What’s Driving the Melt Up (And How Long Can It Last?)

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What’s in Today’s Report:

  • What’s Driving the Melt Up, And How Long Can It Last?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet – The Big Number of the Week Is Today

Futures are slightly higher thanks mostly to momentum from last week’s rally as the weekend was a quiet one.

On trade, the WSJ reported China has reduced additional tariffs on some goods, but this is all part of the existing phase one deal and it’s not an incremental positive.

Economic data was sparse overnight, and none of the numbers are moving markets.

Today we get the most important economic report of the week, New Orders for Non-Defense Capital Goods ex-Aircraft (E: 0.0%), which is a proxy for business spending – something that should start to rise now that we have a phase one trade deal.  As has been the case, the stronger this number, the better for stocks.

Beyond today, this week would have been a quiet one even if there wasn’t a holiday, but it should be even more so as the economic calendar is very sparse.  Geo-politically, North Korea could launch a missile or test a nuclear bomb this week, but while it might cause temporary volatility, that won’t derail this rally.  So, as long as there are no negative trade surprises, the path of least resistance for stocks remains higher into year-end.

If There’s a Pullback, Where Is Support? (Technical Update)

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What’s in Today’s Report:

  • If There’s a Pullback in Early 2020, Where Is Support? (Technical Update)

Futures are little changed this morning following another quiet night of news as markets digest the Q4 gains.

On trade, the House of Representatives passed the USMCA, as was widely expected and already priced in.

Economic data was largely in-line as Japanese CPI (0.5%) and German GfK Consumer Climate (9.7 vs. (E) 9.6) both met expectations.

Today focus will remain on economic data, and we have several more notable reports including, in order of importance: Core PCE Price Index (E: 0.2%), Consumer Sentiment (E: 99.2), Final Q3 ‘19 GDP (E: 2.1%).  The Core PCE Price Index, which is the Fed’s preferred measure of inflation, needs to continue to show subdued inflation pressures, as a sudden surge in inflation is the only thing that could get the Fed to become more hawkish.  Finally, today is a quadruple witching options expiration so don’t be shocked if there’s elevated volumes and some volatility into the close.

Is The Bond Market Finally Turning Positive on Global Growth?

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What’s in Today’s Report:

  • Is The Bond Market Finally Turning More Positive On Growth?
  • Another Brexit Worry?
  • EIA and Oil Market Update – No Breakout Yet

Futures are flat following a very quiet night of news.

Economic data was mixed as Australian jobs adds beat expectations (39k vs. (E) 18k) while British retail sales badly missed estimates in November (-0.6% vs. (E) 0.5%. But, neither number is moving markets.

On the earnings front, Micron (MU) had positive commentary and the stock rallied 5% after hours, and that’s helping broader market sentiment this morning (it’s the single biggest reason stocks are flat).

Today’s focus will remain on economic data, and there are three notable reports including (in order of importance):  Jobless Claims (E: 221K), Philly Fed (E: 8.5) and Existing Home Sales (E: 5.450M).

As has been the case, the stronger the data, the better, and if we get decent prints from these reports, we’ll be looking at 3200 in the S&P 500 shortly after the open.

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.