Valuation Update (Better, But Not Good)

/in /by

What’s in Today’s Report:

  • Equity Risk Premium Update – Better, But Not Good
  • Updated Oil Outlook

Futures are marginally weaker following a quiet night as markets as markets further digest the 2019 rally.

Economic data was sparse although Euro Zone Core HICP (their CPI) met expectations at 1.0%, which remains near multi-month lows.

Today focus will remain on earning and we get some notable consumer companies reporting (in addition to more banks).  Some reports we’ll be watching include:  MS ($0.90), PPG ($1.10), NFLX ($0.25),and AXP ($1.79).  As has been the case so far in earnings season, the commentary on the economy will be just as important as the actual results.

We also get two notable economic reports, including Jobless Claims (E: 216K) and the Philadelphia Fed Business Outlook Survey (E: 10.0) plus one Fed speaker: Quarles (10:45 p.m. ET). Bottom line, if earnings continue to beat low expectations, stocks can grind higher for now.

An Update from Dr. Copper

/in /by

What’s in Today’s Report:

  • An Update from Dr. Copper (Mildly Encouraging)

Futures are up modestly, but off the highs as investors digest the latest Brexit drama, Chinese stimulus, and mixed economic data ahead of more key US bank earnings.

Economically, Japanese Machine Orders badly missed expectations in November (0.0% vs. E: 3.3%) pointing to soft capital spending while European inflation data was largely inline with estimates.

Today, the government shutdown is going to start affecting the flow of economic data as the December Retail report will not be released. To that point, concerns are starting to build about the economic headwinds the shutdown will have as it drags on, and eventually those worries will begin to weigh on stocks.

U.S. economic data on Import & Export Prices (E: -1.2%, -0.3%) and the Housing Market Index (E: 57.0) will still be released as scheduled however, and there is one Fed official speaking: Kashkari (1:00 p.m. ET).

On the earnings front, focus will be on financials early with: BAC ($0.63), GS ($5.37), BLK ($6.39), and BK ($0.92) all due to report ahead of the bell while two notably growth-sensitive companies: AA ($0.49) and CSX ($1.00) will report after the close.

Tyler Richey appeared on TD Ameritrade Network on January 15, 2019.

/in /by

Tyler Richey appeared on TD Ameritrade Network on January 15, 2019. Watch the entire clip here

Brexit Vote Preview

/in /by

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)

/in /by

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

/in /by

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)

/in /by

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?)

/in /by

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

/in /by

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

/in /by

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.