting.

I think that's what a lot of uh economists are expecting, but I think street analysts are expecting for a bigger move, which I think would be a mistake.

So I think investors need to understand the data that's coming.

They also need to understand.

August is kind of a funny month, right?

There's a lot of people on vacation so there's a lot less volumes and so moves can be exaggerated in either direction based on the data that comes out.

So don't put too much uh uh thought into it as you just, you have to kind of watch as the market reacts to the data without getting too impatient.

Right?

Patience at this time is very much a virtue, Kenny.

Do you think there's a chance that we are over pricing the likelihood of a huge market reaction to this data print given that the market has particularly been concerned about the labor market so far versus the inflation data.

And the real question has been about a growth scare, not about an inflationary scare.

I I think the market is now very sensitive as overreacting to both, you know, to all the economic data that comes out.

Right?

If the CP I number is better than expected, the I would expect another overreaction demanding that the fed needs to cut rates.

They need to cut it sooner rather than later.

They need to make a big, make a bigger cut.

I think the fed is actually doing the right thing, especially after last week's uh, uh Monday move and the calls for an emergency rate cut meeting and, oh my God, the world was coming to an end.

In fact, they sat back and they, it slow down.

We're watching it.

We understand we have it under control and look the market kind of uh, rebalanced it not completely, which is why I think there's still concern, but I think you have to be careful, especially in August, uh, that the market reacts, uh, overreacts either way to the, to the, uh, to the expectation.

Although I do think that there is, there is some reality to a slowing growth story, not necessarily a crash, but certainly a slowing growth story.

And that's ok considering from where we came.

Well, so Kenny, what do you make of the comments from Bank of America, Ceo Brian Moynihan, really pushing for a September cut.

If we don't get a cut in September, there's lots of talk about 50 basis points.

But what if we don't even get 25?

Would that be a mistake?

I, I don't, I, I think we are getting a cut in September.

I think we're gonna get 25 basis point.

I think actually a 50 basis point would be the mistake.

I don't think at this point as long as long as the data, you know, continues to be what it is and the CP IP P I continue to be better.

I don't see how the fed cannot cut.

They prepared the markets for a cut.

They've been talking about it.

They didn't prepare the market for a July cut.

And so we didn't get one, but they are preparing it for a September cut and I think 25 basis points is right.

And I think Moynihan is correct, but Kenny, why would 50 be wrong?

Is it just because that risk that you still see here to the upside for inflation?

No, I think 50 would be wrong because 50 in my mind would suggest that, you know, they, that the fed is behind the eight ball and now they're trying to play catch up because they see something more negative on the horizon.

So I think 50 basis points just give the impression that we missed it.

We're trying to catch up and that would, that would create some concern.

I think if they stick to 25 that's what they've been saying all along.

I think that would help the market smooth out.

I want to shift gears a little bit and talk about the election and the notes that you sent over to us.

You had a quote saying the Biden Harris years have been a quote disaster for the economy.

Talk to me about where you stand in your thinking on which what, what either candidates potential in the White House come November could mean for the economic path here moving forward.

Well, you know, it's very interesting, you know, we kind of know where Trump stands in terms of the economy and policies that he'd like to implement.

We still have not heard from the other side.

We have not heard from Kamala Harris's uh uh campaign on what her policies are.

She's out there waving everybody saying, you know, I'm gonna change things and I'm gonna do this and I'm gonna do that, but there's no policy.

You go to her website, there's no policy.

So we still don't know what Kamala Harris and the, and, and that ticket is really planning in terms of policies.

We do have a sense.

It's with Trump, we understand where he wants to go.

He's been very clear, we have a history with that.

We don't have one with Kamala Harris at all and she's not really putting one forth, at least not yet.

Uh And that's causing more uncertainty and uh and lack of clarity in the markets at some point, she's gonna have to stand up and say, look, this is the policy, this is the platform, maybe we're gonna get it this week at the Democratic National Convention, maybe.

Um And if we do, then it'll be clearer for investors to kind of assess.

OK.

Here's what he thinks, here's what she thinks and where and where to, where, where are we, right?

Where are we as investors in terms of where do we think it should go?

So, ok, what should investors then be doing when they're trying to position their portfolio?

There's a slew of uncertainty out there.

Should they be making any changes now and why or why not though?

I think as a long term investor, here's what you have to do.

You have to at this time, I think if you're gonna add more money to your portfolio, you have to add it defensively.

So you have to think of kind of big boring names, consumer staple names.

You gotta think of utilities which are the most boring sector in the whole group.

But at this time, especially if rates are gonna go lower, utilities will benefit, right?

