Anchor: A stark divergence on Wall Street as the trading week gets underway. Treasury yields are taking a breather today after 10 years Treasury yields touched multi-decade highs yesterday and yet equities are defying the bond slide. The S&P 500 and are eyeing key levels driven by relentless AIA as well as robust corporate earnings. Well joining us live this morning here at the New York Stock Exchange senior market strategist Michael Ryan. Great to have you here. Thank you so much for joining me.
Michael Ryan: Good morning. Thanks for having me back.
Anchor: Here we are. We are set for another higher open on this Tuesday morning and we have to keep in mind that we are eyeing some key technical levels when it comes to Treasury yields as well as the major US stock averages. So where do we go from here?
Michael Ryan: Interestingly enough, if you look at where futures are right now, we're up about 0.5% this morning, and if cash markets open kind of where futures are pointing, that would be pretty much. Right at the all-time high levels, right, so pretty kind of interesting in that we've had this rally that kicked off yesterday despite the fact that you had Treasury yields continuing to move higher this morning we have a little bit of a respite kind of coming out of Europe as Le Pen kind of put forward some spending cuts in France, which has kind of been one of those things that's been kind of pushing. Global yields higher and so we've seen rates in France particularly moving sharply lower and that's helping kind of the bond complex move a little bit lower as well, kind of more globally and then we also have oil prices that are kind of coming off a little bit as you have some negotiations that are kind of happening behind the scenes.
Anchor: And you bring up an important point because as we kicked off the trading week we're paying attention to what was happening in terms of Politics in France as well as in Spain, and here we are, we continue to keep an eye on the euro dollar, but of course I do want to get your perspective on the US economy following the latest data points last week as we head into next week's inflation figures we are getting too complacent when it comes to borrowing costs borrowing costs here in the US in relation to what the Fed.
Michael Ryan: Last week on Friday we had the jobs report which came in a little bit kind of weaker than expected on a headline basis, right? So we saw 29 around 29,000 jobs added to the economy. That was below estimates and we saw negative revisions to the previous two months. Now if you look at things, we're averaging over the last three months about 50,000 jobs added. is very much in line with where kind of economists have suggested that the break even rate would be for the US economy given some of the. Immigration laws that have been put in place. If you look at the unemployment rate, the unemployment rate ticked up to 4.2%, but that happened for a good reason as the labor force participation rate moved higher, right? So that was not necessarily a bad thing. And if you look at the household survey, it was actually pretty strong. So what that tells you is that we continue to have this kind of pretty resilient economy. You have a labor market that's resilient. Now the issue is kind of the pricing side of things, right? And we've continued to see in the survey data, you know, in last week's manufacturing ISM, yesterday's services ISM, we continue to see the prices components move higher. Now putting that all together, right, we've kind of heard from some Fed officials and particularly Of note, New York Fed President Williams, who suggested that after the last rate hike that the Fed could be a little bit more patient, right? He's going to speak again today, so we're going to see what he has to say, but it's really, you know, I think markets are at the point where they believe that we're on hold for October unless we get a very hot CPI report next week.
Anchor: Yes, and of course that CPI number is something that all of us will be paying attention to ahead of the October Fed meeting and of course before the Fed enters its blackout period in terms of commentary, but I do want to get your perspective on what we're seeing when it comes to sectors because the S&P 500 is within a stone's throw from record highs and we know that tech is leading the way higher, but as we head into earnings season, the official start. Next week, what do you think is key, especially when it comes to the sector leadership?
Michael Ryan: So particularly right since Jackson Hole and we had this very sharp move higher in interest rates, what we've started to see is the breath really start to deteriorate within the market, right? And if you look at the S&P 45, 600, the Russell, the equal weight version of the S&P 500, right, they've all kind of pulled back. 5 to 8% from the highs, um, you know, kind of over the last couple of weeks or over, you know, for the last kind of 6-7 weeks, right, the equal weight was down I think 7 consecutive weeks in a row, right, and we've just come into some pretty key technical levels last week with all of those indices basically testing their 200 day moving averages, right? So we want to see those, you know, kind of the, the breath start to improve. You want to see those levels hold. And then now you're kind of you're going to start the clock right where if you have the market cap weighted S&P 500 trade to new all-time highs, you kind of start the clock where you want to see confirmation by the other parts of the market kind of within like a 30 day or so kind of window, right? So that's going to be pretty key here. If we kind of do push to fresh all-time highs, you're going to want to see the breadth start to improve. We're heading into earnings season. In general, those numbers are kind of expected to be kind of pretty strong yet again.
Anchor: Yes, and Michael, finally, before I let you go, hard to believe, but we are counting down to the midterm elections. So given the fact that there are several catalysts that are coming down the pike. Do you expect us to end the year with another consecutive year of double digit percentage gains for the equity?
Michael Ryan: I mean, we are set up that way clearly right now, right? We've just come through kind of the most negative part of seasonal period for markets through September, the back half of September, we've talked about that kind of ad nauseam. And we're now into kind of a more positive, you know, kind of seasonal backdrop, right, where if you look at kind of in midterm election years October, November do tend to be the best two months during that, you know, kind of during midterm election years, and then when you look at the four year presidential cycle, it's Q4 of this year into the beginning, you know, the first half of next year is the best three quarter performance, and you've never had markets end. Lower one year after midterm elections. That being said, right there, you know, every situation is different. You do tend to see, you can see some volatility leading up to midterms, and I think given what's happening from a geopolitical perspective, right, there are some clear kind of risks on. Both sides of that in that if we do see a blue sweep, you could definitely see the administration kind of take the gloves off and we could really see a pretty significant escalation game theory thinking about from game theory perspective, you could also come to a conclusion that this would be sort of a. Where Iran might actually want to make a deal because you don't want to kind of cross over that threshold, right? So I think that's also kind of keeping a little bit of a bid under the market despite kind of some of the cross currents that we've seen so far.
Anchor: Well, so many fundamentals as well as technicals to keep our eyes on. So thank you so much for weighing in this morning, Michael.
Michael Ryan: Thanks for having me.
