“In March, we had four areas of trade uncertainty: Mexico, China, Europe and Canada. I think Canada will be resolved and Europe and Canada are already resolved,” said Tom Essaye, founder of The Sevens Report. “Basically, we’ve got three of four resolved, but China is a big one.”
Essaye also said he would be surprised if stocks keep grinding higher without a resolution to U.S.-China trade relations.
Tom Essaye, Founder, The Sevens Report, joined Bryan Curtis and David Ingles on Daybreak Asia to discuss the deal on trade with Mexico and the outlook for a resolution with China. He goes onto Fed hikes, how close they are to neutral and when the yield curve may invert.
Link to the Bloomberg site: Click Here
Futures are modestly lower as markets digest the recent rally.
Concerns about China (both trade and the economy) are the most cited reason for the mild dip this morning but nothing materially negative occurred overnight.
Economically, Japanese retail sales beat estimates (1.5% vs. (E) 1.2%) while Euro Zone Economic Sentiment slightly missed expectations (111.6 vs. (E) 112.0).
Today markets will be looking for any official news on Canada joining the U.S./Mexico trade deal (it’s not expected but possible).
Beyond those trade-related headlines, the most important event today will be the Core PCE Price Index (E: 0.2% m/m, 2.0% y/y) contained in the Personal Income and Outlays Report. Slowly accelerating inflation remains a key pillar in the bull thesis on this market, and if we see a core PCE Price Index materially above 2% (say 2.2% or higher) that will push the dollar and yields higher, and likely be a headwind on stocks.
Tom Essaye, Founder, The Sevens Report, joined Bryan Curtis and David Ingles on Daybreak Asia to discuss the deal on trade with Mexico and the outlook for a resolution with China. He goes onto Fed hikes, how close they are to neutral and when the yield curve may invert.
It was another very quiet August night in the markets as US futures are flat this morning while European shares are slightly lower and Asian indexes continued to advance modestly with trade negotiations still the major focus.
The German GfK Consumer Climate edged down 0.1 to 10.5 vs. (E) 10.6 in September. Sentiment in Europe is not quite as strong as the US, but it remains mostly upbeat and strong enough for continued equity gains in the medium term.
Oil prices are slightly higher this morning despite the API reporting a slight build (+38K bbls) in crude stocks vs. (E) -1M bbls ahead of the weekly EIA report this morning.
Today, trade will continue to dominate the headlines but there are two economic reports to watch: GDP (E: 4.0%) and Pending Home Sales (E: 0.0%). There are no Fed officials or other central bank events so from a catalyst standpoint, it will likely be another quiet session.
The dollar has been a good inverse proxy for trade sentiment recently so if we see a continued pullback, stocks can continue to flirt with new highs, however any material rebound in the dollar index today will likely pressure US shares (the greenback is slightly higher so far).
Finally, I’ll be joining Liz Claman on Fox Business’s “Countdown to the Closing Bell” this afternoon at 3:00 p.m. ET to discuss the outlook for the markets and opportunities for investors as we head into the final four months of the year.
Futures are slightly higher this morning after a very quiet night as global shares are edging higher after yesterday’s run to new all-time highs in several major US indexes.
Trade concerns continue to ease after yesterday’s favorable developments between the US and Mexico, leading to a further pullback in the dollar which has been the most significant tailwind for stocks over the last week.
Looking ahead to today’s session, there are a few notable economic reports due out: International Trade in Goods (E: -$69.4B), S&P Case-Shiller HPI (E: 0.2%), and Consumer Confidence (E: 126.8) but there are no Fed officials scheduled to speak.
Economic data aside, progress on trade and the subsequent decline in the dollar index have been the primary bullish influences on stocks right now, so as long as the trade situation doesn’t deteriorate today, and the dollar doesn’t materially rally, stocks should be able to continue towards new highs.
Futures are extending Friday’s gains following efforts by Chinese authorities to further strengthen the yuan.
The yuan strengthened to a one month high vs. the dollar as Chinese officials re-introduced the “Counter Cyclical Factor” in setting the daily value of the yuan. That “factor” is widely seen as an intent to ensure yuan strength and avoid a potential breach of 7.00. And, that support of the yuan is a potential macro positive.
The only notable econ report was German IFO Business sentiment, which beat estimates at 106.4 vs. (E) 105.4.
Today there are no notable economic reports and no important Fed speakers, so focus will remain on any trade headlines (a new trade deal with NAFTA seems imminent and that should be a mild positive on sentiment and stocks).
Tom Essaye, editor of the Sevens Report, was on CNBC, says “a lot more has to happen” for U.S. President Donald Trump to be impeached.
Futures are modestly higher following a generally quiet night of news.
U.S./China trade talks ended with no specific future date to resume negotiations, but the tone from the meeting was constructive and that’s helping sentiment.
Economically it was a quiet night as Japanese CPI slightly missed estimates while German GDP met expectations.
Today the key event to watch is the Powell speech from Jackson Hole (10:00 a.m.). But, while that clearly has the potential to move markets, it’s widely expected that Powell will stick to the script and repeat much of what the Fed has said recently (pointing to a September rate hike and then quarterly hikes thereafter).
In addition to Powell, we also get Durable Goods Orders (E: -0.8%), but barring major surprises from either one, we can expect typically slow Friday in August trading.
Futures are little changed following a quiet night as the August flash PMIs provided no big surprises.
August flash PMIs largely met expectations as the Japanese manufacturing PMI rose to 52.5 vs. previous 52.3, while the EU Composite PMI was in line at 54.4 vs. (E) 54.5.
On trade, the WSJ said odds of the 200 billion additional Chinese tariffs happening are higher than the market thinks and those tariffs remain a real risk to this rally. But, for now, the market is focused on the on going talks and as such the headline isn’t weighing too much on futures.
There are several notable economic reports today, most important of which is the August Flash Composite PMI (E: 55.6). But, we also get readings from housing via the FHFA House Price Index (E: 0.4%) and New Home Sales (E: 649K). Finally we also get weekly Jobless Claims (E: 215K).
From a trading standpoint today, any trade headlines (positive or negative) will likely move markets while BABA earnings will also be important. Earnings have quietly been strong this week and if BABA numbers are solid, it could help tech rally and that should pull markets higher.
