Market Multiple Update: As Good As It Gets?

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What’s in Today’s Report:

  • Market Multiple Update: As Good As It Gets?
  • Economic Data Recap

It is another slow morning in the markets as stock futures are tracking the modest gains of overseas equities amid good economic data but underwhelming earnings news.

FDX shares are down 7% in pre-market trading after the company missed on earnings and lowered 2020 guidance.

The German Ifo Survey showed improving economic sentiment in Europe’s largest economy with both Current Conditions and Business Expectations figures topping estimates which is helping EU stocks edge higher this morning.

Looking into today’s session, it is lining up to be another quiet day as there are no economic reports and only one Fed official is scheduled to speak: Evans (12:40 p.m. ET).

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on December 17, 2019

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The “solid economic data in the U.S. and abroad” paired with phase one/phase two trade deal optimism helped fuel the rally from a fundamental standpoint. From a technical standpoint, recently strong upside momentum is creating a ‘chase’ higher effect, further lifting…” Tyler Richey, co-editor at Sevens Report Research wrote in Tuesday’s newsletter. Click here to read the full article.

Oil Rig

What Phase One Means for Markets (Three Takeaways)

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What’s in Today’s Report:

  • What the Actual Phase One Deal Means for Markets
  • Weekly Market Preview (All About Economic Data)
  • Weekly Economic Cheat Sheet

Futures are modestly higher on the U.S./China phase one deal momentum while economic data was mixed.

There were no new details released on phase one trade deal over the weekend, but sentiment towards the agreement remained generally positive.

Economic data was mixed as Chinese economic data beat estimates (Retail Sales, FAI, Industrial Production), while EU flash manufacturing PMI missed 45.9 vs. (E) 47.3.

Today (and going forward) focus will turn back towards economic data, so today’s Flash Manufacturing PMI (E: 52.4) is the key number to watch, while Empire Manufacturing Index (E: 4.0) and the Housing Market Index (E: 70) are also notable.  Going forward, the better the economic data, the better for stocks.

Is the Trade Deal a Bullish Gamechanger?

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What’s in Today’s Report:

  • Is the U.S./China Trade Deal a Bullish Gamechanger?
  • Sector Winners from the Trade Deal

It’s green on the screen as global stocks surged overnight following the agreement on phase one of the U.S./China trade deal, while the landslide Tory victory in the UK elections added fuel to the bullish fire.

Regarding the UKL election, it was a bullish surprise.  The Tory party won 361 seats, well over the 335 expected, and the big majority almost guarantees a quick passage of the Brexit agreement.

On trade, there’s been no new news since yesterday afternoon as markets wait for official details of the deal, although rumors of a signing ceremony this afternoon with the Chinese ambassador hit the tape earlier this morning.

Today the market will be focused on getting the actual text of the trade deal, and that will dominate the market’s attention.  But, we also have an important economic number out this morning, Retail Sales (E: 0.5%), and if it confirms the U.S. consumer remains incredibly strong (which it should) that will likely add to the bullish mood in markets.

Why The Fed Was More Bullish Than It Seems

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What’s in Today’s Report:

  • Why The Fed Meeting Was More Bullish Than It Seems
  • Why the UK Election Matters to You (Good/Bad/Ugly Preview)
  • EIA Update – Where Will Oil Go?

Futures are slightly higher following a generally quiet night as markets digest yesterday’s Fed meeting and wait on important trade news and the results of the UK election.

Today is a big day in the U.S./China trade as Trump is meeting with senior advisors to decide the fate of the 12/15 tariff increases.  It’s widely expected they will be delayed and if they are not, that will be a negative shock for markets.

Economic data was again mixed as Euro Zone IP missed (-0.5% vs. (E) -0.3%) while German CPI met expectations.

Today will be a busy day.  First, regarding the trade meeting, it’s unclear if a formal announcement will be made on the decision, but it could come at any time so markets will be watching the tape closely.  Additionally, there is also an ECB Meeting this morning and it’s new ECB President Lagarde’s first press conference.  Finally, we should know the results of the UK election by this evening, and the key number for the Torys is 335 seats.  Stocks will like any result above that number.