Nee is a great name that's still down 12% from when they started uh raising rates two years ago.

So if they start cutting rates, Nee is gonna be one of those names that benefits from that and it already is an anticipation, right?

Consumer Stables are another kind of boring group yet.

They're good dividend payers and look, there's stuff that we need.

Proctor and Gamble, uh, Kimberly Clark Johnson and Johnson.

Those are all things whether we're in a recession or not, that consumers are gonna need.

So you gotta get a little bit more defensive.

Now, if we, you see a big pullback in some significant names, whether they're tech or otherwise, you know, NVIDIA was off 30% on by Wednesday night.

Now it rallied a little bit on Thursday and Friday, but it was off 30%.

That was a screaming by, for me, whether or not you like tech or not, do you think, you know, you shouldn't be in tech because it's too nervous is down 30% in NVIDIA when the story hasn't changed was a real opportunity for the long term investor that's looking out 5, 1015 years, right?

Um And so that's how you have to position yourself.

But if you're, if you're nervous about what's gonna happen over the next uh two or three months, which is a seasonally weak time of year in the markets anyway, August to October is seasonally weak, the market tends to go lower.

Then either you do two things you, you, you get more defensive with, with the boring names, consumer, save utilities or you put your money in treasuries earning five percent or 4.5%.

That is also an investment decision, right?

That's certainly some activity that we're starting to see.

Kenny.

Thank you so much for joining us.

That was Kenny POA case capital advisors managing partner.

Thanks so much.

Bye bye turning now to that November election, Vice President Kamala Harris drawing a stark difference between herself and former President Donald Trump regarding potential central bank policy calling the fed an independent entity and saying she will not interfere with its decision making.

This comes after Trump said the president should have a say in fed policy here with reaction.

We've got Yahoo Finance's senior columnist, Rick Newman.

So Rick, it's interesting.

I was a lot of commentary over the weekend about the initial Wall Street Journal report.

They had access to a 10 page note that they say indicated former President Trump's thinking on potential central bank policy moving forward.

And there's a lot of commentary about how that memo should be released by the journal.

What what are you hearing in terms of reaction to the difference in in central bank policy from both candidates?

I think this is just confirming what we already know.

Uh Trump uh when he was president, I mean, he complained about the Fed all the time when it wasn't doing what he wanted and what he generally wants is the fed always to be lowering interest rates and have the the lowest possible interest rates.

I mean, remember he, uh he used to be a developer and he uh you know, developers borrow a lot of, so that's his bias.

He said last week at the press conference where the, the news conference with no news.

Um He said yes, he thinks the president should have some say in what the Federal Reserve does and the default position of almost every other president.

Uh going back to Jimmy Carter Nixon is an exception here is no, you stay out of the fed's business.

Uh Let the Fed do what it needs to do because we've got political interference every place else in Washington.

So let's at least let this one institution which is the most important financial institution in the world.

Let's at least let this institution operate without political interference.

Um That's the default position.

Trump is the outlier here.

So not no surprise at all that Kamala Harris would say, I'm not like Trump.

I won't mess with the Federal Reserve.

All right, Rick, sorry about that.

We're going to continue to watch and we'll catch up with you next hour from the latest developments out of DC.

Rick Newman.

Thanks so much.

Let's take a look at the crypto market because Bitcoin price is falling further here this morning.

Extending the sell off that we saw over the weekend.

It's now trading just below that $60,000 level.

Jared Bicker standing by with a closer look at this move here to the downside, Jared.

Yes.

60,000 is kind of my line in the sand but it keeps going above and below and it's been in flux, uh, for a little bit here, a real level in play.

And the reason is it just kind of sticks out on some of these charts.

Now, the interesting thing about Bitcoin is it has been breaching the 60,000 level.

It first did that in May then in July and more recently in August, it's been breaching it and hitting it more farther and farther down to the downside.

But as I've also been pointing out on a five year chart, this is simply a bull flag.

So a bit above 60,000, I tend to be bullish and below, I tend to be bearish.

We'll have to see what that next catalyst is.

I want to talk about F flows real quickly.

And that's because even though we saw some flows out of ETF S last Friday, I was tracking the Thursday to Thursday flows.

And despite all of this pressure, uh all the selling and all the volatility that we've seen over the last month, we're still seeing inflows into the ETF S and I think that's a positive story.

Um You take out those two gray scale ETF S so Spot Bitcoin and Spot E ETF S that have higher fees.

We actually had additions of about 250 to $300 million in those ETF S from Thursday to Thursday.

