October 10, 2022

Markets:

Stock futures were flat Monday morning as investors look ahead to key earnings and inflation reports that will shed light on the U.S. economy after a shaky week for markets.

Market observers generally consider the week ahead as the kickoff to earnings season, with four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi reporting Friday.

Inflation will also take center stage as new monthly Consumer Price Index data comes Thursday morning.

Markets whiplashed last week, starting with a relief rally that pushed the S&P 500 up more than 5% in its largest two-day gain since 2020. That rally unwound when jobs data came in stronger than expected, signaling further rate hikes, and OPEC+’s decision to slash oil supply rattled investors.

Monday could see light volume with many Wall Street traders off for Columbus Day. The U.S. stock market is open Monday, but the bond market is closed. On last year’s Columbus Day, the SPDR S&P 500 Trust traded about 65 million times. That is lower than any day in September or October of this year. While lower volume can sometimes make for a sleepy trading day, it could also contribute to outsized stock moves, as the market could be more susceptible to news events that drive knee-jerk reactions.

Portfolio:

We enter this monster week holding positions in NBIX and PARA and we will look at adding new opportunities emerging this week. Today, expect a potential slow trading session as volume should be super low due to Columbus Day. This week however we have a ton of key trading points, most importantly CPI on Thursday and the start of earnings season this week as well. We love the 4th quarter of a year and everything it brings. Be ready this week, although CPI is the main event, earnings season need to be in focus!