Tyler Richey appeared on TD Ameritrade Network on January 15, 2019.
Tyler Richey appeared on TD Ameritrade Network on January 15, 2019. Watch the entire clip here
Brexit Vote Preview
What’s in Today’s Report:
- Citi Earnings: Not a Bad Start to the Season
- Brexit “Meaningful Vote” Preview
U.S. futures are modestly higher this morning, tracking gains in Asian shares thanks to chatter of further stimulus measures by the Chinese government.
EU markets are underperforming however as focus remains on today’s Brexit vote and more key bank earnings.
Looking to the Wall Street session, the major focus will be on earnings as JPM ($2.20), WFC ($1.17), and DAL ($1.27) all report before the bell. The banks will be the main focus after C’s results were received well yesterday.
Economically, PPI (E: 0.2%) is due out ahead of the bell while the Empire State Manufacturing Survey (E: 12.0) will print at the top of the 10 o’clock hour. The Empire number could potentially move markets as survey-based data badly underwhelmed in December, contributing to the last wave of significant volatility in 2018.
Lastly, there are three Fed speakers today: Kashkari (11:30 a.m. ET), Kaplan (1:00 p.m. ET), and George (1:00 p.m. ET) but their comments should not materially move markets as they are expected to reiterate a more dovish stance on future policy.
Market Outlook (After the Bounce)
What’s in Today’s Report:
- Market Outlook (After the Bounce)
- Weekly Economic Cheat Sheet (Important First Looks at January Data)
- Weekly Market Preview (All About Earnings)
Futures are sharply lower following more disappointing global economic data.
Chinese exports badly missed expectations falling –4.4% vs. (E) 4.8%, further stoking fears of a Chinese economic slowdown. Data in Europe wasn’t much better, as Euro Zone Industrial Production fell –1.7% vs. (E) 0.5%.
Geopolitically, it was a generally quiet weekend as markets are looking past Trump’s economic threat to Turkey.
There are no notable economic reports today so focus will be on earnings, as the Q4 season officially kicks off with C ($1.55). The key for this report (and all reports this season) will be the guidance and management commentary – and anything that downplays a slowing global economy will be welcomed by markets.
Tom Essaye Quoted in MarketWatch on January 10, 2019
Tom Eassye was quote in MarketWatch on January 10, 2019. Read the full article here.
Earnings Season Preview (Market or Break for the Bull Market)
What’s in Today’s Report:
- Earnings Season Preview: Two Important Factors
Futures are slightly lower despite generally good news overnight, as markets continue to digest the recent rally.
The U.S. & China announced the next round of trade talks will occur Jan 30/31 in Washington, which is a mild positive (although it was largely expected and mostly priced in).
Economically, data was mixed Japanese Household Spending rose 1.1% vs. (E) 0.2%, while UK Industrial Production dropped –0.3% vs. (E) 0.4%.
Today is all about the CPI report (E: -0.1% m/m, 1.9% y/y). Both the headline and core need to stay around 2.0% yoy for this “dovish” Fed narrative to continue to grow, as a hot CPI report could undo some of the rally markets have enjoyed since last Friday.
Technical Update (Bounce or Bottom?)
What’s in Today’s Report:
- Technical Market Update – Bounce or Bottom?
- U.S./China Trade Update (What’s Next and What Sectors Benefit)
Futures are modestly lower as markets digest the recent rally following a quiet night of news.
Economically, Chinese inflation underwhelmed as CPI rose 1.9% vs. (E) 2.0% and PPI gained just 0.9% vs. (E) 2.7%. However, those soft numbers give Chinese authorities more room to further stimulate their economy, so low inflation isn’t a negative.
On trade, there were no further comments from either side (a slight negative) as some were hoping for some optimistic official statement from the Chinese.
Today focus will remain on the Fed as we get multiple Fed speakers, highlighted by Fed Chair Powell (1:00 PM) and Vice Chair Clarida (5:30 PM). We expect more dovish language from virtually all the speakers today, but at this point most of the benefit from dovish Fed speak is priced in, so don’t expect the comments to be a major positive catalyst unless there’s a surprise.
Economically, the calendar is quiet although we do get Jobless Claims (E: 224k) and we want to see those move back towards 200k and away from 250k.
