Names mentioned: AAPL JBHT F

U.S. equity futures point to declines at today's market open following disappointing economic news from China, while the 10-year U.S. Treasury yield has climbed back above the 1.6%. With a light economic and earnings docket today, odds are Apple's (AAPL) latest special event at which it is widely expected to introduce new M1 Macs and potentially updated Air Pods will be a highlight of the day. We'd remind subscribers that expectations tend to run high ahead of these events leading AAPL shares to trade off following the event more often than not.

As we move through the week and the velocity of quarterly earnings reports increases, company comments on those factors will likely shape the market's direction this week.

Weak Economic Data out of China

China's economy slowed more than the expected 5.0% in Q3, falling instead to 4.9% YoY after rising 7.9% in Q2 and compared to expectations for it to have slowed to 5.2%. On a sequential basis, China's GDP rose just 0.2% QoQ. Industrial Production in the nation rose 3.1% YoY in September after rising 5.3% in August and compared to expectations for slowing to 3.8%. Retail sales in September grew more than the expected 3.5%, expanding 4.4% YoY from 2.5% in August. The country's unemployment rate in September dropped to 4.9% from 5.1% in August.

All of this is poised to weigh on 2021 global GDP forecasts, but we'll be looking for the October Markit Economics data to see if that slowdown continued or to what degree China's economy bounced back as pandemic restraints eased.

Supply Chain Woes Continue

Supply chain problems persist with 665 container ships waiting to enter ports as of Friday, according to data from Seaexplorer.com. That represents around 10% of the total current in service around the world. Outside LA, ships are waiting for more than 12 days on average before they can pull into port, which is about the amount of time it takes to cross the Pacific from Asia.

When it reported its quarterly earnings report late last week, JB Hunt Transport Services (JBHT) shared that bottlenecks on the West Coast are going to "intensify further peak-season capacity needs into November and December."

Energy

Crude oil futures closed above $82/bbl on Friday, a new seven-year high, and are moving even higher this morning, even as a natural gas supply crunch in Europe and optimism about demand in the U.S. continued to propel the recent rally. Even though natural gas prices are trending lower today, following their significant climb that began in April, the Energy Information Administration warns the nearly half of U.S. households that use natural gas to heat their homes can expect to pay an average of 30% more on their bills this winter than last year.

Another potential headwind to consumer spending in the coming months as cooler temperatures become the norm.

Portfolio Mentions

Ford Motor (F) will spend up to £230 million (~$315 million) to turn a transmission factory in northwest England into a plant to produce electric power units for cars and trucks sold throughout Europe. Another positive data point in our view for the company's transformation.