MARKET WRAPS
Watch For:
Housing Starts for July; Industrial Production and Capacity Utilization for July; Canada Housing Starts for July; Canada Consumer Price Index for July; earnings from Walmart, Home Depot
Opening Call:
Stock futures dipped on Tuesday ahead of results from major retailers that could offer clues about consumer behavior during a period of rampant inflation.
Investors are eyeing a week of key retail earnings, with Walmart and Home Depot set to post results later Tuesday.
On Wednesday, the FOMC will publish the minutes from its policy meeting in July, with the minutes closely read for signals on the Fed's next move.
Tim Pagliara, chief investment officer at CapWealth, said a few softer inflation readings "doesn't mean the Fed will slow or even pause the pace of rate hikes, which is what the market is expecting."
Pagliara said the recent market "melt-up" was "more akin to a bear market rally and we remind investors that the dot-com bubble saw four bear market rallies of 20% or more, with each one testing new lows."
European stocks edged higher for a five-session winning streak, while Asian shares finished mixed, with a tech selloff htting Hong Kong's Hang Seng.
Stocks to Watch:
An economic slowdown is encroaching on Apple, which has reportedly laid off 100 contract workers in charge of recruiting.
Those made redundant--across several regions--were informed Apple needed to make adjustments for its current business climate, according to a Bloomberg report on Tuesday that cited sources close to the company.
Not all of its contract workers were let go, and full-time employees involved in recruiting are being retained, the report said.
A representative for Apple didn't immediately respond to a request for comment by MarketWatch.
Read more here.
Forex:
The dollar could rise further in the near-term, supported by the energy shock, uncertainty over whether the PBOC will engineer another mini-devaluation in the renminbi and improved U.S. economic data, ING said.
The energy independence of the U.S. leaves the dollar relatively insulated to rising energy prices, ING added.
Data on industrial production later Tuesday and retail sales on Wednesday should ease recession fears, ING said. "106.95/107.00 looks like the near-term target for the DXY Dollar Index."
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Sterling was little moved after the latest U.K. employment data as investors look ahead to Wednesday's key inflation print.
"The employment reading indicates a robust jobs market and will provide the Bank of England further reason to continue on its current trajectory for a higher interest rate environment," Silicon Valley Bank said.
The U.K. unemployment rate was little changed at 3.8% in the three months to June while the number of people in employment increased 160,000 over the quarter and average earnings excluding bonuses rose 4.7% following 4.4% growth in the previous quarter.
Bonds:
The prospect of a slowdown of economic activity makes UBS Asset Management "rather cautious" in its positioning in government bonds, considering selloffs as an entry opportunity.
"Risk assets have not yet priced in the extent of this economic slowdown, " UBS AM said, staying underweight stocks and using selloffs in bonds as an opportunity to increase exposure to sovereign fixed income.
It sees balanced risks to developed-market sovereign yields outside the U.S., and sees Treasurys remaining the world's pre-eminent haven and top source of risk-free yield.
Energy:
Crude futures were more than 1.5% lower in Europe, extending Monday's hefty losses, on the prospects of a revival of the Iran nuclear deal and the subsequent resumption of Iranian oil exports.
DNB Markets said that could see Iran increase production by 1 million barrels a day within 9 months from current levels of 2.5 million barrels.
Metals:
Metals prices edged lower in European trading hurt by a strong dollar that spiked on Monday after China had cut rates to add some stimulus to its lockdown-hit economy.
"The macro mood feels heavier this morning," Peak Trading Research said, noting that the Chinese yuan, the number one importer currency, had fallen after the PBOC rate cuts.
TODAY'S TOP HEADLINES
Activist Politan Capital Has 9% Stake in Masimo
An activist investor has a big stake in Masimo Corp. and plans to push the medical-device company to take action to improve its stock price following a poorly received acquisition, according to people familiar with the matter.
Politan Capital Management LP, founded by veteran activist Quentin Koffey, has a 9% stake in Masimo worth roughly $750 million, the people said. Politan's specific ideas couldn't be learned.
Dan Loeb's Third Point Calls for Disney to Spin Off ESPN, Refresh Board
Activist investor Dan Loeb's Third Point LLC has bought a new stake in Walt Disney Co. and is calling on the media company to buy the rest of Hulu, explore spinning off ESPN and refresh its board.