So on that front, it looks like the new people who are investing in these etfs for lack of a better term.

They have diamond hands.

Also want to consider that the dollar is up today.

So we're seeing not only Bitcoin a little bit of weakness in Bitcoin, but we're seeing some strength in the dollar.

And interestingly, we're also seeing record highs in gold.

So maybe something is under foot there.

Something will be tracking in the hours and days to come guys.

We certainly will be.

All right, Jared.

Thanks so much for kicking us off here this morning.

Coming up, we're taking a look at NVIDIA shares are trying to regain its footing.

Looks like we're looking at a move to the upside here ahead of the open up just about 1.5% coming up.

We will discuss with an analyst the best ways to play the chip sector.

Next stocks are looking to regain footing after a volatile week for market semiconductor ETF in particular, be a bit of the brunt of the market route last week.

But let's focus on the chip giant and video losing over $900 billion in market cap since its prior highs back in June, it did recover towards the end of the week and does continue to rise as investors anticipate earnings coming up in a few weeks here.

So joining us to discuss what is next in the chip space we've got John Vin.

He is Key Bank's Capital markets, equity research analyst, John, it's, it's great to speak with you.

So obviously the volatility impacted the entire market and chip stocks.

Of course, we're a part of that.

What do you think will be the single biggest driver of chip stocks moving forward in the next couple of weeks as we do wait for those in video earnings?

Yeah, I think you're gonna have um maybe a couple of earnings reports before NVIDIA.

You've got um Ed I reporting next week, which you know, obviously is gonna be a read on the broader recovery from a cyclical perspective.

But I think outside of that, I think all eyes are going to be focused on Nvidia's earnings in in two weeks.

John, what do you think we're going to hear from NVIDIA because we talk about the lack of catalyst between now and then?

Do you think they're going to meet and exceed expectations?

Which is ultimately the huge question right now?

Uh Yes, we do.

Um I think if you look at the sell off over the last several weeks related to the chip sector and maybe more specifically to NVIDIA.

Um I think one, you have some concerns about maybe uh hyperscale Capex getting to kind of peak levels.

But I think those were largely addressed later when you had comments coming out from Microsoft that is still seeing phenomenal demand on the A I front and it's actually a supply constrained.

Um And then obviously the second factor is, you know, there's some concerns out there that um it's next generation Blackwell product could be delayed.

Um You know, I wouldn't find that too surprising.

You know, they're on an annual chip cadence, which is uh something that's really never been done before within the A I industry.

Typically, you're on a 2 to 3 year cadence.

So if you're kind of moving to an annual cadence, I, I don't think that's surprising.

And I think investors, if it's really a supply timing issues, I think most investors are willing to kind of kind of look through that if it was a demand issue, I think we'd have other issues here with, with NVIDIA.

But, but from our perspective, we think they'll beat and raise.

We don't think near term demand is going to be an issue at all.

What do you anticipate the market reaction to that looking like?

Because we have seen NVIDIA come out in the past and be and raise and the market has not necessarily rallied around that news because the anticipation is so baked in, I would say with a pull back in the stock to around 100 $100 I think a be it in a raise, assuming that it's pretty solid, um should be, should be adequate.

You know, if you think about Nvidia's valuation at these levels, we think they're gonna do, you know, over five bucks and change next year, you're trading at 20 times, which is um you know, puts, puts NVIDIA almost into kind of value stock range relative to the broader semiconductor market, which is kind of trading at kind of mid, mid to high twenties right now.

So John, there's lots to like it sounds like about NVIDIA.

What would you tell investors is the most compelling second source play on A I. Um we like monolithic power, their derivative play on NVIDIA.

They supply power management solutions to the majority of Nvidia's GP U solutions in the next generation, Blackwell.

They're also going to gain significant amounts of content.

The A PS are going to go up 40% and then they're also gaining share at at other providers.

They're also now supplying power to E and D GP U and later this year, we think they're also gonna gain share at uh on Google's GP U.

What do you look at to indicate that thesis John because, and I asked because I was going to ask you about your call on my, you did trim your price target and, and you noted a couple of reasons why particularly given the demand for the data center piece there.

But what is the one thing that investors should take a look at when they are determining the long term potential gains of an A I play?

Yeah, I would say kind of barriers to entry, you know, I think uh when you think about NVIDIA, it's obviously got a significant advantage of advantage from a soft remote perspective with C A. Um and also just their, their competitiveness.

If you look at their next generation blackball solution, particularly the GB 200 This is not an incremental performance uh improvement that you typically get when a when a semiconductor company releases their next generation chip.

