Dow jumps 300 points as Wall Street rebounds from the worst day of the year
“Going forward, stabilization in the U.S./China trade war is now the most important key to broader market stabilization…” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.
“Going forward, stabilization in the U.S./China trade war is now the most important key to broader market stabilization…” wrote Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.
What’s in Today’s Report:
The trade war continues to dominate the markets as the designation of China as a currency manipulator by the U.S. Treasury caused a sharp selloff in stock futures last night. But the PBOC intervened to “fix” the yuan back below $7/CNY which helped global markets stabilize overnight.
German Manufacturers’ Orders jumped 2.5% vs. (E) 0.6% in June but the details showed a continuation of soft demand in the Eurozone, offsetting the headline strength.
The trade war, and any further developments on the topic, will remain the market’s main focus today however there are a few other potential catalysts to watch.
Economically, the June JOLTS Report (E: 7.293M) will be released mid-morning and then shortly after lunch, there is a 3-Yr Treasury Note Auction (1:00 p.m. ET) which will be important because Treasury auctions have been moving the stock market lately.
Lastly, there is one Fed speaker: Bullard at 1:05 p.m. ET and investors will be listening closely for any clues as to what the Fed’s policy plans are into the end of the year.
What’s in Today’s Report:
Futures and global markets are sharply lower as the U.S./China trade war intensified over the weekend.
China allowed the yuan to weaken below the psychologically important level of 7/dollar on Monday, signaling a likely acceptance of a long U.S./China trade war.
Economically, global July composite PMIs were better than feared and generally in-line with expectations, while the British services PMI easily beat estimates (51.4 vs. (E) 50.2).
Today, the key report is the ISM Non-Manufacturing PMI (E: 55.5) and the market will be looking for solid data.
Regarding U.S./China trade, undoubtedly there will be tweets flying today but there is a chance for some good news on U.S./China trade this week. The Commerce Department may grant waivers for U.S. companies to do business with Huawei, and if that happens, it’ll help offset some of this recent trade escalation.
What’s in Today’s Report:
Futures are modestly lower following a steep global sell-off as markets digest Thursday’s tariff threat and the “less dovish than hoped for” Fed, ahead of the jobs report.
Chinese authorities threated retaliation should the tariffs go into effect on September 1st, further escalating trade tensions, although no specifics were given.
Economically, Euro Zone retail sales beat estimates, although revisions were negative so it wasn’t a strong beat.
Today the big event is the Employment Situation Report, and expectations are as follows: Jobs: 156K, UE Rate: 3.6%, Wages: 0.2%). The last thing this market needs at this point is a “Too Hot” number that reduces expected Fed rate cuts, or a “Too Cold” number that increases worries about economic growth. So, from a stock standpoint, the best case in a jobs number between 150k-200k (the higher the better) with tame wage growth and stable unemployment. If we get that “Goldilocks” number it’ll help markets stabilize.
The seven-week stretch of falling crude supplies is the longest since the 10-week decline from the week ended Nov. 17, 2017 to Jan. 19, 2018, according to an analysis of EIA data provided Sevens Report Research. Click here to read the full MarketWatch article.
What’s in Today’s Report:
Futures are bouncing marginally as markets digest the Fed’s “hawkish cut” rate decision.
Economic data overnight was not as bad as feared, although it wasn’t good, either. EU (46.5 vs. (E) 46.4), British (48.0 vs. (E) 47.7) and Chinese (49.9 vs. (E) 49.5) July manufacturing PMIs all beat estimates, although they also remain below 50, signaling contraction.
Today we have an important economic report, ISM Manufacturing Index (E: 51.9) and we also get weekly Jobless Claims (E: 213K), and those numbers (especially the former) could move markets. But, beyond the data, and following the Fed’s “hawkish” decision, the keys to focus on will be the U.S. Dollar and the Treasury yield curve. If the dollar continues to grind higher and the yield curve flattens, that will be another headwind on stocks. Yesterday’s lows in the S&P 500 at 2959 are an important support level to watch if this market rolls over mid-day.
What’s in Today’s Report:
Futures are tentatively higher ahead of the Fed this morning as AAPL earnings beat (shares up 4%+), economic data was mixed, and there were no real trade war updates o/n.
Economically, China’s CFLP Manufacturing PMI was slightly better than feared at 49.7 but importantly still below 50 pointing to contraction while EU data remained “Goldilocks” with in-line growth metrics but soft inflation readings.
Today, investors will clearly be keenly focused on the Fed but there are some other catalysts to watch. On the earnings front, GE ($0.12) reports before the bell while QCOM ($0.75) results will be released after the close.
Economically, the first look at July jobs data will hit this morning with the ADP Employment Report (E: 155K) and then Q2 Employment Cost Index (E: 0.7%) will be released shortly after.
Turning to the Fed, the FOMC Announcement will print at 2:00 p.m. ET, (E: -25 bp cut to 2.00-2.25%) and Powell’s Press Conference follows at 2:30 p.m. ET. The market has high expectations for the Fed today and even a mildly hawkish disappointment could trigger significant volatility as valuations remain as stretched as they have been in years.
What’s in Today’s Report:
Asian markets rallied modestly overnight after the BOJ met expectations while Brexit angst continues to weigh on EU stocks and U.S. futures as investor focus turns to the Fed.
Economic data did not move markets overnight and trade talks between the U.S. and China don’t begin until later today so there were no material developments on the trade war front.
The FOMC Meeting, which is clearly the biggest event of the week, begins this morning and that will likely lead to a sense of “Fed paralysis” in the markets before tomorrow’s announcement and Powell’s press conference however there are still a few important catalysts to watch today.
Economically, the Fed’s preferred measure of inflation: Core PCE Price Index (E: 0.2%) within the Personal Incomes and Outlays report will be the most important report to watch (it is due out before the bell), but there are a few other releases to watch as well: S&P Case-Shiller HPI (E: 0.2%), Consumer Confidence (E: 125.0), and Pending Home Sales (E: 0.3%).
On the earnings front, we will get second quarter results from: MA ($1.82), PG ($1.06), MO ($ 1.10) before the open, and AAPL ($2.10), AMD ($0.08), ALL ($1.48), CHRW ($1.21) after the bell this afternoon.
What’s in Today’s Report:
Futures are little changed following a quiet weekend as all eyes now turn to the Fed decision on Wednesday.
Former Fed Chair Yellen endorsed a rate cut over the weekend, but did not advocate for sustained easing. And, this gets right to the heart of this market. We know the Fed will cut 25 bps this week, but we don’t know if they’ll signal the start of a sustained easing campaign (i.e. 75-100 bps of cuts by year-end) and that’s something the market has already aggressively priced in at these levels.
Economic data was sparse over the weekend although Japanese Retail Sales (0.3% vs. (E) 0.1%) beat estimates.
There was no notable U.S.-China trade news over the weekend and expectations are low for any actual progress at the talks this week.
Today there are no notable economic reports nor any important central bank speak, so focus will remain on earnings (this is the last important week of earnings) and on any U.S.-China trade headlines (although none are expected).
