Inside Markets — Catalysts into a seasonally difficult period

Aggregate Tech positioning is now mildly underweight going into NVDA’s earnings report tomorrow afternoon, DELL earnings/guidance Thursday afternoon and AVGO earnings next Thursday (9/5). The August Jobs Report on Friday 9/6 is the most important catalyst for the broad market, followed by AAPL’s iPhone launch on Monday (9/9), US CPI for August (9/11) and FOMC rate decision (Wednesday 9/18). The current Fed funds rate of 5.30% remains ~200bp above the Taylor Rule-implied neutral rate of ~3.3% with other estimates closer to ~2.5%. The Jobs Report on 9/6 will determine whether the Fed cuts rates by 25bp or 50bp. Consensus is looking for August non-farm payrolls of +160,000 and an inline print could deliver a September cut of 50bp if July core PCE (this Friday) and August CPI (9/11) come inline at +0.2% MoM.

The sharp decline in realized equity volatility and wide open corporate buyback window during a period of relative illiquidity keep the pain trade skewed higher for the next two weeks. This dynamic fades when the buyback window beings to close after 9/13 and when a seasonally difficult period begins.