This is a pretty transformational release where they're moving from a chip based solution to a full stack server rack solutions where there's gonna be potentially a 20 to 30 X uh performance improvement.

So I think that's kind of what you're gonna be focusing on.

When you look at A I places, will they be able to continue to kind of uh push the envelope in terms of improving their um performance leadership?

So then John, where does that leave some of those other secondary plays when you take a look at a MD, some socks that have been on a volatile run here over the last several months, some of that negative moves that we had been seeing leading up to the last couple of weeks to the downside.

Was that a bit overdone?

And do you see significant room to the upside?

Um I do, I do, I think uh we still uh like a MD quite a bit.

Um I think when NVIDIA first released their GB 200 platform, I think there were some concerns out there of whether anyone else in the marketplace can compete and keep up with, with NVIDIA, I I would say a couple things, right.

Obviously, the the delay, the potential delay with blackball potentially gives um A MD a little bit more breathing room.

And in the history of technology, we have never seen somebody have a kind of a monopolistic position.

It's just not sustainable, the market forces will not allow it.

We think A MD has a competitive uh solution in M I 300 X.

You know, we think they're going to do uh $6 billion in revenue this year, which is obviously very small compared to what NVIDIA is going to do.

But it's uh it's notable.

All right, John Vin, great to get your insight here.

Thanks so much for breaking down some of the recent moves that we've been seeing within the chip space, equity research analyst at key bank capital markets.

Thanks so much.

Thank you.

Well, Disney villains are getting a new home.

Disney giving fans a glimpse into the next few years with some big announcements including a slew of theme park expansions headlined by the land for villains which is going to be inside of Magic Kingdom.

Yahoo Finance's Alexandra Canal has the details.

And ali the big reason that we're covering this is because of the slow down or maybe some of the weakness that we are starting to see within the parks business.

Yeah, absolutely.

And that is something that we saw in the latest earnings report, which I will get to you in a bit, but you mentioned the land of villains and this is, that stood out to me.

I mean, some cruella deville hangs of the magic kingdom.

I'm certainly down for that, but it wasn't the only announcement out of the 23 which is the Expo Disney host every two years or so.

That gives fans a taste of what's to come outside of the land of villains.

The cars franchise will also be heading to the Magic Kingdom along with in Canto and Indiana Jones.

Now, some of these projects are slated for a debut by 2027 for others, still a TBD but Disney said it will be part of the largest ever expansion of the Magic Kingdom.

Meanwhile over at Hollywood studios, we have Monsters Inc Land joining the lands of Toy Story and Star Wars.

While more Avengers and Avatar attractions are set to come to California's Disneyland Parks.

Now remember Disney previously announced plans to invest $60 billion into its theme park business over the next 10 years.

But investors have remained cautious.

As you said, China, that park demand slowing in that earnings report that we got last week.

Disney reported a 6% year over year decline in domestic operating income.

The company also warned that demand moderation, it could continue over the next few quarters that led to a drop in Disney share price as a weakness in parks dented in otherwise positive report there.

So Disney certainly hoping that these new attractions and parks can reinvigorate some of that demand.

But as the US economy slows.

So does that discretionary income.

So it could be a bumpy few quarters ahead for this company.

Despite all of the announcements, Disney shares this morning are trading roughly flat.

All right, Ali, thank you so much for joining us on that.

Really do appreciate it as always taking a look at another stock.

We are looking at shares of Starbucks are moving to the upside.

This comes after the Wall Street Journal reported, activist investors, Starboard value has taken a stake in the company sales in Starbucks.

Key us and China markets have plummeted prompting the chain to cut its financial guidance twice this year.

The stock is down around 20% so far this year, you can see it recovering up about 1.5% continuing those gains in the free market here just a few minutes prior to the open.

But I do want to call out some that we are getting in from C NBC about a previous stake from Elliot in Starbucks.

This reporting from C NBC S David Faber saying that Starbucks and activist investor Elliot are discussing a possible settlement and that could include Jesse Con joining the Starbucks board.

Any deal though is not certain, but that could also be why we are seeing a little bit of a paring back potentially of the market games.

But interesting to monitor both of these kind of stakes in Starbucks.

Given the volatility that Starbucks has had over the past year or so.

Yeah, it's been an underperformer, the sock off more than 20% year to date.

So there has been a lot of pressure even just amongst investors trying to push for some changes in that last earnings report that we got from Starbucks, their CEO saying that quote, our conversations to date have been constructive.

He was talking about those conversations with Elliott and that is when they did confirm that Elliott had acquired a stake within the company.