January Economic Breaker Panel Update
What’s in Today’s Report:
- Some Improvement in the Economic Breaker Panel: Three Breakers Tripped, January Update
Futures are cautiously higher this morning mostly thanks to optimism about the US-China trade situation as “mid-level” meetings concluded in Beijing overnight.
President Trump’s address to the nation last night regarding border security and the government shutdown did not have a material effect on markets.
Economically, the Eurozone Unemployment Rate fell to 7.9% vs. (E) 8.1% in November but relative to the first half of 2018, the labor market in the EU continues to show signs of losing momentum.
Oil is up over 2% in the wake of the bullish API print late Tuesday that showed a significant draw in oil stockpiles ahead of today’s official weekly EIA report.
There are no economic reports in the U.S. today but several Fed events to watch including speakers: Bostic (8:20 a.m. ET), Evans (9:00 a.m. ET), and Rosengren (11:30 a.m. ET) before the December FOMC Meeting Minutes are released midafternoon (2:00 p.m. ET).
Stocks continue to have positive momentum right now as the trade war backdrop improves and monetary policy outlook has become less hawkish over the last week but the market is becoming moderately overbought at current levels, on a near term basis, and a profit taking pullback should not come as a surprise.
Encouraging Signs from Credit
What’s in Today’s Report:
- Some Encouraging Signs From Credit
Futures are higher with international shares despite more soft data in the EU and a disappointing earnings report by Samsung as investors focus on U.S.-China trade progress.
China’s Vice Premier, Liu He, unexpectedly attended mid-level trade talks in Beijing overnight which was seen as a potential catalyst for legitimate progress towards a deal.
Economically, German Industrial Production fell –1.9% vs. (E) 0.3% but the NFIB Small Business Optimism Index in the U.S. was not as bad as feared with a headline of 104.4 vs. (E) 104.0.
Today, there is one economic report to watch: International Trade (E: -$53.9B) which has been more closely watched since U.S.-China trade tensions first escalated while there are no Fed officials scheduled to speak.
Momentum remains positive in risk assets including stocks right now and that could continue especially if there are more positive developments regarding the trade talks in Beijing today.
Four Keys to a Market Bottom Updated
What’s in Today’s Report:
- Four Keys to a Market Bottom – More Progress But Not There Yet
- Weekly Market Preview
- Weekly Economic Cheat Sheet
Futures are marginally lower following a quiet weekend as markets digest Friday’s big rally.
Economic data was mixed overnight as Japanese Composite PMI and German Manufacturers’ Orders missed estimates. However, German Retail Sales (1.4% vs. (E) 0.4%) and EU Retail Sales (0.6% vs. (E) 0.2%) beat expectations. So, the data reflects a still generally muddled global economic outlook.
Regarding trade, the next round of U.S./China trade talks began in Beijing but there were no notable headlines, although none were expected this early so the silence isn’t a negative at this point.
Today focus will be on economic data as we get the ISM Non-Manufacturing PMI (E: 58.4). Despite Friday’s strong jobs report there are growing worries about the U.S. economy so a good ISM Non-Manufacturing (or service sector) PMI should help stocks keep most of Friday’s gains. Finally, we also have one Fed speaker today, Bostic at 12:40 p.m. ET, but he shouldn’t move markets.
How Bad Can It Get? Valuation Worst Case Scenario
What’s in Today’s Report:
- How Bad Can It Get? Valuation Worst Case Scenario
Futures are sharply higher after China took further steps to support the economy while economic data was mixed.
China announced a 1% cut to bank reserve requirements and pledged to do more to support the economy. This announcement is the main reason stocks are bouncing back this morning.
Global composite PMIs were mixed as China beat estimates (52.2 vs. (E) 51.9) while the Euro Zone Composite PMI missed expectations (51.1 vs. (E) 51.3).
Today focus will be on two big events. First, the jobs report. Expectations are for 180K jobs adds, a 3.7% unemployment rate and a 3.0% annual wage increase. The best case number is a mild miss on all three metrics, so around 150kish jobs, 3.8% unemployment (or higher) and under 3.0% wages. The worst case scenario (a stagflation number) is a miss on jobs but firm unemployment and wages. If that happens, it’ll likely be another ugly day.
The other major event today is the Powell speech at 10:15 a.m. ET (he’ll be joined by Yellen and Bernanke). The key here is Powell changing his rhetoric to look more flexible on 1) rate increases and 2) balance sheet reduction. If he does that, especially with regards to the balance sheet, then stocks can extend this early rally.