Tuesday Turbulence: Crude Oil, Yields Hit Travel & Transportation Stocks

**SPEAKER_1** (0:00)
To help me set up this trading day, Kevin Hincks, live at the CBOE with our pre-bell playbook. Good morning, Kevin Hincks.

**Kevin Hincks** (0:09)
Good morning, Nicole. Yes, higher crude oil prices, higher yields, higher US dollar, putting pressure on stocks as we get to the first of September. We're waiting, Nicole. We're waiting for some tone change in relationships between the US and Iran. Right now, it sounds like Qatar, Oman, and Pakistan are trying to negotiate some reopening or some de-escalation in the Strait of Hormuz. So we're watching for that. But right now, it only feels like escalation, Nicole. So right now, you've got crude oil up 2.8 percent, you've got yields almost 4.8. We're at 4.792, to be exact, and we've got a dollar up about two-tenths of a percent at 99.50. So all the macro is putting pressure on stocks. You've got E-minis down about seven-tenths. Now that's the low of the day. NASDAQ down 1.4 percent, Nicole. So stocks under pressure to start September.

**SPEAKER_1** (1:15)
Yeah, and you know, yesterday I was saying 1, 2, 3, 4, you know, with the Russell up 1 percent, and 2 percent was the, what we saw, one was the Russell, two was the Dow, three was the S&P, and four was the NASDAQ, roughly, for the month of August. But we did have a bit of selling yesterday, and that's continuing today. And you know, what is the catalyst to turn this around? We have a big week ahead. We're talking about oil, and maybe something on the jobs or something like that could assist. But let's just talk about where oil is now. At $88 a barrel, obviously a huge move in oil this week. I know we've had fluctuations in oil because of all of this, but oil will continue to pressure. Yesterday, we were talking about some of the cruise lines under pressure. But as oil moves higher, we're going to watch the truckers, the shippers, the airlines, anything, and our economy starts to suffer if you have high oil prices. We'll see how long we can digest oil at $88 the barrel, right?

**Kevin Hincks** (2:16)
Yes. If you think about it with a broad stroke, anything that moves something from point A to point B, airlines, trucking, you mentioned cruise lines, the US consumer, higher crude oil prices affect so many parts of the US economy that it's putting pressure on stocks and the overall economy. Remember, yields have followed crude oil on the upside. Now, that's a supply shock, right? Scott Besson, the Trump administration has been talking about, that's temporary. The long-term prospects for crude oil are actually quite positive as this relationship, this deal we struck with Venezuela is actually quite great for the US. So we're going to watch that play out over time. And it's great for Venezuela as well. So I think the long-term set up for crude oil is very good. But the short-term, these disruptions from the Strait of Hormuz are still hampering crude oil and hampering the overall market, Nicole.

**SPEAKER_1** (3:25)
Yeah, understood. All right. Let's move on to some of the economic data. We're waiting on job openings. Friday will be the all-important jobs report. But we have jolts, we have manufacturing numbers, some of the expectations, and your thoughts.

**Kevin Hincks** (3:40)
945, we'll get the PMI manufacturing final. 10 o'clock, we'll get ISM manufacturing index. We'll also get some construction spending. Then we start to look at jolts, job openings and labor turnover survey that we'll get.
The job openings, expected to be something between 7.3 and 7.35 million open jobs. For a month ago, it was 7.359 million. So we'll watch for that one. It'll be our first look at the labor market. We'll get jolts today, we'll get ADP tomorrow, jobless claims on Thursday, and of course, non-farm payrolls and unemployment.
With that wages data, that will give us our first look at inflation. So a lot coming up, a little bit every day from now to the end of the week. We'll get a lot on the labor market, but also some manufacturing data today, Nicole.

**SPEAKER_1** (4:35)
Yeah, a lot to take in, right? And obviously, NEO, we'll hear from NEO. Their outlook fell short. We're gonna hear from some of the Chinese car makers for deliveries. We'll have some earnings, Metronic and Palo Alto, Dell, MagoDB, some early, some late. We'll keep an eye on all of those names as well. Kevin Hincks, thank you so much. It's great to see you there at the CBOE. Kevin Hincks.