Sentiment Update: Stronger Than You Might Think

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What’s in Today’s Report:

  • Sentiment Update: Stronger Than You Might Think
  • Warsh Confirmation Hearing Takeaway
  • Retail Sales – Resilient Consumer Spending Continues

Futures are bouncing back from yesterday’s geopolitically-fueled, late-session losses as President Trump declared an indefinite ceasefire with Iran after the close.

Economically, UK CPI met estimates at 3.3% Y/Y while Core CPI cooled 0.1% to 3.1% vs. (E) 3.2% in March, the latest release to suggest the U.S.-Iran war has not yet had a material impact on inflation pressures globally.

There are no noteworthy economic reports today and no Fed officials are scheduled to speak. However, the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET that could move yields and influence equities today.

Finally, earning season continues with GEV ($1.79), BA ($-0.86), T ($0.55), ELV ($10.68), PM ($1.82), IBM ($1.81), LUV ($0.45), and the first Mag-7 name of the season, TSLA ($0.21) due to report today.

 

Why Are Markets Ignoring Negative U.S.-Iran Headlines Again?

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What’s in Today’s Report:

  • Why Did Markets Ignore Negative U.S.-Iran Headlines (Again)?
  • Chart: Oil Prices Remain Subdued Despite Geopolitical Escalations

Futures are higher on hopes that another last-minute U.S.-Iran ceasefire deal will be reached before tomorrow’s deadline with slim chances of a U.S. extension this time around.

Meanwhile, domestic traders are awaiting Fed Chair nominee Kevin Warsh’s Senate confirmation hearing on Capitol Hill today as any hints at the potential futures policy path (particularly dovish commentary) could move markets.

Economically, U.K. Unemployment fell to 4.9% vs. (E) 5.2% in April while the German ZEW Survey badly missed estimates, however global market focus remains largely on the fragile geopolitical situation in the Middle East.

There are two notable economic reports due out in the U.S. today with Retail Sales (E: 1.4%) and Pending Home Sales (E: 0.9%) scheduled to be released this morning.

In addition to Warsh’s Senate confirmation hearing (beginning at 10:00 a.m. ET), Waller will speak this afternoon (2:30 p.m. ET) and there is a 6-Week Treasury Bill auction at 11:30 a.m. ET, all of which have the potential to impact bond yields and subsequently influence equity markets.

Finally, earnings season continues with UNH ($6.48), GE ($1.63), MMM ($2.02), ISRG ($1.63), UAL ($1.08), and COF ($4.61) all due to release quarterly results today.

 

How Is the Market at All-Time Highs?

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What’s in Today’s Report:

  • How Is the Market at All-Time Highs?
  • Weekly Market Preview: Can Earnings and Economic Growth Continue to Support This Market?
  • Weekly Economic Cheat Sheet: Flash PMIs the Key Report This Week (More Insight into Stagflation Risks)

Futures are moderately lower on higher oil prices (up 5%) as Iran backtracked on its commitment to reopen the Strait of Hormuz over the weekend.

Iran fired on two commercial ships transiting the Strait while the U.S. seized an Iranian cargo ship, escalating tensions between the two countries.

Despite that escalation, ceasefire talks between the two countries are still expected to occur on Tuesday and markets still fully expect a lasting ceasefire to be agreed to in the relatively near future.

Today, focus will stay on geopolitics and as long as the ceasefire talks in Pakistan aren’t cancelled, markets should mostly ignore any negative geopolitical headlines.

Earnings season also rolls on this week and some notable reports today include: CLF ($-0.40), ALK ($-1.61), STLD ($2.79).

 

New ETFs for Your Watchlist (March Launches)

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What’s in Today’s Report:

  • New ETFs for Your Watchlist (March Launches)

Futures are modestly higher overnight on general optimism towards falling geopolitical risks in the Middle East.

President Trump continued to post encouraging comments about the U.S./Iran ceasefire and investors now fully expect a lasting agreement in the coming days.