So now we have reports of Starboard taking the stake in Starbucks and clearly not the first time that we're seeing some of these uh changes that have been uh that activist investors are trying to push.

So of course, the question is what exactly those changes look like going forward?

What exactly Starboard would like to see in terms of those changes at Starbucks?

And remember that this comes at a time when Starbucks has been, has been very challenged.

If you look at their latest earnings report, you can see the decline in earnings and revenue for the first three quarters.

You can also go on to say that they did note the cautious consumer environment that that was impacting results, international sales, China in particular, we're also experiencing some weakness.

So again, at least it looks like when you take a look at Friday's uh move to the upside after the bell.

When you also take a look at some of the movement that we're seeing here this morning.

How of the opening bell?

Investors may be a bit encouraged by some of the changes that could take place as a result of this push here from activist investors.

But again, the latest report coming out of C NBC saying that they may have reached a deal with Elliott management.

So of course, we will continue to track that.

Let's take a look at the opening bell on Wall Street as we kick off a new trading week, coming off the heels of what was a very volatile week for the market last week.

Just seven days ago, we were looking at a totally different story when we had that meltdown in the market triggered by some weakness from the jobs report.

Also the yen carry trade a roll over there that spooked some weakness market.

Why now here we are a week later and it seems like a sense of calmness has returned.

But of course, Matty, the question is whether or not that is going to continue to be the case as we look ahead to some key econ data prints later this week.

That's exactly right, Sean.

And that's what we've been really asking our guest this morning is what is the market reaction going to look like when we do get that key inflation data and of course, retail sales data as well.

But let's get to Yahoo Finance is Jared bli for a look at what is going on on the market side ahead of that data, Jared.

What do you got?

Yes.

So we're looking at bullish action on the left side of the board here.

You can see there was a little bit of weakness in the middle of Paris down about 20 basis points and mixed board over in Asia.

But let's focus on what's happening in the US.

Stocks are coming off four weeks of losses, but S and P 500 staged a monstrous comeback.

Let's just show a 10 day chart here.

I'll put some lines on it so you can see it a little bit better and here was a big drop that we saw late last week and early or the week before that actually into early last week.

And um, you know, this is, we've seen a huge shift in sentiment over the last few weeks in both directions is a tweet that comes from Charlie Beo, the percent of bulls and the Investors Intelligence sentiment index moved down over 17% in the past two weeks.

That's the biggest two week drop in percentage terms since the October 1987 crash.

So just big swings in both directions and I think that kind of encapsulates where we are.

We're also seeing this incredible return to a low VX readings.

Remember last Monday we were all the way at 65 that is just water and that's something that happens in the middle of bear markets at the lows, not in the middle of bull markets.

Uh But we're right back to 20 a half.

Uh just like everything's normal uh to uh to say though that we were actually at 1314, sometimes 12 in the weeks before.

So we're not quite back at those levels.

Here's a tenure tino yield up about two basis points today.

But I do want to get to some of our heat maps and see what's going on in sector land.

We got energy wt I crude up about 1.5%.

So is our leading sector of the day close on its heels, actually just took the number one spot.

That would be XL K that is tech financials.

Also outperforming to the downside.

We got real estate, health care, discretionary utilities and staples all slightly in the red guys.

All right, Jared, thanks so much for bringing us those market moves as always, we do appreciate it coming up Wall Street still on edge.

After a week of big swings in volatility, we're gonna have expert analysis on why the week ahead.

It's crucial for markets.

That's next.

Stock features are relatively quiet this morning after a whipsaw week left investors on edge.

You're looking at a mixed picture right now with the NASDAQ leading the way up just about 4/10 of a percent.

Well, now Wall Street is bracing for a fresh read on inflation and also retail sales that is going to provide some insight as to whether or not maybe a US recession could be in the cards.

A fear that had a roiled markets last for more.

We wanna bring in Mary Ann Bartels.

She is the chief investment strategist at Sanctuary Wealth and we also wanna have, we also have Dennis De Buscher.

He is the president of 22 V Research.

It's great to have both of you, Marion.

Let me start with you coming off of what was obviously a very volatile week here for the markets this week.

What do you think the set up looks like ahead of those Ecom prints that we're gonna be getting later this week because of the violent move that we had from the deed leveraging of the yen carry trade and the major spike that we had in the VIC, which was the third highest um going all the way back to 2008 and 2009.

We now have very oversold conditions within the marketplace um whether you're looking at the S and P NASDAQ Magnificent seven.

And in fact, um we're so oversold that we're starting to get early by signals.

