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Briefing.com Summary:
*Government shutdown concerns have risen after another deadly shooting of a protester in Minnesota.
*This is a big week of earnings reports, with several Magnificent 7 names on the docket.
*Rick Reider has emerged as the betting favorite to be the nominee for Fed Chair.
Last week was driven by geopolitical rancor. This week has begun with domestic upset following the deadly shooting of another protester in Minneapolis. In response, Senate Democrats are signaling that they won't approve a government funding package that includes DHS funding. Therefore, the prospect of another government shutdown is hanging over the market and the country.
The stock market isn't getting too worked up about the latter possibility—at least not yet.
Currently, the S&P 500 futures are up nine points and are trading 0.1% above fair value, the Nasdaq 100 futures are down seven points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are up 72 points and are trading 0.2% above fair value.
These indications are improved from the overnight trade, which was jostled by the president's threat to levy a 100% tariff on Canada if it made a free-trade deal with China and talk of a possible joint intervention on the part of the U.S. and Japan to stem the yen's weakness after reports circulated that the New York Fed conducted rate checks with banks.
The currency intervention remains a distinct possibility, yet Canada's Prime Minister Carney refuted the notion that Canada is seeking a free-trade deal with China, saying Canada respects its USCMA obligations, according to CNBC.
That declaration was a calming factor, but market participants haven't been overeager to buy on weakness in front of a big week of earnings releases that will include reports from Meta Platforms (META), Microsoft (MSFT), Tesla (TSLA), and Apple (AAPL).
This week will also feature an FOMC meeting that will likely get overshadowed by the talk of who the president will nominate to replace Jerome Powell as Fed Chair. Prediction markets show BlackRock fund manager Rick Reider has emerged as the betting favorite, albeit with a narrow lead over former Fed Governor Kevin Warsh. As an aside, the Fed is widely expected to keep the target rate for the fed funds rate unchanged this week.
What isn't unchanged are precious metals prices. They are rallying again, with shutdown concerns, political angst, and momentum acting as the drivers. Gold futures are up 1.9% to $5,076.40/toz., while silver futures have surged 8.7% to $110.19/toz.
The Treasury market looks to be keying a bit off the shutdown worries and political angst as well. The 2-yr note yield is unchanged at 3.60%, and the 10-yr note yield is down two basis points to 4.22%, showing littel reaction to an otherwise solid Durable Goods Orders report for November.
Briefly, durable goods orders jumped 5.3% month-over-month in November (Briefing.com consensus: 1.1%) following an upwardly revised 2.1% decline (from -2.2%) for October. Excluding transportation, durable goods orders rose 0.5% month-over-month, as expected, following a downwardly revised 0.1% increase (from 0.2%) for October.
The key takeaway from the report is that it showed good business spending activity, evidenced by the 0.7% month-over-month jump in nondefense capital goods orders excluding aircraft.