The 10-day ceasefire between Israel and Lebanon is adding to the optimism, pushing oil modestly lower (down 3%).

Today will again be driven by geopolitical sentiment and there are reports the U.S. and Iran may meet in person over the weekend.  Confirmation of that meeting would be an incremental market positive.

Outside of geopolitics, there are no economic reports but there are three Fed speakers including Daly (11:30 a.m. ET), Barkin (12:15 p.m. ET) and Waller (2:00 p.m. ET) and the more they frame any inflation spike is temporary, the better for markets.

Finally, earnings season continues to roll on with a focus on regional banks today including: TFC ($0.99), FITB ($0.84), RF ($0.61) and STT ($2.58).

 

Technical Take – All Time Highs (Bull vs. Bear Case)

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What’s in Today’s Report:

  • Technical Take – All Time Highs (Bull vs. Bear Case)

Futures are little changed following a generally quiet night of news as markets digested the new highs.

There was no notable news on the U.S. and Iran overnight and the consensus view is that the ceasefire will be extended with an announcement coming any day.

Today focus will remain on Iran although as mentioned, a ceasefire extension is already priced in so if/when that’s announced, it likely won’t be an incremental positive catalyst.

Away from geopolitics, there are three notable economic reports including: Jobless Claims (E: 215K), Philly Fed (E: 12.0) and Industrial Production (E: 0.1%).  Given stagflation fears, solid activity that’s near expectations will be welcomed by markets.  There are also two Fed speakers today, Williams (8:35 a.m. ET) and Miran (10:35 a.m. ET), with Williams the more important of the two (he’s part of Fed leadership).  If he’s a bit hawkish, that could marginally pressure markets.

Finally, earnings season continues to heat up with several important results today including: TSM ($3.31), ABT ($1.14), PEP ($1.55), NFLX ($0.76), AA ($1.60).

 

Not All Markets Are Signaling an “All-Clear” Yet

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What’s in Today’s Report:

  • Why Aren’t Treasuries or Oil Confirming The Rally in Stocks?
  • Return Table – Not All Markets Are Signaling an “All-Clear” Yet…
  • Producer Price Index Takeaways – Cooler Than Feared

Futures are slightly lower on mixed geopolitical headlines since yesterday’s close.

Overnight, Iran threatened to halt trade through the Persian Gulf and Red Sea if the U.S. Naval blockade of Hormuz continued, however the AP reported progress in ceasefire talks with a deal potential imminent.

Today, there are several noteworthy economic reports to watch in the U.S. including the Empire State Manufacturing Index (E: -2.0), Import & Export Prices (E: 2.1% m/m, 1.7% m/m), the latest Housing Market Index release (E: 37).

Additionally, there is a 4-Month Treasury Bill auction at 1:00 p.m. ET. and two Fed officials scheduled to speak: Barr (8:30 a.m. ET) and Bowman (1:45 p.m. ET).

Finally, earnings season continues to get underway with notable companies reporting today including ASML ($7.72), BAC ($1.00), MS ($3.06), PGR ($4.77), PNC ($4.12), and JBHT ($1.45).

 

Why Didn’t Stocks Fall Yesterday?

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What’s in Today’s Report:

  • Why Didn’t Stocks Fall Yesterday?

Futures are tracking global shares higher amid hopes that continued U.S.-Iran talks this week will yield a lasting ceasefire and end to the war in the Middle East, critically including a sustained reopening of the Strait of Hormuz.

Economically, the NFIB Small Business Optimism Index fell -3.0 to 95.8 vs. (E) 97.5 amid a spike in the Uncertainty Index.

Today, focus will remain on any news or developments regarding plans for the U.S. and Iran to resume ceasefire negotiations with rumors that President Trump may be in attendance and directly involved in the talks.

Additionally, we will get another important inflation report in the form of the March Producer Price Index release ahead of the bell (E: 1.2% m/m, 4.7% y/y) and there is a  52-Week Treasury Bill auction at 11:30 a.m. ET that could shed light on bond traders’ Fed policy expectations.

