“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.
What’s in Today’s Report:
Stock futures are solidly higher this morning after Hong Kong’s Carrie Lam announced the withdraw of the extradition bill that was the major catalyst for the recent protests. The news sparked a near 4% rally in the Hang Seng Index.
Composite PMI data for August was also better than expected with the Chinese figure rising to 51.6 from 50.9 while the EU headline firmed to 53.5 from 53.2 in July helping ease concerns about the health of the global economy.
Looking into today’ session, there are two economic data points to watch: Motor Vehicle Sales (E: 16.8M) and International Trade (E: -$53.5B) however investors will be primarily focused on the very busy schedule of Fed speakers: Williams (9:30 a.m. ET), Kaplan (10:00 a.m. ET), Bowman and Bullard (12:30 p.m. ET), Kashkari (1:00 p.m. ET), and Evans (3:15 p.m. ET).
Investors will be looking for any further insight into how accommodative the Fed will be in the coming months, specifically how likely a 50 bp cut at this month’s meeting is (current expectations are low, so a dovish surprise would be well received by stocks).
Beyond the Fed speak, the trade war is still the major influence on the broader markets right now and investors continue to wait for updates on the next round of trade talks that are supposed to take place in the coming days.
“The trade war remains the market’s main focus and with new tariffs going into effect over the [past] weekend, investor sentiment towards U.S.-China relations are continuing to deteriorate…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
“Going forward, the dollar will have a hard time declining unless the Fed gets aggressively dovish, simply because global growth remains lackluster and global central banks are easing policy…” said Tom Essaye, founder of the Sevens Report. Click here to read the full article.
What’s in Today’s Report:
Stock futures are in the red this morning and international markets were mostly lower overnight thanks to on-going trade tensions and more political drama in Europe.
The latest set of U.S. tariffs on Chinese goods went into effect over the weekend as expected however there were no updates regarding this month’s scheduled trade talks which is weighing on risk assets this morning.
Brexit concerns continue to simmer as the odds of a no-deal exit from the EU creep higher ahead of the October deadline but for now, the situation is largely isolated to Europe and not having a significant impact on U.S. equity markets.
Economic data was mixed overnight but there were no material, market moving surprises.
Today, there are two economic reports to watch: ISM/PMI Manufacturing Indexes (E: 49.9) and Construction Spending (E: 0.3%) while the Fed’s Rosengren is scheduled to speak shortly after the close (5:00 p.m. ET).
Investor focus will primarily remain on the trade war however, so any positive headlines regarding the planned, in-person negotiations this month will be well received while a continued lack of clarity on the topic will be a headwind for stocks.
“For U.S.-China trade to cause a sustainable rally, we need some proof of actual movement towards a trade ‘truce,’” said Tom Essaye, founder of the Sevens Report, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are moderately higher as more positive U.S./China trade chatter fuels the rebound.
There was more vague, but positive, commentary on the tone of current U.S./China communications, as China called the conversations ”effective.”
There was a lot of economic data overnight and it was decidedly mixed. Japanese IP beat estimates but German Retail Sales (-2.2% vs. (E) 1.1%) disappointed. Bottom line, the outlook on the global economy remains decidedly mixed.
Today should be quiet given the looming holiday weekend, but the key number to watch is the Core PCE Price Index (E: 0.2% m/m, 1.7% y/y). If that runs very “hot” (so a number close to 2.0%) that will be taken as slightly hawkish and could reverse some of this week’s rally.
Tom Essaye appeared in Mid-Day Movers by TD Ameritrade Network discussing equities, what’s driving the markets right now, earnings and more…Click here to watch the full interview.
“In the bond market, the benchmark 10s-2s yield curve spread hit a fresh 12 year low below -5 basis points this morning while the 30-Year yield has hit a record low, signaling more broad market angst by the “smart market…” writes The Sevens Report’s Tom Essaye. Click here to read the full article.
“The staples are actually poised to be in a pretty good spot,” said Tom Essaye, founder of the Sevens Report. He said he thinks positive but slowing economic growth could continue to benefit the group. Click here to read the full article.
