Tom Essaye, Founder of The Sevens Report, joined Bryan Curtis and David Ingles on Daybreak Asia, reacting to today’s U.S. equity sell off. To listen to the entire clip go here
What’s in Today’s Report:
Futures are sharply lower as global markets dropped following the Wednesday rout in U.S. stocks.
Nothing new occurred overnight to cause the additional selling this morning and this is all momentum driven.
There was no notable economic data or geo-political news out overnight and the sell-off itself was the focus of most of the financial media.
Today the key event is the Core CPI report (E : 0.2% m/m, 2.3% y/y) out this morning. This release is even more important than before because if it prints “hot” (core CPI above .4% m/m) that will add to the concern that the Fed is going to get more hawkish and that will add another source of pressure on stocks, which we obviously don’t need right now. Conversely, if this number is inline of a little light, that could provide a catalyst for markets to try and stabilize.
What’s in Today’s Report:
US stock futures are slightly lower this morning as EU shares are declining on renewed concerns about Italy’s budget despite mostly good economic data overnight.
The Italian Parliamentary Budget Office raised doubts about the government’s growth forecast of 1.5% in 2019 which would ultimately mean a larger budget deficit than previously expected, and that has triggered risk-off money flows this morning.
Economically speaking however, Industrial Production data across Europe was generally better than expected and revisions were mostly positive. While that is currently being overshadowed by the Italian budget drama, it is a positive for the medium term outlook for EU markets.
Today, we get our first of two notable inflation figures this week: PPI (E: 0.2%) as well as Wholesale Trade (E: 0.8%) and there are two Fed speakers to watch: Evans over the lunch hour (12:15 p.m. ET) and Bostic after the close (6:00 p.m. ET).
Otherwise, focus will remain on bond yields and tech shares. For stocks to continue to stabilize or turn higher this week, we will need to see the former hold steady or even pullback slightly and the latter once again outperform.
What’s in Today’s Report:
US futures are lower again this morning and most overseas markets declined overnight thanks to a continued rise in bond yields and concerns about global economic growth.
The IMF reduced global growth expectations for 2018 from 3.9% to 3.7% citing the escalating trade tensions between the US and China as a potentially significant headwind.
The NFIB Small Business Optimism Index eased to 107.9 vs. (E) 108.0 last month, but remains near a record high.
With the NFIB already out, there are no additional economic reports in the US today but there are two Fed speakers to watch, one shortly after the open: Evans (10:00 a.m. ET) and one later this evening: Williams (9:15 p.m.ET).
That will leave investor focus on the pace of rising bond yields and tech weakness. And unless we see some moderation in the bond rout and some stabilization in tech, it will be hard for stocks to move meaningfully higher today.
What’s in Today’s Report:
Futures and most global markets are moderately lower thanks to further deterioration in U.S./China relations.
Secretary of State Pompeo met with his Chinese counterpart and the tone of the meeting was less than friendly, reminding markets of deteriorating U.S./China relations.
Chinese econ data was solid as the Caixin Service PMI rose to 53.1 vs. (E) 51.5. But, Chinese officials cut bank reserve requirements again, a sign the economy is still struggling.
Today the calendar is quiet due to the Columbus Day holiday, and as such there are no economic reports today or Fed speakers, and the bond market is closed. That said, we could still see volatility and once again tech is a leading indicator for the market. If tech breaks last week’s lows (7,715) look for selling to accelerate.
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Futures are flat following a generally quiet night as markets look ahead to this morning’s jobs report.
Economic data and earnings overnight were solid as Samsung posted good numbers while German Manufacturers’ Orders handily beat expectations (2.0% vs. (E) 0.2%).
There was no notable trade news or European political news (Italy) out overnight.
Today the focus will be on the jobs report, and expectations are – Jobs: 180k, Unemployment: 3.8%, Wages: 0.3% m/m, 2.9% y/y.
The key is the wage number, and if it prints a 3.0% yoy gain, look for Treasuries and the dollar to rally. A rally in the dollar to the mid 96 level and the 10 year yield moving into the mid to high 3.20% range will likely pressure stocks again.
Outside of the jobs report, there are two Fed speakers, Kaplan (12:30 p.m. ET) and Bostic (12:30 p.m. ET) but neither should move markets.
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“Fundamental dynamics have shifted in favor of the bears this week with a huge build in commercial crude oil stocks and news that Saudi Arabia and Russia made a private agreement weeks ago to increase output to help offset the declining exports from Iran,” said Tyler Richey, co-editor of the Sevens Report.
To read the entire Market Watch article Go here
What’s in Today’s Report:
Futures are moderately lower following hawkish commentary by Fed Chair Powell and ahead of a critical speech on China by VP Pence.
Fed Chair Powell said in a Q&A after the bell that the Fed is a “long way” from neutral rates and may have to go “past” neutral. The comments further pressured bonds overnight and extended the rise in global bond yields.
Politically, VP Pence will deliver a very critical policy speech on China that goes beyond economic criticism, and the concern is the speech will make a trade deal even more difficult to achieve.
Today focus will be on bond yields (does the surge in yields/dollar continue?) as well as the Pence speech on China (just how critical will it be?). Economically, there are two reports, Jobless Claims (E: 213K) and Factory Orders (E: 2.1%) and one Fed speaker, Quarles (8:15 a.m. ET), but none of that should move markets.
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What’s in Today’s Report:
Futures are modestly higher and European shares stabilized overnight thanks to positive developments in Italy.
News broke overnight that while Italy still plans on a 2.4% budget deficit for 2019, it will reduce that figure by 0.2% in each of the following two years, resulting in 2.0% in 2021.
Italian yields pulled back from multi-year highs and the euro found support, weighing slightly on the dollar overnight which is a slight positive for US markets.
Today, jobs week kicks off with the ADP Employment Report before the bell (E: 179K) and then the ISM Non-Manufacturing Index (E: 58.0) is due out at 10:00 a.m. ET.
Aside from economic data, there are a slew of Fed speakers today: Barkin (8:05 a.m. ET), Harker (12:00 p.m. ET), Brainard (1:00 p.m. ET), Mester (2:15 p.m. ET), Powell (4:00 p.m. ET), and Kaplan after the close (8:00 p.m. ET).
Europe will remain the primary focus today and as long as the overnight progress on the Italian budget plans is not forfeited in morning trade (before the Euro close) then risk on money flows and an easing dollar should support some upward momentum in US stocks today.
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What’s in Today’s Report:
S&P futures are decidedly lower while most international markets were down overnight thanks to Italian political/budget fears.
The 2.4% budget deficit Italy proposed to the EU was not well received yesterday and the mention of “Italy’s own currency” by a notable law maker overnight sent Italian bond yields to more than four year highs.
Meanwhile safe haven money flows are pushing Treasury and Bund yields lower and the dollar is up to fresh multi-week highs which will quickly become a headwind on US shares again in the near term.
Today, there are no notable US economic reports but there are two Fed speakers to watch: Quarles (10:00 a.m. ET), and more importantly Chair Powell (12:00 p.m. ET). Otherwise, focus will be on Europe and any developments with Italy’s budget or further discussions of Italy’s “own currency.”
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