• Soft economic news keeps dogging China. Earlier today, the country reported larger-than-expected drops in imports and exports for November, and shares there fell despite Beijing easing COVID-19 restrictions. That appears to be setting the tone for Wall Street early on.
• Campbell (NYSE:CPB) is heating up after reporting a solid quarter and raising fiscal year 2023 guidance. Shares climbed nearly 4% in premarket trading. Sales rose 15% in the quarter, and that was mainly due to pricing, because volume fell 1%.

“After years of low yields followed by a brutal drop in prices during 2022, returns in the fixed income markets appear poised to rebound,” Jones wrote. “It’s likely to be a bumpy ride due to the cross currents created by global central banks’ tightening policies, a volatile global economy, and ongoing political uncertainty here and abroad. Despite these challenges, we see opportunities in 2023 for the bond market to provide investors with attractive yields at lower risk than we’ve seen for several years.”

Several major companies are expected to report earnings Thursday, including Broadcom (NASDAQ:AVGO), LuLulemon (NASDAQ:LULU), and Costco (NASDAQ:COST). Anything in common here? Well, all three report after tomorrow’s close, but beyond that, it’s hard to find a lot of similarities. Looking individually:

COST already reported November sales, and the market didn’t apparently like what it saw, even though the number rose 5.7% from a year earlier. That was down from a 7.7% increase for October and a gain above 10% in September. Costco shares fell on the news, making tomorrow’s earnings report feel a bit like an afterthought. Keep in mind that Costco sales, like any big retailer, can reflect ups and downs in inflation, meaning current drops in gasoline costs might have an outsized impact. Something else to watch: the company’s margins, which took a hit last time due to higher costs. If supply chain issues have truly begun to ease, that could provide a margin tailwind. In addition, listen for any news on membership fees, which Costco hasn’t raised since mid-2017 despite some competitors doing so.

LULU reported strong earnings back in September, beating Wall Street’s expectations and is raising its outlook. Shares popped 9% on the day, according to LuLulemon. To match that sort of report, it has a very large pair of jogging pants to fill. If it does, maybe give the weather a credit. It’s been a colder-than-normal start to winter across parts of the country, and the snowpack out west is double the average amount in parts of the Sierras. That could be driving sales of the company’s outerwear like heavy jackets and boots. Or at least that’s what bullish investors probably hope. As with any retailer, inventory levels will be important to watch. Last time LULU reported, it sounded like it made strides getting supplies back to levels where tightness wasn’t an issue.

AVGO continues to work on its $61 billion merger with VMware, an IT infrastructure company, so look for updates on progress there. The idea behind the merger is to diversify AVGO’s business into enterprise software and beyond its core semiconductor business, but some analysts consider this a big bite to chew off and wonder if AVGO can be successful. Broadcom beat analysts’ estimates and gave strong guidance the last time it reported, but that was in early September before the Biden administration tightened chip sanctions on China. Shares went on a nice run starting in mid-October but leveled off recently.

Waiting for Santa Claus? We’re entering the time of year when many investors look for the so-called Santa Claus Rally—the market’s tendency to deliver outsized gains between mid-December and early January. According to the Stock Trader’s Almanac, it has occurred in about 75% of the years since World War II. Last year, despite the market’s ups and downs, it led to a nice end-of-year rally. But as soon as Santa retreated to the North Pole in early January, so did the market: January 4 was and remains the 2022 high.

This year, Fed Chair Jerome Powell may be the one driving the sleigh. While the Fed funds rate itself might not be the catalyst for any positive spin, according to CME Group’s FedWatch Tool, there’s a 77% chance of a 50 basis point hike, a 23% chance of the Fed hiking by a hawkish 75 basis points, and essentially zero chance of a more dovish stance. Powell’s remarks following next week’s post-FOMC press conference could offer some positive language on when the tightening cycle might be completed (his estimated “terminal rate”), or other words of reassurance like expectations for a soft landing. If not, this year’s stockings could be filled with lumps of coal.

You may hear about the futures market being in contango or backwardation, meaning future prices are higher or lower than the spot price. That’s normal. What’s abnormal is how /CL futures currently line up. The spot price is near $75 per barrel, and so are all the contracts for the entire next year, with no drops below $74 or jumps above $76 baked in. That’s rare for any futures market, let alone a volatile one like crude that can pivot quickly on changes in seasonal factors to geopolitics. Over the last year alone, /CL has gone all the way from $75 to $130 to $75 again. What we see now suggests traders—both commercial and speculative—believe supplies are roughly balanced, and that fundamentals won’t change much over the next year. Come back in five minutes if you don’t like it.

Claims Jumping: Tomorrow brings the weekly initial jobless claims data, which, for the most part, hasn’t satisfied those who’d like to see a slowdown that might soothe the Federal Reserve. If analysts are right, Thursday’s data won’t be any different, with consensus on Wall Street at 220,000, according to Briefing.com. Perhaps it’s more informative at this point to look at continuing claims, which topped 1.6 million last time. That brought the four-week continuing claims average up by 30,000 to 1.538 million. Remember, numbers can be jumpy week to week, so it’s worthwhile to keep an eye on the longer-term trend. The November PPI report is Friday morning, and we’ll preview the numbers tomorrow.