In the meantime, investors might be craning their necks for anything worth trading on this morning. Asian stocks closed mixed and European shares are about flat. The data calendar is nearly blank today, and earnings news isn’t too exciting, either, though Walt Disney (NYSE:DIS) is expected to report this afternoon (see more below). For the moment, Wall Street seems less interesting than watching paint dry.

• In Q3 earnings, Norwegian Cruise Line (NYSE:NCLH) provided one highlight, beating Wall Steet’s earnings per share (EPS) and revenue consensus and offering guidance line with analysts’ expectations. Shares popped more than 3% in premarket trading.
• On the other end of the spectrum was Lyft (NASDAQ:LYFT), driving steeply downhill on its outlook for lower revenue and lower ridership. Shares were off 16% as LYFT provided a stark contrast to competitor Uber’s (NYSE:UBER) recent results.
• The U.S. Dollar Index ($DXY) and Treasury yields are steady so far but have moved in opposite directions the last couple of days. That’s something worth watching. Yields continued to move higher Monday while the $DXY retreated.
• Eurozone retail sales, meanwhile, posted a 0.4% month-over-month September increase, in line with analyst expectations and up sharply from August’s -0.3% decline. Like the Federal Reserve here, the European Central Bank (ECB) is under pressure to reduce inflation, and ECB President Christine Lagarde has been sounding hawkish. Bloomberg reported that Lagarde told reporters that 2% inflation remains the ECB’s goal, but wouldn’t speculate on a peak, or terminal, interest rate.

There’s been a lot of focus lately on the Cboe Volatility Index® (VIX) retreating recently to nearly two-month lows below 25, but a check of the VIX futures complex doesn’t offer much hope for smooth trading ahead. That’s because it’s in backwardation, meaning outlying contracts trade above current levels. There’s nothing extremely spooky on the futures charts, but the market is pricing in a VIX that will be above 25 for the next six months, a signal that turbulence isn’t necessarily over.

Did someone say, “Over”? As far as the 2022 midterms, nothing is over until the final votes are counted, and if 2020 is a guide, that might take a while. Today could be the calm before the storm, but how long the storm lasts is anyone’s guess. In 2020, it took nearly a week for an official declaration of President Biden’s victory over former President Trump, and many congressional districts took even longer to settle the outcome. There’s a small chance we could wake up tomorrow and have a solid idea of how things turned out, but there’s also a chance for a lot of uncertainty.

As we noted yesterday, DIS offered solid results during its previous quarter, beating analysts’ estimates on revenue and EPS. Subscription growth at streaming service Disney+ rose more than expected to 152.1 million during its fiscal Q3, and spending at theme parks appeared to impress investors. Some analysts expect theme parks to again carry the day when the company reports later on, noting strong travel demand hasn’t let up even though we’re further and further from the main post-pandemic surge.

The problem is DIS isn’t just a theme park company. Disney+ results could get close scrutiny after last week’s disappointing outlook from Roku (ROKU), which warned of a pullback in advertisement spending. Disney+ is expected to launch a new ad-supported tier next month, according to Barron’s, and DIS shares fell after the ROKU news. This afternoon’s call from DIS could provide investors a bit more insight into how strong (or weak) DIS thinks the advertising climate is heading into the holidays, traditionally a strong season.

• That’s quite a disappointment considering that back on June 30 it expected 9% Q4 earnings growth.
• Sharp drops in projected results for the materials (-18.0%), communication services (-15.4%), and consumer discretionary (-14.4%) sectors drove the latest estimate.
• Falling earnings projections indicate, to some degree, that higher costs are hurting company margins.
• However, FactSet still projects earnings growth for all four quarters of 2023. An “earnings recession” is defined as consecutive quarters of falling earnings, something last seen in 2020.

Does the Market Vote?  It’s fair to wonder if today’s election could cause a major market pivot, but if the 2018 midterms and the presidential election of 2020 were any indication, you’d be wrong. In 2018, markets had been slipping, and once the polls closed, they kept heading down until late December. Ditto 2020, though the direction was up instead of down. The SPX had a couple short-lived sell-offs that fall, but the general direction continued upward. The last time a vote really seemed to change the market’s direction was in 2016, when stocks sold off for about a week before the election and then rallied  afterward. That happened to be the last election that gave the GOP full control of Washington. As for 2018 and 2020, the big story both years was interest rates. They generally moved up in 2018 and down in 2020. Consider that food for thought as you watch the results come in.

Rechecking the Jobs Report: Last Friday’s jobs report is in the rearview mirror, but there’s still interesting stuff to glean. Like this tidbit: More than half of the “upside surprise” in the October Nonfarm Payrolls data came from additional government positions. Total government jobs growth of 28,000 in October went a long way toward explaining why headline jobs growth reached 261,000 when Wall Street had expected 220,000. Government hiring tends to come in big batches, meaning you can’t necessarily count on a repeat when this month comes to a close. So, what’s the point?  While the report is seasonally adjusted for such trends, there’s a possibility that if government hiring eases in November, the next report could offer a much clearer view of what’s really going on in the private sector.

Costlier Workers See Slowdown: October’s report also had tough news for older workers. The number of employed people between ages 45 and 54 dropped by 406,000 month over month in October. This could be a sign that employers are holding back on hiring more experienced (and therefore more costly) workers. This could indicate companies might be looking to eliminate similar salaries on their payroll as inflation and other factors drive costs higher. One more thing to watch—the household employment survey. This part of the Nonfarm Payrolls Report showed a 328,000 decline in the number of people actually employed across the economy in October, while the employment-to-population ratio fell just a sliver to 60% in October. The behavior of these two numbers suggests that the jobs market—particularly as it relates to private-sector growth—could be softer than Friday’s headline number let on.