“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality,” Tom Essaye, founder of the Sevens Report, told CNBC. Click here to read the full article.
“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality. Just that reminder combined with a lot of the second wave…” Essaye told CNBC. —Li
Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower on rising coronavirus concerns, as cases continued to rise in the U.S. over the weekend.
Certain states (CA/TX/FL/AZ) continue to see an acceleration in new coronavirus cases, although national new cases remain around 20k (where they’ve been for weeks).
Chinese economic data was slightly disappointing as Industrial Production (4.4% vs. (E) 5%), Retail Sales (-2.8% vs. (E) -2.33%) and Fixed Asset Investment all missed expectations.
Today focus will be on that 3,002 low in the S&P 500 from Thursday. If that’s broken, a run down towards 2900 becomes much more likely. Economically, the June Empire Manufacturing Survey (E: 30) is the key number today because it is the first look at June data, and the market will want to see continued improvement from May. There’s also one Fed speaker today, Kaplan (11:00 am E.T.), but he’s unlikely to move markets given Powell is speaking tomorrow.
What’s in Today’s Report:
Futures are sharply lower on follow through from the modest declines following yesterday’s FOMC decision.
If there’s a “reason” for the pullback it’s two-fold: First, digestion of Powell’s depressing outlook on future growth and second, a potential rebound in coronavirus cases.
Regarding coronavirus, the number of new cases is not spiking, but it is accelerating, as it’s done for over a week. Point being, there hasn’t been a recent spike in new cases over the past few days, the rise in cases has been occurring for over a week. But, the news cycle is turning again and renewed media focus on the virus is weighing on sentiment.
Looking forward to today, the key number is Jobless Claims (E: 1.500M) and again we need to see this number 1) Continue to decline and 2) Beat expectations, especially in light of Powell’s caution on the economy. Also, Continuing Claims needs to decline. If jobless claims disappoint markets, the selling today will likely intensify.
What’s in Today’s Report:
S&P futures wavered between gains and losses overnight amid mixed economic news and an uptick in new COVID-19 cases across parts of the U.S. while focus turns to the Fed.
In their latest update, the Paris-based OECD now expects a 6.0%-7.6% contraction in the global economy in 2020, the worst in 100 years.
Economically, both China’s CPI and PPI readings for May were well below estimates with the latter pointing to a concerning increase in deflationary pressures (-3.7% YoY) as a result of the coronavirus pandemic.
Looking into today’s session, there is one economic report due out ahead of the bell: CPI (E: 0.0%) before investors will look ahead to the FOMC Meeting Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) in the afternoon.
Specifically, the Fed’s new economic projections and any clarity on QE plans will be most closely watched items this afternoon and have the most potential to move markets into the close.
What’s in Today’s Report:
S&P 500 futures are down roughly 1% this morning tracking European shares lower after German trade data showed a much larger than anticipated drop in exports during the depths of the COVID-19 pandemic in April.
Eurozone GDP and the NFIB Small Business Optimism Index slightly beat expectations however German exports declined by the most on record in April, tumbling by -24.0% on the month which is weighing heavily on EU shares today.
Looking into today’s session, there are two lesser followed economic reports due to be released: April JOLTS (E: 5.750M) and Wholesale Trade (E: 0.4%) which are not likely to move markets while there are no Fed speakers as the June FOMC Meeting Begins today.
With tomorrow’s Fed announcement and Powell’s press conference coming into focus, it is possible we see a continued wave of profit taking today, especially given the disappointing economic data out of Europe, however a sense of “Fed paralysis” should keep the losses somewhat limited.
What’s in Today’s Report:
Futures are modestly higher thanks to momentum as markets extend Friday’s rally following a quiet weekend.
Economic data was mixed overnight as Chinese exports were better than expected (-3.3% vs. (E) -6.5%) while German Industrial Production missed estimates (-17.9% vs. (E ) -16.2%). But, neither number was bad enough to turn the bullish momentum.
Protests continued across the U.S. and were mostly peaceful, but this remains largely a non-issue for markets.
Today there are no economic reports and no Fed speakers so re-opening headlines and virus trends will drive trading, and as long as there isn’t any materially negative news on either front, the bulls will likely remain in charge.
What’s in Today’s Report:
Futures are sharply higher thanks to a big rally in European markets, which rose on the hopes for more stimulus.
The rally in Europe didn’t come because of any new headlines, and instead appears to be a delayed reaction to the bigger than expected ECB QE program, combined with the passage of the German stimulus earlier in the week.
Economically, the only notable number was German Factory Orders which fell –25.8% vs. (E) -20%.
Today the focus of markets will be the jobs report, and the estimates for job adds and the unemployment rate are as follows: Job Adds: -7.725M, UE Rate: 19.8%.
Practically speaking, anything less than 10 million job losses likely doesn’t cause a pullback in stocks, while a number under 5 million job losses could extend today’s early rally, because markets are still solely focused on the incremental changes in economic data, not the historically bad absolute values. The only other notable economic report today is Consumer Credit (E: -$14.0B).
What’s in Today’s Report:
Futures are modestly lower as markets digest Wednesday’s big rally, following a quiet night of news.
Germany finalized its stimulus plan, but it didn’t include an incentive program for traditional (non-electric) car purchases and that’s causing mild disappointment and European shares are lower as a result.
Economic data was again better than feared as Euro Zone Retail Sales dropped –11.7% vs. (E) -18.0%.
Today there are two key events that could move markets:
First, the ECB is expected to increase its QE program (called the PEP) by € 500 bln. If that does not happen, markets will be disappointed because stimulus remains a key driver of this rally.
Next, weekly jobless claims (E: 1.790M) remain very important and we need to see both initial claims and continuing claims fall further this week, and if that does not happen markets will be disappointed, especially given the rally of the past 10 days.
What’s in Today’s Report:
S&P futures are once again up by double digits today as more stimulus chatter by global central banks and good economic data offset intensifying civil unrest in the U.S.
Economically, global Composite PMI data for May was mostly upbeat with Chinese and EU figures coming in ahead of expectations while the EU Unemployment Rate in April was not as bad as feared at 7.3% vs. (E) 8.2%.
Looking into the U.S. session, focus will be on economic data early with three notable reports due to be released: ADP Employment Report (E: -8.663M), Factory Orders (E: -14.0%), and ISM Non-Manufacturing Index (E: 44.0).
There are no Fed officials scheduled to speak today so investor focus will likely turn back to the protests across much of the country as well as the simmering geopolitical tensions between the U.S. and China after this morning’s economic data.
Bottom line, if economic data in the U.S. largely confirms the upbeat data from overseas, the rally could extend higher towards 3,100 in the S&P 500 however the market is becoming near-term overextended and due for a breather.