On the economic front, the only notable report is Jobless Claims (E: 213K).

Economic Breaker Panel: December Update

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What’s in Today’s Report:

  • Economic Breaker Panel: December Update

Stock futures are flat and international markets were little changed overnight amid very quiet newswires while investors look ahead to today’s Fed decision.

Economically, the Japanese PPI release was the only report out overnight and the headline met expectations at 0.2% which did not move markets.

In the energy market, oil futures are down nearly 1% after the API reported an inventory build of +1.4MM bbls vs. (E) -2.8MM ahead of today’s EIA report.

Today, the focus will be on the Fed decision with the Meeting Announcement at 2:00 p.m. ET and the Fed Chair Press Conference following shortly after at 2:30 p.m. ET.

Any significant market moves before the Fed are unlikely but there is one economic report to watch: CPI (E: 0.2%), and the EIA report at 10:30 a.m. ET could trigger a reaction in the energy market which could affect sector trading.

Beyond those catalysts, the trade war remains the single biggest influence on this market right now so investors will be looking for any incremental developments regarding the Dec. 15 tariff plans or news on a phase one trade deal.

Fed Preview and Key Levels to Watch in Yields

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What’s in Today’s Report:

  • FOMC Preview
  • Did Dr. Copper Just Offer an All-Clear Signal?
  • Key Levels that Will Tell Us, in Real-Time, Whether Events this Week Are Positive or Negative for Stocks

Global markets are trading with a notable risk-off tone this morning as investors position into several key events later this week including the Fed and ECB announcements and next Sunday’s deadline for more U.S. tariffs on China.

Economic data overnight was positive as the Current Conditions and Business Expectations components of the German ZEW Survey were better than feared while the NFIB Small Business Optimism Index was 104.7 vs. (E) 102.9.

Looking into today’s session, thing should be quiet with the December Fed meeting getting underway however there is one economic report to watch: Productivity and Costs (E: -0.2%, 3.5%) and there is a 10 Year T-Note Auction at 1:00 p.m. ET this afternoon. If the auction triggers a significant reaction in yields, that will affect stocks.

There have not been any notable developments on the trade war this week and “no news is bad news” right now given the looming Dec. 15th deadline for the U.S. to add more tariffs to Chinese imports. As a result, the market will continue to look for any clues regarding progress towards a “phase one deal” that will avoid additional tariffs and potentially roll back existing ones.

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on December 5, 2019

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Even so, “deeper production cuts were not the consensus expectation coming into this week’s OPEC+ meeting (only an extension of current policy) and if they are formally agreed upon tomorrow, that will be an incremental positive for the market in the near to medium term,” said Tyler Richey, co-editor at Sevens Report Research. Then “we could see WTI futures breakout…” Click here to read the full article.

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on December 2, 2019

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“Trade war headlines have been the main driver of the energy markets, but since late last week, OPEC+ policy expectations, economic data, and inventory/production releases have…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil Rig

Was the Jobs Report an “All Clear” on the Economy?

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What’s in Today’s Report:

  • Was the Strong Jobs Report an “All Clear” on the Economy?
  • Weekly Market Preview:  What Happens on December 15th?
  • Weekly Economic Cheat Sheet:  A Busy Week or Reports (They Start on Wednesday)

Futures are slightly lower as markets digest Friday’s big rally following a generally quiet weekend.

On U.S./China trade, there was no new news, although China released a statement saying it wanted to make a deal “as soon as possible.”

Economic data was again mixed, as Chinese exports missed estimates (1.3% vs. (E) 1.9%) while German exports beat expectations (1.2% vs. (E) -0.3%.  But, neither number is moving markets.

Today there are no notable economic reports and no Fed speakers (they are in their blackout period ahead of Wednesday’s decision) so focus will again be on any updates on U.S./China trade.

The December 15th tariff increases are the last “big” event of 2019 and markets fully expect those to be delayed, so any confirmation of that should be a mild tailwind on stocks.  Conversely, any hints the tariffs might go into effect will hit markets, potentially hard.