Why Are Stocks So Resilient (And Can It Last?)

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What’s in Today’s Report:

  • Why Are Stocks So Resilient (And Can It Last?)
  • Last Week’s Key Event (It Wasn’t Mexican Tariffs)
  • Weekly Market Preview (Four Big Events This Week, Not Just the Fed)
  • Weekly Economic Cheat Sheet (All About the Fed)

Futures are fractionally higher following a weekend full of  articles on trade and the Fed but none of them shifted the current market outlook.

There were multiple stories on U.S./China trade and they were mixed (some positive, some negative).  The bottom line remains that the best hope for the G-20 summit is a resumption of negotiations and promises of no new tariffs.

There was no notable economic data over the weekend.

The Fed meeting is just over 48 hours away so barring any major surprises on U.S./China trade, markets should be relatively calm into that meeting.

But, that said, there is an important economic report today, Empire Manufacturing (E: 10.0), which will give us the first look at economic activity in June and this report could confirm or deny the U.S. economy is again losing positive momentum, although it’ll take a big miss or beat vs. expectation to materially move stocks.

Tom Essaye Quoted in MarketWatch on June 13, 2019

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Tom Essaye, founder of the Sevens Report Research, partly credited expectations for further economic supportive measures from China for the market’s gains. “Chinese Vice Premier Hu called for more stimulus…” Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on June 12, 2019

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The Sevens Report’s Tom Essaye said this week that the trade war is one of several key uncertainties creating volatility in the market. A major divide seems to exist between market expectations for three…Click here to read the full article.

Tom Essaye Quoted in U.S. News on June 13, 2019

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Tom Essaye, the founder and president of Sevens Report Research in Palm Beach Gardens, Florida, says last weekend’s G-20 finance ministers and central bank governors meeting produced no progress on U.S.-China trade, and there are no…Click here to read the full article.

Weighing Gold

Tom Essaye Quoted in CNBC on June 12, 2019

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“Momentum can carry this market higher especially into the Trump/Xi G20 summit, but the bigger (and longer-term more important) question regarding…” says Tom Essaye. Click here to read the full article on CNBC.

Stock Buyer on the stock exchange floor

Fed Expectations (What’s The Best Scenario?)

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What’s in Today’s Report:

  • The Right Fed Expectation for This Market
  • More Proof There’s No Chinese Buyers Strike for Treasuries (That’s a Positive)

Futures are modestly lower following a night of bad micro and macro-economic news.

On the micro front, Broadcom (AVGO), a major semi-conductor company, missed earnings and provided ugly guidance for 2H ‘19, citing the trade war as a major negative on demand.

On the macro front, Chinese economic data was on balance disappointing as Fixed Asset Investment and Industrial Production both missed estimates, although Retail Sales was a mild beat.

Looking ahead to today, the major number is the Retail Sales report (E: 0.7%), and the market would welcome a slightly disappointing number as it would further solidify the expectations for a Fed rate cut in July, and likely spur a rebound this morning. We also get Industrial Production (E: 0.2%) and Consumer Sentiment (E: 98.4) this morning as well.

Tom Essaye Quoted in Seeking Alpha on June 12, 2019

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Tom Essaye quoted in Seeking Alpha. Analysts are also starting to reassess the June market comeback, with some saying it doesn’t quite make sense. “This rally is not fundamentally backed. Instead what we are seeing is a…” Click here to read the full article.

Tom Essaye Headshot

Tom Essaye Quoted in International Business Times on June 11, 2019

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“This rally is not fundamentally backed. Instead what we are seeing is a bunch of people getting swung around and now they are chasing stocks higher,” said Tom Essaye. Click here to read the full article.

New York Stock Exchance

Dr. Copper Update

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What’s in Today’s Report:

  • Dr. Copper Update
  • CPI – The Case for a July Rate Cut Got A Bit Stronger Yesterday
  • China & Treasuries: No Signs of a Buyers Strike (Yet)
  • Oil Outlook – Supplies Keep Rising.

Futures are marginally higher following a busy night of news, but none of it shifted the current market outlook.

If there is a “reason” for the gains this morning it’s hopes for more Chinese stimulus as Chinese Vice Premier Hu called for more stimulus to help the economy, although no specifics were given and China’s already been aggressively stimulating the economy for months – so this isn’t exactly incremental news.

Geo-politically, Brent crude oil surged 3% after two tankers were attacked via a torpedo and mine strike overnight in the Gulf of Oman (near the mouth of the Strait of Hormuz).  It’s unclear who is responsible at this point but that’s obviously increasing tensions in an already unstable part of the globe.

The remaining big event for the week comes tonight via the Chinese economic data, so today will be spent watching the headlines for any trade updates, while on the economic front we get Jobless Claims (E: 216K) and Import & Export Prices (E: -0.3%, 0.1%), but neither should move markets materially.  Finally, there is a 30 Yr. T-Bond Auction at 1:00 p.m. ET and we’ll be watching to see if there are any signs of a Chinese “buyers strike” for Treasuries (so far, it’s not happening).

Tyler Richey co-editor of Sevens Report Quoted in MarketWatch on June 12, 2019

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“The dominant trend remains bearish as U.S. oil supply is up more than 10% this year, and…” says Tyler Richey, co-editor of Sevens Report Research, told MarketWatch. Click here to read the full article.

Oil Rig