So I think we're actually, if we can have um data, that's comforting to the market, I think we're in for a rally for the next couple of weeks and I do think it's going to be led by tech and tech related.

Well, Mary and I gotta, I gotta follow on that before we get to you, Dennis.

I'll come to you in a second here.

But what are you basing the confidence on in the market rally to come in the coming weeks given that there is potential that the carry trade didn't fully unwind, given that we could see more volatility off of this week's data prints and that there's still the looming growth scare question in the room.

Well, we did look at the commitment of trader reports for non commercial, which is really basically your fast money or traders and that's almost completely closed.

There's not a lot of short positions, at least based on that data doesn't mean that there's not other positions around the world.

But here in the us, it looks like the trade is pretty much closed.

So I think volatility can actually come down.

So how do I say a buy signal?

So that's where we lean on the technicals.

And we've looked at the 14 day stochastic and that is an oversold condition.

And remember we used to talk about Fang, well, there's an index that's called the New York Stock Exchange Fang plus index, which is the magnificent seven plus a few others.

And that's actually generated a buy signal from the stochastic.

So I think this is an oversold bounce uh by no means do I think we're out of the volatility range?

I am expecting volatility to pick back up again back in the fall months around September and October.

But right now, I think we're rallying which will give investors an opportunity to rebalance their portfolios if they haven't already done.

So.

So Dennis, how are you looking at the risk of slowing growth right now?

And how big of a headwind that could be for stocks?

Well, it could be a major headwind.

Uh insofar as the tail risk is, is higher, right?

So to the extent that you end up in a negative feedback loop for the economy, which would be related to obviously the unemployment rate moving up to 4.3% to the extent that impacts confidence, uh corporate decisions, et cetera, you have the tail risk uh and the earnings tail risk related to uh a recession.

Uh We put, we don't think a recession is a base case at all, but that risk is out there.

Um Time will reduce that tail risk.

And when I say time, time and in line data, so you take this kind of shorten the time frame, you take this week's data and you look at it if it were to come mostly in line with consensus vol just going on.

Mary's comments, volatility come down your odds that the normal economic expansion uh would continue would increase.

Um So you need uh negative data from here.

To justify higher recession risk odds which are elevated.

I mean, I don't, I don't want to diminish that point.

Uh But to the extent that you don't get it, uh, you probably want to be a better buyer than seller of the market.

Dennis.

Let's talk about your rate call for the fed.

I know you're thinking a 50 basis point cut.

Come September, talk to me about that call and to what extent does the market action and volatility that we have seen play into that call?

Uh Great question in the sense that if you're getting our calls, 50 basis points as you say, and if it's 50 basis points in a risk management framework, because at the end of the day, you have a 4.3% unemployment rate, you have inflation that is slowing.

Hopefully, that data is confirmed this week again.

And in that context, if you're gonna cut 50 basis points and very quickly get back to some level of less restriction in a non recession scenario, it is very positive for risk assets, all all things equal, that's full stop.

Now, importantly, if you get 50 basis points with uh unemployment rate of 4.5% then it's negative.

So when you think about it in risk asset terms, when you think about our market terms, it's very related to how are you getting the cuts in relation to the way your baseline economic outcomes are uh developing in our view it's gonna be non recession and to the extent that that happens, you wanna be a buyer of rate cuts because it's gonna be an important positive Miriam.

What do you think?

Do you agree?

And, and how are you thinking about rate cuts?

So, uh the proxy that I'm using is actually the two year treasury yield.

Um We've been saying for quite some time that rates have peaked both at the short end and the long end of the yield curve.

But it looks like a major top is forming in the two year treasury.

And if that breaks and stays below 3.5, we can get that rate down to a 2 to 1% handle.

And the only explanation I can come up with is that you would have to be in a recession or very close to recession to get rates down at that level.

So we're watching the two year to actually signal if the economy is sig uh significantly slowing Dennis, I wanna give you the last word here.

I, if what Mary Anne was saying that what this week, this past week rather was just leverage, getting pushed out of the system.

Will this week's economic data really be that much of a referendum on the market volatility that we saw last week.

It has the potential to be, I don't want to get over my skis on it.

But, you know, at the end of the day, you're sitting at a 20 vix which is high for any uh normal economic expansion.

So to the extent that you have data that does not confirm fears of a impending recession, it's probably going to be more positive than negative uh, week for markets.

So, you know, the way you got to think about this is what are we gonna find out that's new to make the downside risk come to fruition?

Right.

So you're gonna have to make a bet that claims will be worse.

You have to make a bet that retail sales will be worse.

You have to make a bet that housing data is gonna be worse, could be the case.

