This Is How Markets Roll
Earnings have been good so far, so there’s that too.
The CBOE Volatility Index $VIX was up nearly 5 percent at its peak on Monday, which probably qualifies as a “spike.” Of course that’s off what remains a historically low base.The VIX measures implied volatility over the next 30 days through changes in the prices of options on the S&P 500.
It’s been tame for months. They call it the “fear gauge,” but I think that’s just a marketing thing, for drama.
What we know is all of the major equity indexes are trading at or near all-time highs in the immediate aftermath of the attempted assassination of Donald J. Trump.
Price action in the bond market, with US Treasury yields lower at the short end and higher at the long end, also reflects raised expectations of a Trump restoration.
No. 45 cum No. 47 means lower interest rates and more deficit spending. That’s traditionally a good combination for equities.
We’ll see how another four years of favors-based Trumponomics, rule-of-law mockery, and further institutional erosion impacts the US dollar.
That’s for later.
For now, let’s take a look at Ryan Detrick’s updated list of major geopolitical events from September 1, 1940, through July 13, 2024.
Note that the S&P 500 was up 21 percent in the six months after Hamas attacked Israel, the most recent event prior to last Saturday.
And here’s some more substance to consider.
According to FundStrat, of the 28 S&P 500 companies that have reported so far, 82 percent have exceeded estimates by a median of 3 percent.
That’s only 6 percent of the S&P 500, so it’s not quite a trend.
But it bears close scrutiny given the way the index has run this year, setting 39 new all-time closing highs and counting.
Goldman reported a $282 million provision for credit losses, 54 percent lower than the provision for the second quarter of 2023.
CEO David Solomon said the prevailing economic environment “remains relatively constructive” despite inflation being “stickier than many had anticipated.”
“Markets continue to forecast a strong landing as the expected economic growth trajectory improves and equity markets remain near all-time highs,” Solomon said.
We’ll hear what Bank of America $BAC and Morgan Stanley $MS have to say before the opening bell rings today.
A bellwether of another sort will draw the curtain on second-quarter tech reporting on Thursday, with Netflix $NFLX revealing numbers in a post on its website at 4:00 p.m. ET.
Maybe it’s not magnificent, but the streaming giant posted solid first-quarter results.
NFLX beat analysts’ expectations for revenue and earnings per share and reported better-than-forecast subscriber growth.
Wall Street expects a similar result this time around: EPS growth of more than 33 percent on revenue growth of nearly 8 percent.
NFLX closed up 1.37 percent on Monday, running ahead of the Nasdaq Composite, and setting the stage for its at-the-close announcement later this week.