Will the Hong Kong Bill Hurt U.S./China Trade Talks?

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What’s in Today’s Report:

  • Will the Hong Kong Democracy Bill Hurt Trade Talks?  (No – Here’s Why)
  • What Wednesday’s Strong Economic Data Means for Markets

Futures are modestly lower following the Thanksgiving holiday due to a mild uptick in trade concerns after President Trump signed the Hong Kong democracy bill.

President Trump’s signing of the bill drew criticism from China, but multiple media outlets, including the WSJ, are reporting the law won’t de-rail trade talks.

Economic data was again underwhelming as Japanese IP and German Retail Sales both badly missed estimates, although that’s not impacting markets as focus remains almost exclusively on U.S./China trade.

Today there are no economic reports, no Fed officials are scheduled to speak and the NYSE closes at 1:00 p.m. ET.  So, barring any U.S./China trade headline surprises, it should be a typically quiet post-Thanksgiving trading session.

Tom Essaye Interviewed with Yahoo Finance on November 27, 2019

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Tom Essaye interviewed with Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Jared Blikre to discuss the latest market action, U.S.-China trade deal, economy and more…Click here to watch the full interview.

Yahoo Finance Interview

Tom Essaye Quoted in ETF Trends on November 26, 2019

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“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, founder of The Sevens Report, in a note.

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Tom Essaye Quoted in MarketWatch on November 26, 2019

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“Considering that recession fears are based on a slowdown in manufacturing and business spending bleeding into the labor market and, ultimately, the consumer, it’s notable that claims are rising…” according to Tom Essaye, president of the Sevens Report, in a Monday note. Click here to read the full article.

New York Skyline

Has Healthcare Finally Broken Out?

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What’s in Today’s Report:

  • Has Healthcare Finally Broken Out?

U.S. stock futures are trading higher and most overseas markets rallied overnight thanks to another wave of optimism for a “phase one” trade deal as traders look ahead to a busy morning of domestic economic releases.

This time it was President Trump who said the U.S. and China were in the “final throes of a very important deal” late yesterday, stoking more risk-on money flows overnight.

Today, attendance will noticeably thin out ahead of the Thanksgiving holiday and volumes are expected to be light.

But, there are several important economic reports due out today: Durable Goods Orders (E: -0.7%), GDP (1.9%), Jobless Claims (E: 219K), and Core PCE Price Index (E: 0.2%).

A rebounding economy is largely priced into stocks at these lofty levels so any significant disappointments out of this morning’s data could trigger some profit taking into the Thanksgiving holiday.

Aside from the economic data, there are no Fed officials scheduled to speak today which will leave investors focused on any new chatter on the trade war as it remains the single biggest influence on markets right now.

Tom Essaye Quoted in MSN.com on November 25, 2019

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“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, the founder of The Sevens Report, in a note.  Click here to read the full article.

New York Stock Exchange

Tom Essaye Interviewed with Channel 12 on November 25, 2019

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Tom Essaye from Sevens Report Research in Palm Beach Gardens spoke to CBS12 News at 9 on how to stay out of money trouble during the holiday season. Click here to watch the full interview.

Tom Essaye Interview with Channel 12

Tom Essaye Quoted in CNBC on November 25, 2019

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“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.

New York Stock Exchange Traders

Yield Curve Update: Negative Trend Break

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What’s in Today’s Report:

  • Bottom Line: Did Something Good Happy Yesterday?
  • Yield Curve Update: Negative Trend Break

Stock futures are little changed this morning as investors digest new Fed chatter and more trade war jawboning.

Fed Chair Powell said he saw the “glass as much more than half full” regarding the current expansion and reiterated that rates will remain unchanged until inflation rises materially.

U.S. and Chinese trade negotiators spoke on the phone overnight to discuss “core issues” and reported that they have reached a “common understanding on resolving relevant problems” but no concrete progress was made and the status of phase-one remains unknown.

There are a few potential catalysts to watch today including economic releases: International Trade in Goods (E: -$70.0B), S&P Corelogic Case-Shiller HPI (E: 0.3%), New Home Sales (E: 707K), and Consumer Confidence (E: 126.8) as well as one Fed speaker: Brainard (1:00 p.m. ET).

Additionally, there is a 5-Year Treasury note auction today at 1:00 p.m. ET and with the yield curve coming back into focus, any wild swings in the belly of the curve could move stocks (remember we want to see the 10s-2s steepen due to a rising 10-year yield).

Aside from those scheduled events, speakers and reports, the market will clearly remain very sensitive to anything regarding the relationship between the U.S. and China as the trade war remains the single most important influence on this market right now.

Tom Essaye Quoted in CCN on November 22, 2019

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Tom Essaye of Sevens Report Research told CNBC that a sizeable crash could be coming for the stock market if talks devolve: If there’s not a China trade deal, you are going to see the S&P 500 go down 10% in a heartbeat. It’s going to fall fast. If the talks collapse this time…Click here to read the full article.

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