The Week Ahead: A Market in Search of Guidance Advisorpedia's The Week Ahead Podcast, Powered by Tematica Research

Join Tematica Research's Chief Macro Strategist, Lenore Hawkins, and Chief Investment Officer, Chris Versace, as they discuss and debate what's driving the market and the economy this week.

Markets last week

For all the talk of a booming equity market and bust in the bond market ...

Net inflows into US bond funds outpacing those for comparable equity in 2021. 

Bond mutual funds and ETF added $372b as of June 23 v $160b for equities according to ICI

Bond funds are on track to eclipse the $446b of inflows in 2020

Lagging advance/decline lines for Nasdaq

Short-and medium-term oscillators have risen well into overbought territory.

Russell 2000 has been in a sideways trading range/consolidation since March, h. 

Short-term indicators remain under downside pressure while medium-term measures wavering around neutral.

Key Economic Data and Related Events Last Week

Last week’s ISM non-manufacturing and Markit Services PMIs both declined sequentially and came in weaker-than-expected. Both the US and global indices indicated a peaking out of the year-over-year base effects, just as we have been suggesting would happen. This fits with the corresponding rally we have been witnessing in Treasuries, which is consistent with expectations for the economy starting to roll over.

Last week the Federal Reserve released the minutes from their June meeting that rather rocked the markets. The minutes indicate that officials are pleased with the economic recovery and focused on the strong investment and increases in productivity but were dissatisfied with the progress in the labor market. When it comes to inflation half think the high current prices will end up being deflationary and half think they will be self-reinforcing high inflation. Several participants want to reduce mortgage-backed security purchases faster than Treasury bond purchases. Bottom line - this stuff is complicated and even the experts with all the data available right at their fingertips don’t agree and the market didn’t react noticeably once these minutes were released.

Possibly one of the biggest pieces of news last week came from Wells Fargo (WFC) which announced it is closing all credit lines and will no longer be offering them.

Economic Data to Watch THIS WEEK


July 13: Inflation, Monthly Federal Budget statement
July 14: Producer Price Index; Fed Beige Book
July 14-15: Fed Chair Jerome H. Powell - Semiannual Monetary Policy Report to the US House Committee on Financial Services 
July 15: Weekly jobless claims, NY Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production, Import & Export Prices
July 16: Retail Sales, Michigan Consumer Sentiment, Business Inventories, Net Capital Flows, Foreign Bond Investment
JULY 31 - Debt ceiling suspension expires

Last time we had an impasse on such the S&P 500 fell 6% in a month (July 2011) and didn’t get a solid breakout until December




Earnings of note THIS WEEK

Tuesday, July 13:


Conagra (CAG) - tough YoY comps, how much is attributed to the reopening
PepsiCo (PEP): away from home consumption of its beverages


Wednesday, July 14: 


Delta Air Lines (DAL): outlook for 2H vs. 1H schedules, fares, butts in seats; international travel


Thursday, July 15:  


Taiwan Semiconductor (TSM): comments will be closely 
Alcoa (AA)


Friday, July 16: 


Ericsson (ERIC): 5G
Kansas City Southern (KSU): June rail traffic was up 19% YoY - let’s see if KSU can translate that volume growth into operating leverage; also how it sees the Biden White House’s ramped up regulatory scrutiny of the rail industry playing out


Resources: Tematica Research | Chris Versace | Lenore Hawkins