“The sooner … phase one is signed (regardless of the details) the better, because both sides want a deal, so the longer it’s delayed, the more the market will begin to…” Tom Essaye, founder of market research firm Sevens Report Research, wrote in a note to clients. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed as markets digest yesterday’s potentially negative U.S./China trade headlines along with more headlines overnight, as the trade noise grows louder.
The trade headline whiplash continued overnight as Chinese Vice Premier He said he was “cautiously optimistic” about a phase one deal being signed. This is helping, somewhat, to counter yesterday’s headline about a deal slipping into 2020.
There were no economic reports out overnight.
Today there are some important economic reports, but the biggest issue today will be whether President Trump signs the bill passed by Congress supporting democracy in Hong Kong (if he does, that could complicate trade talks). He is expected to sign the bill, although that’s not a high conviction expectation.
Looking at actual economic data, we have two important reports today, Jobless Claims (219K) and Philadelphia Fed (E: 7.5) and one housing number, Existing Home Sales. As has been the case, the stronger the data, the better for stocks. We also have two Fed speakers, Mester (8:30 a.m. ET) and Kashkari (10:10 a.m. ET), but neither should move markets.
Tom Essaye interviewed with Oliver Renick from TD Ameritrade, discussing Bonds vs Equities, trade war, yield curve, reflation and more…Click here to watch the full interview.
What’s in Today’s Report:
U.S stock futures are trading lower and international markets saw broad declines overnight thanks to escalating trade tensions between the U.S. and China.
The Senate passed a bill late Tuesday in support of the Hong Kong protests to which the Chinese Foreign Ministry has issued a strong statement of disapproval for.
Additionally, Trump threatened higher tariffs at a cabinet meeting yesterday and the combination is weighing on sentiment.
There are no economic reports today and no Fed officials scheduled to speak but the minutes from the October FOMC Meeting are due out at 2:00 p.m. ET which will be closely watched for further clues on the Fed’s future policy plans.
The trade war is still dominating markets right now so investors will be watching for any rebuttals from the U.S. regarding China’s negative response to the “Hong Kong bill” or any additional talk of future tariff policy from either the U.S. or China.
What’s in Today’s Report:
Futures have steadily melted higher overnight, tracking risk-on moves in most international markets on optimism for more Chinese stimulus and improving investor sentiment towards the trade war and health of the global economy.
Over the past two weeks, the PBOC has lowered its “one-year medium-term lending facility” and its “seven-day reverse repo rate” increasing the odds that the Chinese central bank provides further stimulus in the near-term.
Looking into today’s session, the list of potential catalysts is limited as there is just one economic report due to be released: Housing Starts (E: 1.320M) and one Fed official scheduled to speak shortly before the bell: Williams (9:00 a.m. ET).
Home Depot reported underwhelming earnings this morning as they slashed their sales forecast which will likely be a topic of discussion today but so far, stock futures are largely shrugging off the sharp drop in HD shares.
With the trade war still the markets primary focus, stocks will remain sensitive to any headlines, positive or negative, regarding the phase one deal and potential for tariff relief.
What’s in Today’s Report:
U.S. futures are modestly higher and most international markets rallied overnight thanks to more trade war optimism and unexpected stimulus by China’s central bank.
A “constructive” phone call between China’s Liu He, USTR Lighthizer and Secretary Mnuchin reportedly took place on Saturday which is helping boosting hopes for a trade deal.
Additionally, the PBOC cut a key interest rate for the first time in 4 years, offering a dovish tailwind to risk assets this morning.
Today is lining up to be a fairly quiet session as far as catalysts go as there is just one economic report: Housing Market Index (E: 71) and only one Fed official is scheduled to speak: Mester (12:00 p.m. ET).
With trade war optimism continuing to be the main driver of this most recent run to new all-time highs the markets will remain keenly focused on any new developments or news regarding the “phase one” trade deal.
What’s in Today’s Report:
Futures are marginally higher as the U.S./China trade saga remains the singularly dominant influence on markets.
The commentary overnight was positive as Larry Kudlow said the “mood music” of the negotiations was “pretty good” and a deal is close, although there was no actual new information presented.
Economically there were no surprises as EU HICP (their CPI) rose 1.1%, as expected.
Today there are several important economic reports including (in order of importance): Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 5.0) and Industrial Production (E: -0.4%). Broadly, markets need to see strong data to imply the U.S. economy is stabilizing and starting to re-accelerate.
But, beyond the data, U.S./China trade will remain a huge influence over stocks so any more headlines that a phase one deal is imminent will likely send stocks higher (even if there is no actual news contained in the comments).
The bearish supply and production data by the Energy Information Administration and “lack of clarity” on the U.S.’s plans for tariff policy changes as part of the phase one trade deal with China, are “both negative influences on the market…” said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full article.
“Trade war concerns are being offset by positive comments on the global economy by both Fed Chair Powell and OPEC’s Secretary General Barkindo…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as a potential “stall” in U.S./China trade talks and disappointing data weigh marginally on global stocks.
Chinese economic data was universally disappointing, as Fixed Asset Investment, Retail Sales and Industrial Production all missed estimates. The soft numbers implied the global economic rebound expected by stocks isn’t a done deal just yet.
Today there are two notable economic reports, Jobless Claims (E: 215K) and PPI (E: 0.3%) and a figurative parade of Fed speakers including (in order of importance): Powell (10:00 a.m. ET), Clarida (9:10 a.m. ET), Evans (9:10 a.m. ET), Daly (11:45 a.m. ET), Williams (12:00 p.m. ET), Bullard (12:20 p.m. ET).
But, the data points shouldn’t move markets, and neither should any of the Fed speak because Chair Powell spoke yesterday and clearly signaled the Fed is on hold, which is what the market expects and has priced in.
So, we can expect trade commentary and headlines to move markets. Clearly the market is ignoring the phase one “stall” headlines, otherwise, stocks would be down sharply this morning. But, headlines worsen and the stall increases the risk of a phase one breakdown, that will hit markets hard.