This Week

Equities had a rough stretch last week but managed to catch an oversold bounce from Friday’s lows, grinding back to finish slightly positive — not a huge move on the surface, but an important one given how fragile things looked mid-session. Stocks are trying to build on that modest momentum to start the week, with S&P futures up about +0.6% Sunday evening.

The big headline right now is progress toward a deal to reopen the government — something the market would clearly welcome, while any signs of a breakdown could flip sentiment fast. This week also brings another busy slate of earnings, though less of the megacap kind. More on that and a few interesting weekend stories below.

• Senate on track to pass funding deal that could end government shutdown (CNBC)

  • The Senate was on track to approve a deal that could end the federal government shutdown, which began on Oct. 1. The deal does not include what had been the main sticking point for Democrats: an extension of enhanced Affordable Care Act tax credits, which are due to expire at the end of December. People familiar with the situation told CNBC that enough Democratic senators had agreed to vote for the deal to clear a 60-vote minimum threshold.

• Talks to end government shutdown take a promising turn, Senate majority leader says (CNBC)

  • Bipartisan talks in the U.S. Senate to end the government shutdown have taken a positive turn, Senate Majority Leader John Thune said on Saturday, with lawmakers working on deals to temporarily reopen the government and introduce three longer-term funding bills for some agencies. Asked by reporters whether there have been bipartisan talks within the last 24 hours that have been positive in nature, Thune, a South Dakota Republican, responded, “Yeah. I’d say so.”

• Republicans Pitch Alternative to ACA Extension to End Government Shutdown (WSJ)

  • Senate Republicans have made what amounts to a counteroffer in a bid to end the government shutdown, proposing that some healthcare funding be provided directly to households rather than be used to pay for a one-year extension of enhanced Affordable Care Act subsidies. The leading GOP proposal involves sending federal money into flexible-spending accounts instead of to insurance companies. The money could be used to cover deductibles and other out-of-pocket costs, which Republicans see as a way to give consumers more choice and control healthcare inflation.

• Transportation Sec. Duffy warns air travel will be ‘reduced to a trickle,’ with flight cancellations worsening as the shutdown drags on (CNBC)

  • Air travel in the U.S. will be reduced to “a trickle” ahead of the Thanksgiving holiday, Transportation Secretary Sean Duffy said. Trump administration officials ordered commercial airlines to cut hundreds of flights, citing strains on air traffic control during the government shutdown. Air traffic controllers are set to miss their second full paycheck next week because of the shutdown. Flight cuts could ramp up to 10% next week, and Duffy had warned they could reach 20%.

• 'Hiring has dramatically slowed': What private data says about America's job engine (Reuters)

  • The US job market has become one of the economy's biggest question marks. With the government shutdown stretching into its second month, now the longest in US history, investors and government officials have been left flying blind. No jobs report, no JOLTS data, and no clear understanding of how hiring, wages, or participation are actually holding up. Private and survey data filled part of that gap this week, painting a picture of a labor market that's holding up but losing steam as layoffs climb and confidence slips. "Hiring has dramatically slowed," Betsey Stevenson, professor at the University of Michigan and former member of the Council of Economic Advisers under former President Barack Obama, told Yahoo Finance on Friday. "So if you have a job, great, but if you lose it, you're kind of in more trouble than you would have been a year or two ago," she said.

• Hassett says US fourth-quarter GDP could be negative if shutdown drags on (Reuters)

  • U.S. economic ​growth in the fourth quarter ‌could be negative if a federal shutdown ‌drags on, White House economic adviser Kevin Hassett said in an interview that aired on Sunday. Hassett,⁠ speaking ‌to the CBS show "Face the Nation",‍ noted that a shortage of air traffic controllers was causing major ​travel delays in the run-‌up to the Thanksgiving holiday.

  China’s Stocks Are Flying as Beijing Doubles Down on Tech. Why the Economy Is Still Struggling. (Barron’s)

  • The future of robotics, biotechnology, and artificial intelligence is playing out in hundreds of fully automated labs across China managed by Hong Kong–listed biotech XtalPi Holdings. The company, founded in Boston by a trio of Massachusetts Institute of Technology–trained physicists, uses data generated in the labs to train AI models to accelerate drug discovery—garnering partnerships with Western pharmaceutical giants Pfizer and Eli Lilly.

• Wall Street Sounds Alarm on SNAP Cuts Amid Peak Shopping Season (Bloomberg)

  • As the US government shutdown stretches further into November and threatens holiday spending, one casualty of the budget impasse feared to hit sales of major grocers and their suppliers: the delay of monthly federal food assistance.

    Wall Street analysts, company executives and investors warn the funding pause for the Supplemental Nutritional Assistance Program, known as SNAP, risks putting further pressure on low-income households, which were already buckling under the weight of tariff-induced inflation and a tough job market. The Trump Administration’s tax and spending bill this summer reduced food aid for SNAP recipients, but the current halt in monthly benefits ..

Last week’s decline, which saw the QQQ lower by nearly 5% from the highs, and SOPX -4% before the bounce on Friday had vol a little spooked, with the VIX reaching an intraday high of about 22.50 Friday. That seems like it signaled some near term capitulation, and rally into the close crushed vol significantly, but it remains elevated compared to recent weeks. the 1.7% expected move in SPX is more than last week’s 1.4%. The QQQ 2.4% move compares to 1.9% last week, so movement is expected, even if it’s to the upside:

This Week’s Expected Moves:

• SPX/SPY: 1.7% (6600-6850)

  • QQQ: 2.4%

  • IWM: 2.2%

  • TLT: 1.2%

  • USO: 2.9%

USO volatility is significantly lower than the past few weeks, with oil looking pretty comfortable around $60. And speaking of pins, gold seems to have settled into a consolidation at/near 4000 — something we flagged to look out for about a month ago in this space.

Looking ahead to this week on the macro front, the government shutdown will probably delay the CPI and PPI, even if it gets resolved early this week. Once employees are back, though, we could see a quick clearing of the backlog. Prior shutdowns saw delayed reports begin to be released as early as 3 days with most in the 5-10 business days after.

That means we may get a cluster of delayed reports hitting all at once, potentially adding some short-term volatility ahead of the Thanksgiving break.

Here’s what’s on deck for the week:

Economic Calendar: 

• Tuesday

  • Bond market closed for Veterans Day

  • Fed Speak: Barr

  • 8:30am - ADP monthly employment change

• Wednesday

  • Fed Speak: Williams, Waller, Miran, Paulson

• Thursday

  • Fed Speak: Musalem, Hammack

  • Unlikely: CPI

• Friday

  • Fed Speak: Schmid

  • Unlikely: PPI, Retail Sales

Earnings reports this week include some interesting names, not of the Mag7 variety, but plenty of story names like CRVW, CRCL, OKLO, plus CSCO, DIS, and AMAT:

Earnings (with expected moves):

• Monday

  • Pre-market: B 5.8%, MNDY 11%

  • After-hours: CRWV 15%, RGTI 15%, OXY 4.4%

• Tuesday

  • After-hours: BYND 32%, OKLO 14%

• Wednesday

  • Pre-market: CRCL 12%

  • After-hours: CSCO 5%

• Thursday

  • Pre-market: DIS 6%, JD 6%

  • After-hours: AMAT 6%, NU 7.6%

One last note: Should we see an early week shutdown deal, vol could get crushed pretty quickly, but that relief may be fleeting as a wave of delayed economic data will begin to get released right into the lead up to NVDA earnings. That should keep the megacaps and other sectors moving in unison for a few weeks, adding to some volatile index swings.

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