“Stocks hit fresh new highs last week on a familiar theme: Positive chatter/headlines on phase one of a U.S./China trade deal, while earnings and global data…” wrote Tom Essaye, president of the Sevens Report, in a Monday note to clients. Click here to read the full article.
“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today…” Tom Essaye, founder of The Sevens Report, said in a note this summer. Click here to read the full article.
What’s in Today’s Report:
Global markets are trading with a moderate risk-off tone this morning as the trade war weighs on sentiment.
It remains unclear whether the U.S. will offer relief on existing tariffs as part of the “phase one” trade deal with China (which has been priced into stocks in recent weeks), or just cancel the scheduled December tariffs, which would be a disappointment.
Meanwhile, on the economic front, Eurozone Industrial Production was largely overlooked because of trade angst but the release was not as bad as feared (0.1% vs. E: -0.3%) further easing recession concerns in Europe.
There were other headlines overnight including escalating protests in Hong Kong which saw the Hang Seng underperform (down nearly 2%) and chatter about the public impeachment hearings in Washington today but neither are materially affecting U.S. stocks at this point as the market’s main focus remains the trade war.
Looking into today’s session, there is one economic report to watch: CPI (E: 0.3%) before focus will turn to Powell’s testimony before Congress on the state of the economy at 11:00 a.m. ET. Later in the day, there are two other Fed officials scheduled to speak before the closing bell: Barkin (12:30 p.m. ET) and Kashkari (1:30 p.m. ET).
Bottom line, there are a lot of headlines this morning but the trade war remains the single most important influence on this market so if expectations for tariff removal continue to fade, stocks are likely to trade with a heavy tone.
Tom Essaye of Sevens Report Research lays out some good tips to avoid accumulating debt this holiday shopping season. Click here to watch the full video.
Tom Essaye presented at Marine Bank, a fantastic community bank in Vero Beach, FL. He talked about 2020 recession risks.
They made a generous donation to the Els for Autism Foundation in honor of the event.
What’s in Today’s Report:
Futures are edging higher in early trade while most international markets rallied on better-than-feared data overnight.
In Europe, the headline to the German ZEW Survey was a slight miss but business expectations rebounded to -2.1 vs. (E) -12.5 as recession fears continued to moderate.
In the U.S., the NFIB Small Business Optimism Index was 102.4 vs. (E) 102.0 another incremental economic positive.
With no economic reports today, focus will be on Trump’s midday speech in NY regarding the trade war. Additionally, there are two Fed speakers: Harker (1:00 p.m. ET) and Kashkari (6:00 p.m. ET).
The trade war is still by far the most important influence on the markets right now so whether Trump is negative or positive in his discussion regarding trade negotiations today will likely decide whether stocks rally or extend yesterday’s pullback this afternoon.
“The last 24 hours have seen a bit of whiplash in the U.S./China trade drama, as a potentially negative headline yesterday has been more than offset by a positive one this morning. But “it’s fair to say that at these levels…” said Tom Essaye, founder of The Sevens Report, in a note to clients. Click here to read the full article.
Tom Essaye joins Yahoo Finance’s Brian Sozzi, Alexis Christoforous and Jared Blikre to discuss the latest market action on The First Trade. Click here to watch the full interview.
What’s in Today’s Report:
Futures are modestly lower this morning thanks to disappointing U.S./China trade news and underwhelming economic data.
President Trump threw more cold water on the idea of existing tariff reduction over the weekend saying that the tariff reduction story was “over-reported.”
Economically, Chinese New Yuan Loans rose 12.4% vs. (E) 12.5%, while British IP & Q3 GDP slightly missed estimates.
Today should be relatively quiet as there are no economic reports today and no Fed speakers due to the Veteran’s Day holiday. The bond market is also closed.
However, any trade news/commentary could cause larger than normal volatility given expected holiday trading volumes, so we’ll be watching the tape closely.
Tom Essaye (TE): Buybacks have been a factor in the market over the past couple of years. Basically, buybacks occur when a company uses cash (either its own or borrowed money) to purchase shares of stock in the open market. A company then essentially “retires” that stock, thereby taking it out of circulation, which reduces or “floats” the total number of shares outstanding…
Click here to read the full article.