There are also two Fed officials scheduled to speak today: Goolsbee (12:15 p.m. ET) and Barr (12:45 p.m. ET) but they are unlikely to move markets.

Finally, Q1 earnings season continues to get underway with multiple big banks and large cap U.S. companies reporting quarterly results today including JPM ($5.46), BLK ($11.96), C ($2.64), WFC ($1.57), JNJ ($2.67), and ACI ($0.39).

Investors will be looking for favorable geopolitical news, “cool” inflation data, and strong earnings today in order for the robust April rally to continue.

 

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What the Failed Peace Talks Mean for Markets

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What’s in Today’s Report:

  • What the Failed Peace Talks Mean for Markets
  • Weekly Market Preview: Dual Focus This Week on Iran but Also Key Bank Earnings
  • Weekly Economic Cheat Sheet: Are Stagflation Risks Rising?

Futures are moderately lower as peace talks between the U.S. and Iran failed to produce a lasting ceasefire.

The ceasefire talks between the U.S. and Iran yielded no material progress and, in response, President Trump ordered a partial blockade of the Strait of Hormuz, which is boosting oil prices (up 8%) and weighing on futures.

Economically,  there were no notable reports over the weekend.

Today focus will stay on the Strait of Hormuz and specifically if the partial blockade goes into effect and, if so, whether that reignites direct conflict (if so, that would be an incremental negative).

Outside of geopolitics, this is an important week for earnings as we get major banks reporting this week (among other notable companies) and that starts today via GS ($16.34), FAST ($0.30) and FBK ($1.13) results.  In this environment, the stronger the earnings and guidance, the better for stocks.

Finally, there is one economic report today, Existing Home Sales (E: 4.07 million), but that shouldn’t move markets.

 

Sevens Report – MMT Chart (April Update)

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What’s in Today’s Report:

  • MMT Chart (April Update)

Futures are little changed as markets tread water ahead of tomorrow’s U.S./Iran peace talks.

Despite conflicting headlines, the U.S./Iran ceasefire is holding enough for markets to remain stable ahead of face to face meetings Saturday morning.

Economically, the only notable report was German HICP which met expectations (2.8% y/y).

Today geopolitics will remain the dominant force on markets but as long as the face to face meeting Saturday morning isn’t cancelled, geopolitics shouldn’t weigh on markets too much.

Outside of the U.S./Iran war, we get important economic data today via CPI (E: 0.9% m/m, 3.4% y/y) and Core CPI (E: 0.3% m/m, 2.7% y/y).  With inflation concerns rising, investors will want to see a better than expected Core CPI reading and if that does not happen and Core CPI spikes, it’ll be an additional negative on the market.

There are two other economic reports today, Consumer Sentiment (E: 52) and Factory Orders (E: -0.3%), but neither should move markets.

 

Market Multiple Table: Renewed Optimism (Maybe a Little Too Much)

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What’s in Today’s Report:

  • Market Multiple Table: Renewed Optimism (Maybe a Little Too Much)

Futures are modestly lower on digestion of Wednesday’s big rally, as there was no negative news overnight.

Geopolitically, the U.S./Iran ceasefire is holding, for now, despite conflicting reports of violations.  The next key event is Saturday’s first round of negotiations.

Economically, German Industrial Production was slightly weaker than expected (0.0% vs. (E) 0.3% y/y).

Today the primary focus of markets will stay on geopolitics and whether the ceasefire holds.  While there are conflicting headlines, the key remains President Trump.  As long as he doesn’t post that the ceasefire is off, then regardless of other headlines, it’s still on (at least from a market standpoint).

Outside of geopolitics, we do get some notable economic reports including Jobless Claims (E: 213K), Core PCE Price Index (E: 0.3% m/m, 2.9% y/y) and Final Q4 GDP (E: 0.7%).  Of the three, the Core PCE Price Index is the most important but it’s February data (so before the war).  That said, if it’s higher than expected, that will only further increase inflation anxiety (which will be a mild negative on this market).