But everything we're seeing from a high frequency point of view doesn't suggest meaningful downside risk from here to the economic data.

All right, Dennis and Marian.

Thank you both so much for kicking off this trading week here and what investors need to expect ahead of what is going to be a very busy week here for econ data.

Thanks to you both.

Thank you.

Treasury Treasury is ticking lower when we come up, we are going to discuss actually will yield.

Moving to the upside here.

You have treasury prices tick lower.

What's next for the bond market?

We can discuss that right after the break.

Stocks and bonds are negatively correlated again for the first time since the 2023 regional banking crisis.

Taking a look at Treasury on your screen.

Here.

You're seeing the yields are taking higher this morning after a volatile week for equities left investors seeking safety slashing exposure to equities at the sharpest rate since the here to discuss what is next for Treasury.

We got Brian Way in TCW Fixed Income Groups, Chief Investment Officer and generalist portfolio manager.

And thanks so much for being here, Brian.

So it seems to me that bonds became the haven trade again last week.

Do you anticipate that thesis?

Continuing?

Yeah.

Uh We've, we've been saying around here bonds can be bonds again, you know, we went through a bond market, went through a tough period in 2022 with rates rising kind of settled in last year.

We came into this year, you know, particularly in the spring bonds were yielding about 5%.

So they were offering, you know, good, good carry.

Uh But at the same time, more importantly, and to your point, which is the the price movement of bonds now is gonna be moving in a, in a different direction than, than risk assets.

So, you know, as equities go down, bond prices more likely than not will go up and it kind of provide that diversification to uh to an overall portfolio.

So, Brian, what range do you think we're likely gonna be trading in then?

I think we've kind of settled in, you know, we've come a long way this summer.

Uh Right, we've come about 100 basis points in the front end.

So yields have dropped about 1% since, since the spring time and since July 1st, at least in the front end of the curve, the two year and the five years come down about 60 basis points and about basis points from that employment report a couple of weeks ago.

So this feels about right.

You know, there's a, there's a couple of days in late August that traders wanna be in their seat.

We've got, you know, we've got CP I this Wednesday, that'll be important.

The market will be watching that to make sure the inflation trends are in place and that they're, they're on a downward trajectory.

Uh and then uh we've got the Jackson Hole, uh you know, um conference uh that Powell will be speaking at.

So trades are gonna want to sit there.

And so from now until the next labor report, which will be early September, um you know, we'll have about two days, uh and we're gonna be settling in here in rates.

Uh But then long term, you know, we think we're gonna be on a, on a downward trend in uh in, in interest rates.

Uh We think, you know, the the market over time over the fall will start to kind of coalesce around the idea that this economy is slowing a lot quicker uh that was priced in, at least in the first half of the year.

Uh And if we're right with that and inflation continues to come down.

The market's gonna start to project that the FED is gonna start cutting interest rates at a more aggressive pace than even what's current in the marketplace.

So what does that mean, Brian, for the average kind of retail investor who maybe had their money sitting in, say a high yield savings account for the last couple of years.

They're seeing this news about impending rate cuts.

What should they be doing with that money in terms of, of treasury specifically, if they wanted to get into the space before those cuts?

Yeah.

Sure.

Yeah, I mean, you're gonna wanna be in, um, well, the most uh sensitive part uh to uh, interest rate cuts are the front end of the curve.

So you're talking about the two year and the five year uh treasury other kind of high quality bond, uh, markets are a good place to go like investment grade corporate bonds.

They, they should perform pretty well.

Um And so you're gonna get about a 4% yield.

Uh, you're gonna get the diversification benefits in case your equities or other, you know, commodities go down in your Port polio.

And that's, um, that's what they're supposed to do.

Um, places we'd avoid though in the bond market, um, which is uh elements of the bond market that are more correlated to equities.

Uh And so the easiest place to reference, uh a high yield is a great example, uh high yield spreads right now, you're only getting about a little about a little less than 3.5% more yield uh in a high yield bond or a high yield portfolio relative to, uh to treasuries, which historically is actually not a lot.

And so if you think about the, you know, kind of our forecast and what's starting to be more people kind of coming into, into this, uh idea that the of a recession might be, um you know, coming up in the, in the near future, um equities will not do well in that environment and therefore high yield bonds will probably not do well as well.

So you want, you want high quality bonds um to, to provide you um that stability, Brian going back to what you just said a moment ago that you expect the fed to begin cutting rates at an even more aggressive pace than what the market is pricing and what are you expecting?

Uh I think, look all spring we have seen, uh manufacturing has been very poor in terms of activity.