Mr. Loeb on Monday said his firm, which liquidated a large Disney stake earlier this year, has repurchased a "significant stake" in the company and sent a letter to Disney Chief Executive Bob Chapek urging the company to engage with Third Point on a number of issues.
WWE Says Probe of Vince McMahon Is 'Substantially Complete'
An investigation by World Wrestling Entertainment Inc.'s board of directors into allegations of sexual misconduct against former chairman and chief executive Vince McMahon is "substantially complete," the company said in a securities filing on Monday.
The internal investigation, announced in June, found roughly $20 million in expenses that should have been recorded in the company's financial statements, including $14.6 million that Mr. McMahon agreed to pay women to settle allegations of sexual misconduct from 2006 to 2022, according to people familiar with the deals. Earlier this month, the company disclosed additional payments in 2007 and 2009 totaling $5 million that it said were unrelated to the allegations of misconduct that led to the investigation.
There Is No Preset Path for Australian Rate Rises, RBA Says
SYDNEY-The Reserve Bank of Australia is staying flexible on the size and pace of future interest-rate rises, underlining in the minutes of its Aug. 2 board meeting the need to respond to a shifting inflation outlook and labor data.
The minutes, published Tuesday, repeated the RBA's warning that the path to reining in inflation while maintaining economic growth is narrow.
UK Unemployment Rate Increased Modestly in Three Months to June
The unemployment rate in the U.K. rose slightly in the three months to June, although the country's labor market remained tight.
The U.K.'s unemployment rate stood at 3.8% in the three months through June, up from 3.7% in the preceding three-month period, according to data from the Office for National Statistics published Tuesday.
Explosions Hit Russian Ammunition Depot in Crimea
Russian authorities reported explosions at an ammunition depot in Crimea on Tuesday morning, a week after blasts at a Russian air base on the peninsula appeared to destroy several warplanes.
The new explosions took place at a temporary ammunition dump at a former farm near the village of Maiske in northern Crimea, a local official told Russia state news agency TASS. Local authorities are evacuating Maiske.
Merrick Garland Weighed Search of Trump's Mar-a-Lago for Weeks
WASHINGTON-Attorney General Merrick Garland deliberated for weeks over whether to approve the application for a warrant to search former President Donald Trump's Florida home, people familiar with the matter said, a sign of his cautious approach that will be tested over the coming months.
The decision had been the subject of weeks of meetings between senior Justice Department and FBI officials, the people said. The warrant allowed agents last Monday to seize classified information and other presidential material from Mar-a-Lago.
Former Trump Organization Finance Chief Set to Plead Guilty
The Trump Organization's former finance chief is expected to plead guilty later this week to criminal charges stemming from his indictment on tax-fraud charges, according to people familiar with the matter.
A court hearing is scheduled Thursday morning for longtime chief financial officer Allen Weisselberg, records show. The guilty plea, which is expected to carry a sentence of five months in jail, isn't final, the people said. Mr. Weisselberg isn't expected to cooperate with Manhattan prosecutors as part of the deal, according to the people.
Record Numbers of Migrants Arrested at Southern Border, With Two Million Annual Total in Sight
Record numbers of migrants are being arrested while crossing the southern U.S. border with Mexico, a sustained surge of single men and families from across Latin America either seeking asylum or work, according to new figures Monday from U.S. Customs and Border Protection.
Border Patrol agents have made about 1.82 million arrests at the southern border so far in the government's fiscal year, which runs from October to the end of September. The number beats the record set last fiscal year, which was 1.66 million apprehensions in the year ending September 2021.
Camden Diocese Insurers Granted Permission to Challenge Bankruptcy Plan
A bankruptcy judge sided with insurers for the Diocese of Camden, allowing them to make their case against the church's reorganization plan to settle sexual-abuse claims at a trial in October.
In a court ruling on Friday, Judge Jerrold Poslusny said it was reasonable for insurers including Century Indemnity Co. and Lloyd's of London to oppose the plan that they said would harm their rights in future litigation over sex-abuse claims against the Catholic diocese in southern New Jersey.
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Earnings:
Osisko Mining 2Q
Economic Indicators (ET):
0815 Jul Housing Starts
(MORE TO FOLLOW) Dow Jones Newswires
08-16-22 0506ET
