Navigating the week of August 22nd, 2022

I hope everyone had a great weekend! This week is going to be full of event volatility catalysts, between Jackson Hole, PCE, and some interesting earnings.


Earnings

As we wind down earnings season, there are still some very interesting companies reporting this week, including ADSK, BOX, CRM, DLTR, DKS, DLO, DELL, DOLE, GES, GPS, INTU, JD, JWN, M, MRVL, NVDA, PANW, SNOW, SPLK, TOL, ULTA, and VSCO. Each give us a glimpse in to their respective sectors and, in particular, their outlook for the rest of the year.


The tech earnings from ADSK, BOX, CRM, DLO, INTU, JD, MRVL, NVDA, PANW, SNOW, and SPLK will be quite interesting. We have a broad variety of industries represented within technology, including analytics, cloud, CRM, cybersecurity, ecommerce, semiconductors, and other software.


I'll be especially interested in PANW's outlook on cybersecurity spending as I believe it is a somewhat more resilient component of the IT budget, but still expect the rest of 2022 and the first half of 2023 to be challenging for many of these tech firms. The question is whether cybersecurity spend becomes more utility-like in nature or remains somewhat of a discretionary item on the balance sheet.


Because tech acted as leadership from the mid-June lows, earnings this week, especially from the larger players, should be pivotal toward shaping that sentiment moving forward.


Economic events

What a week of economic event volatility catalysts! Of course all eyes are on Friday's PCE and Jackson Hole speech by Fed Chair Jerome Powell, and these two events will be crucial for market participants trying to interpret the Fed's path as we navigate this tightening cycle.


But we also have PMI, New Home Sales, Durables, Initial Jobless Claims, and Real GDP. All of these econometrics are crucial to watch. I expect PMI is likely to show continued slowing, as will New Home Sales. Durables may slip along with home sales. Jobless claims seem likely to begin rising soon, whether it's this reading or the next. Real GDP should confirm a shallow recession in progress. Will be key to watch for revisions and where they are happening.


Treasury auctions

Finally, we have a busy schedule of US Treasury auctions, with over $300 billion offered. I will be watching the 2, 5, and 7-year note auctions most carefully as I believe they will be the most important for market participants.


Whether we get a tail, and how healthy the bid-to-cover is will be revealing about the demand for these notes. I suspect that demand may be tempered. If that's the case, and rates continue their rise, then we are likely to see further pressure on equities.