We've seen small and mid size business, um sentiment and hiring.

Um that's been very poor, um consumer behavior.

Um We've seen a ton of either kind of a pullback in consumer or at least substitution effects.

And then over the past couple of months, we've seen it's just time after time again, you just hear companies talking about changes and preferences and a slowdown in the economy.

And the one thing we haven't seen, uh and it was really the whole thing kind of holding up this kind of no landing narrative was this headline uh employment number.

Um Even though there's a number of flaws about it, uh you know, in terms of response rates and birth, death models and adjustments and all of that didn't matter.

Uh There was a lot of hope out there.

Uh And the markets wanted to hang on to that.

And then finally, you know, we saw maybe a crack in that number last Friday.

And so that has kind of shaken, I think investor confidence and you saw quite a bit of volatility around that, although we've settled in.

So what you should expect to see is over the next couple of months.

Uh and it's gonna be slow and it might take some time, but you should probably start to see more of a pullback in consumer spending.

You'll see growth rates start to come down, uh More likely than not after kind of a scars of the pandemic, uh where companies have been unwilling to let go of labor now that they're starting to hear that everybody else out there is, is softening and, and maybe they're letting go of some people, they're not gonna be as fearful about cutting people.

Uh And then so once you, once that narrative takes hold, you'll probably start to see more companies, um make layoffs at a faster rate than we've seen in a long period of time.

And that will obviously push up the unemployment rate, uh, at a more rapid pace than, than people expect.

And that's when the feds gonna have to react, they're gonna have to look around and say, you know, what, 5.5% that's, that's too tight.

Uh, we're gonna start to cut rates and, you know, we can debate about our start and what's the neutral rate, uh, for interest rates.

But it's a long way from here.

Uh, it's certainly below 4% and, you know, we would contend it's still below 3%.

And if that's the case, you know, you've got probably a couple 100 basis points uh, of, uh, of, uh, journey to go downwardly, uh, in us treasury rates.

And that could mean price returns of 10% or more, uh, in, uh, in the bond world.

And as we started off the segment, you know, when your bonds are up, 10% more likely than not, that's gonna be because your equities are down more than 10%.

Right.

Well, Brian congrats to you and the bond guys for a good week of attention there.

Thank you so much for joining us.

That is Brian Whelan with TCW coming up, we're going to have all your markets action ahead.

So stay tuned for more.

You can have a little bit of pressure across markets here with the S and P down nearly 3/10 of a percent.

The NASDAQ down about 1/10 of a percent.

Watching Morning Brief.

Let's get to some big stock movers on Yahoo Finance.

Today is monday.com Barrett Gold and Key Corp. We're gonna do each one in 30 seconds.

Let's kick it off first.

We have monday.com shares are rallying today.

You're looking at gains of just about 8.5%.

Now, this company is a project management software company.

It actually beat the street's expectations in its last quarter.

It raised its guide and some of the things that we are seeing quote unquote the results, a signal sustained market share gains and also further inroads in the larger customers as pro product portfolio brought in.

So that pipeline for their product portfolio, a bull as sign here for investors at this point.

Again, this move to the upside, Tegan is very encouraging from the streets.

So monday.com a trend here today.

All right, Sean.

Well, I'm gonna move on to gold beret gold in particular shares rising after the mining company beating the street's expectations in its second quarter report that comes thanks to both a jump in gold and copper prices.

This company also issuing a 10 cent per share dividend repurchasing nearly 3 million shares.

But what I really wanted to focus on was gold as its own asset class hitting its highest levels in a week ahead of key inflation data.

It's nearing all time highs and I should also mention that gold is already up 19% over the course of this year.

So we've seen a massive run not only due to some of the volatility we saw last week here, but of course, the geopolitical tensions leading to that run as well.

All right, let's round it out with Key Co because shares are surging Bank of Nova Scotia agreeing to buy nearly 15% stake.

So I had about 2.8 billion in the bank holding company.

You're looking at gains of just about 12% here.

Well, Keycorp here, one of the regional banks that was hit hard by last year's turmoil.

Bank of Nova Scotia doing this as part of their focus on North America.

Now this is that Canadian Bank is the one with the biggest international footprint.

Most of their investments though have been in Latin America.

So they have a push here for North America again, the move to the upside in Key Corp and that is a stock to watch today coming up.

We are watching.

So edging just a bit lower here to kick off a busy week for the market.

You looking at the down now of 233 points, you've also got the S and P are the NASDAQ as well.

Flipping from positive territory to negative.

We're going to dive into the key catalyst for the markets in the next hour.

We'll be right back