“The U.S.-China trade talks are the clear highlight this week. Some sort of a trade truce that results in no more new tariffs is the clear market expectation. If that does not occur, this market is at…” said Tom Essaye, founder of The Sevens Report. Click here to read the full article.
What’s in Today’s Report:
S&P 500 futures jumped as much as 1.4% in early morning trade after Bloomberg reported that China is willing to discuss a “partial U.S. trade deal despite tech blacklist.”
The risk-on rally has faded moderately however as the article pointed out that Chinese officials are not optimistic and would only accept a partial deal if the next waves of U.S. tariffs are canceled.
Furthermore, China is willing to make non-core concessions like ramping up purchases of U.S. ag products but won’t budge on key issues like intellectual property theft, issues which the White House has said are critical to a deal.
The trade war will clearly continue to dominate the markets today as we have already seen in the sizeable pre-market moves however there are a few additional potential catalysts to keep an eye on.
Economically, the August JOLTS report will be released shortly after the Wall Street open (E: 7.181M) while Powell and George are scheduled to speak at 11:00 a.m. ET (note Powell did move markets yesterday by mentioning balance sheet expansion).
In the afternoon, there is a 10-Yr Treasury Note Auction at 1:00 p.m. ET which could move the yield curve and ultimately the stock market before the FOMC Meeting Minutes will print at 2:00 p.m. ET.
What’s in Today’s Report:
Stock futures reversed from overnight gains and are now decidedly lower with EU shares after the Trump administration expanded its “blacklist” to 20 Chinese companies and Chinese officials said to “stay tuned” for retaliatory measures.
Economically, the Chinese Composite PMI firmed to a multi-month high of 51.9 last month (although the services component was mildly underwhelming) and German Industrial Production was not as bad as feared (0.3% vs. E: -0.1%), while the NFIB Small Business Optimism Index was inline.
Today, there is one economic report to watch in the morning: PPI (E: 0.1%) and then the Treasury will hold a 3-Yr Note Auction at 1:00 p.m. ET (auctions have had an impact on the yield curve recently and as a result, moved markets).
Later in the day, there are a few notable Fed speakers: Evans (1:35 p.m. ET), Powell (1:50 p.m. ET), and Kashkari (5:00 p.m. ET), and while investors will watch Powell’s speech closely, the main influence on markets remains the trade war this week and as such, traders will continue to be most sensitive to any further developments or statements released by the White House or Beijing.
What’s in Today’s Report:
Futures are modestly lower on digestion following Friday’s big rally, although there was also more soft economic data and a slightly negative U.S./China trade article.
German Manufacturers’ Orders missed expectations, falling -0.6% vs. (E) -0.4% and it’s yet another disappointing global manufacturing datapoint.
A Bloomberg article Sunday afternoon was a mild negative as it lowered expectations for a broad trade deal at this week’s talks, but there was no new news revealed. To that point, we need to all brace for an avalanche of U.S./China trade headlines as we approach the Thursday start of senior-level talks, but cutting past the noise, the expectation is for a “Trade Truce” so anything that contradicts that expectation will be a negative for markets.
Today there is no notable economic data and two Fed speakers: Kashkari (10:20 a.m. ET) and Powell (1:00 p.m. ET). Powell is clearly the more important of the two, but he’s giving opening remarks at a movie screening about the Fed (seriously) so I don’t think he’ll say anything market moving.
“Bottom line, worries about the economy spiked this week, and the last thing this market needs is a soft jobs number to reinforce the idea that any trade truce next week between the U.S. and Chins is ‘too late’ to help manufacturing sentiment. So, it’s not often the case, but the stronger this jobs report, the better, as a strong report will help calm any…” says Sevens Report Research founder Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures are enjoying a modest oversold bounce despite more trade noise and disappointing economic data.
On trade, the U.S. imposed $ 7.5 billion worth of tariffs on the EU following a WTO ruling. But, while the headline is scary, this was widely expected and not a new negative.
Economic data was soft again as Japanese and EU composite PMIs and the UK services PMI all missed estimates.
Today the focus will be on economic data and the key report is the ISM Non-Manufacturing Index (55.4). If it badly misses expectations, concerns about a broader economic slowdown will grow further, and that will weigh on stocks again. We’ll also be watching Jobless Claims (E: 215K) for any signs of slowing in the labor market.
There are also several Fed speakers today, but with rate cuts expected, I doubt they will say anything too material. Speakers today include: Quarles (8:30 a.m. ET), Mester (12:10 p.m. ET), Clarida (6:35 p.m. ET).
“On Saturday, the Treasury Department stated it’s not considering blocking Chinese companies from listing on U.S. exchanges ‘at this time,’ refuting the Bloomberg story from Friday, which caused the declines in stocks…” wrote Tom Essaye, president of the Sevens Report, in a note to clients. Click here to read the full article.
Today’s Report is attached as a PDF.
What’s in Today’s Report:
It is a mixed start to Q4 today as U.S. stock futures are modestly higher, Asian shares rallied overnight following a rate cut by the RBA (although Chinese markets are notably closed for a holiday), while European markets declined on soft economic data.
September Manufacturing PMI data remained decidedly weak in Europe with Germany’s headline index notably falling from 43.5 to 41.7, the lowest since June 2009. Inflation in the Eurozone meanwhile remains weak with the core HICP figure meeting estimates at 1.0% year-over-year.
Looking into today’s session, there are three economic reports to watch this morning: PMI Manufacturing Index (E: 51.0), ISM Manufacturing Index (E: 50.0), and Construction Spending (E: 0.3%) and a busy schedule of Fed speakers: Clarida (8:50 a.m. ET), Bullard (9:15 a.m. ET), and Bowman (9:30 a.m. ET).
Beyond those potential catalysts in the morning, markets will remain focused on the political drama surrounding the impeachment proceedings by the House against Trump as well as any further updates on the U.S.-China trade war as the latter continues to be the single most important influence on global markets right now.
“Those comments about Saudi oil production and capacity by Al-Buainain were certainly a bearish catalyst for today’s price weakness. Speculation that production would be back online much quicker than initially thought was the main driver of…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
“The fact that the repos are still ongoing is a bit troubling for me. It makes me think that the Fed somehow or other has misjudged the liquidity needs…” Tom Essaye, who publishes investment newsletter The Sevens Report, told Yahoo Finance’s The First Trade. Click here to read the full article.
