Another Reason to Buy China

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What’s in Today’s Report:

  • A New Positive for Chinese Stocks
  • A Theory on the Copper Rally

Stock futures are modestly lower this morning after another mostly quiet night of news as investors look ahead to the remaining catalysts this week including US jobs data.

The only economic report overnight was Australian GDP which missed expectations (0.2% vs. E: 0.3%) and hit the Aussie dollar (-0.76%).

Oil prices are down over 1% this morning after the API reported a weekly build of +7.3M bbls late yesterday vs. (E) +1.6M bbls. A build of this size would largely offset last week’s bullish draw and could pressure the energy space (and drag risk assets lower too) if confirmed by this morning’s EIA report (10:30 a.m. ET).

Today, we get our first look at February jobs data with the ADP Employment Report (E: 180K) due out ahead of the bell. Then, International Trade figures will be released shortly thereafter (E: -$57.6B). Either release could move markets as growth concerns and the trade war remain two of the biggest influences on stocks right now.

Other than the weekly EIA report mid-morning, there are two Fed officials scheduled to speak over the lunch hour: Mester (12:00 p.m. ET) and Williams (E: 12:10 p.m. ET).

Market Multiples Explained

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What’s in Today’s Report:

  • Market Multiples Explained
  • Real Interest Rates and Gold

Futures are up modestly while international markets were mixed in quiet trade overnight as investors eyed the benign start of China’s NPC where 2019 forecasts largely met expectations while economic data was mixed.

China’s General Services PMI fell from 53.6 to 51.1 in February while Composite PMI data in Europe was better than expected which is helping EU shares outperform this morning.

Today, there are two Fed officials speaking early: Rosengren (7:30 a.m. ET) and Kashkari (9:30 a.m. ET), before a few notable economic reports are due to be released shortly after the bell: New Home Sales (E: 590K) and ISM Non-Manufacturing Index (E: 57.2). Beyond those potential catalysts, focus will remain on U.S. – China trade.

Tom Essaye Appeared on The Ticker on Yahoo Finance on March 1, 2019

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7 Macro ‘Ifs’ That Could Boost Markets

Tom interviewed with The Ticker’s Jackie DeAngelis on Yahoo Finance to discuss the 7 ‘ifs’ that would have to happen for markets to…Click here to watch the entire clip or click on the video below.

Tom Essaye Quoted in Axios on March 4, 2019

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Tom Essaye was quoted in Axios to share his take on U.S./China trade deal, the big picture and more. Read the full article here.

Tom Essaye Quoted in CNBC on March 4, 2019

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“Markets expect a deal by the end of March, but the key here will be whether the deal results in the removal of all tariffs,” said Tom Essaye, founder of the Sevens Report. Click here to read the article.

Latest on U.S./China Trade (Is a Deal in Place?)

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What’s in Today’s Report:

  • Latest on U.S./China Trade (Is a Deal In Place?)
  • Positive Signs from the Bond Market?
  • Weekly Market Preview (Jobs & The ECB)
  • Weekly Economic Cheat Sheet

Futures are modestly higher thanks to reports that the U.S. and China are extremely close to a new trade deal.

The WSJ reported the U.S. and China are aiming to sign a new trade deal on March 27th that will include the removal of all tariffs, although the article cautioned it’s not a done deal at this point.

Economically, data was weak again as British Construction PMI (50.6 vs. (E) 52.5) and EuroZone PPI (3.0% vs. (E) 3.2%) missed estimates.

There are no economic reports today so focus will remain on U.S./China trade and any official confirmation (from the U.S. or Chinese government) of the positive articles that hit overnight.

Tom Essaye Quoted in MarketWatch on March 1, 2019

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Tom Essaye, president of the Sevens Report, said, “To be sure, there are arguments that industrials could keep up their current pace of growth, at least in the short term. Investor optimism toward a U.S.-China trade deal, as well as the belief that global growth will…” Read the full article here.

A Make Or Break Month Ahead

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What’s in Today’s Report:

  • Why March Will Be A Make Or Break Month For The 2019 Rally
  • The Q4 GDP Report – Why It Wasn’t As Strong As It Seemed

Futures are moderately higher thanks to strength in Asia and generally in-line economic data.

Chinese shares are up 1% because index firm MSCI announced it will increase the weighing for mainland Chinese stocks to 20% from the current 5%.

Economically, global Feb manufacturing PMIs largely met estimates as the EU number rose to 49.3 vs. (E) 49.2. while the British reading was in-line at 52.0.

Today focus will be on data as we get two important economic reports.  First, the Fed’s preferred measure of inflation, the Core PCE Price Index (E: 0.2% m/m, 1.9% y/y) is released, and that year over year number needs to stay around 2% to continue the “dovish Fed” narrative.  Later, we get the Feb. ISM Manufacturing PMI (E: 55.0) and it needs to meet expectations to help offset some of the poor data from February (retail sales, etc.).

Tom Essaye Appeared on Cheddar on February 27, 2019

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U.S. Trade Representative, Robert Lighthizer, urged caution on China while testifying before Congress. Tom Essaye, Founder of the Sevens Report Research, joined Cheddar to discuss the contradicting narratives coming from President Trump, market and…Watch the entire interview here.

Two Important Takeaways from Yesterday’s Testimonies

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What’s in Today’s Report:

  • Yesterday’s Most Important Testimony (It Wasn’t Cohen)
  • Is All the Good News Priced in Already? (Two Important Observations)
  • Why Did Treasury Yields Surge Yesterday?

Futures are modestly lower again this morning following more disappointing Chinese economic data and the collapse of the U.S./North Korea summit.

Global growth remains a concern as the Chinese Feb. manufacturing PMI missed estimates, dropping to 49.2 vs. (E) 49.4.  Japanese IP and Retail Sales also missed estimates.

The U.S./North Korea summit ended early and without a substantive agreement, and while that’s not a direct impact on stocks, it’s adding to the generally negative mood this morning.

Today there will be focus on the Preliminary Q4 GDP (E: 2.2%) but keep in mind that’s now a very old number.  Tomorrow’s global manufacturing PMIs are a much more important number for the markets going forward.  Today we also get Jobless Claims (E: 225k) which have been trending higher lately, and markets will want to see that trend reversed.