Question on Banks

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What’s in Today’s Report:

  • Subscriber Question on Banks
  • EIA’s Short Term Energy Outlook Analysis
  • Dollar Technical Update

Despite a handful of headlines regarding trade and emerging markets overnight there were no material macro developments leaving US futures, the dollar, and global shares little changed overnight.

The EU’s Juncker jawboned about trade o/n (but no policy change) and the Turkish Central Bank are set to raise rates tomorrow, but neither was a surprise or moved markets materially.

Economically, Eurozone Industrial Production fell -0.8% vs. (E) -0.5% in July pointing to a disappointing slowdown in Q3 manufacturing growth.

In the face of the recent dollar strength, investors were hoping to see better economic data in Europe rally the euro and pressure the dollar, but that is unfortunately not playing out so far in Q3.

Looking ahead to today’s Wall Street session, there is one inflation metric to watch: PPI (E: 0.2%), but unless it is a big surprise, it will likely be shrugged off ahead of the CPI report tomorrow. Additionally, there is one Fed speaker today: Brainard (12:45 p.m. ET).

With a lack of any notable, scheduled catalysts, focus will likely remain on US tech shares and any trade developments (and their subsequent influence on the dollar). As long as tech trades ok and the dollar doesn’t materially rally, stocks broadly should be able to continue to drift higher this week.

Read the detailed analysis here.

Another Breaker Tripped

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What’s in Today’s Report:

  • Another Breaker Tripped (Now There Are Three – September Update)

Futures are modestly lower and international markets were mixed overnight as focus largely remains on global trade relations in an otherwise quiet trading environment.

The German ZEW Survey for September was solid overnight with a headline of 76.0 vs. (E) 72.0 suggesting the EU economy may be picking up some momentum in H2’18.

The NFIB Small Business Optimism Index was the more notable print however as the headline rose to a record high of 108.8 vs. (E) 108.1 in August.

Today will be quiet from an economic standpoint as there is just one report due out: July JOLTS (E: 6.670M) and there are no Fed officials scheduled to speak today.

With tech shares showing signs of stabilizing so far this week, focus will remain on trade, emerging market currencies, and the dollar today. And as long as sentiment towards those influences does not deteriorate materially, the S&P 500 should be able to hold recent support between 2850 and 2870.

Read the full report here.

Tom Essaye on USA TODAY – His Take on Market and Economy Surge

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“The stock market is relentless in asking the question, ‘What’s next?’ ” says Tom Essaye, founder of the “Sevens Report,” a financial newsletter. “The idea of ‘peak everything’ is a legitimate one. There is a fear that … while things are great right now, it’s as good as it gets.”

Access the full USA TODAY article here.

The Key Event This Week (Not What You Think)

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What’s in Today’s Report:

  • The Most Important Central Bank Meeting This Week (it’s Not What You Think)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

Futures are modestly higher thanks to decent Chinese economic data, following a generally quiet weekend.

Chinese August exports beat expectations, rising 10.0% vs. (E) 9.8%, providing more evidence that economic stimulus measures from Chinese officials are starting to work.

On trade, Friday afternoon President Trump again threatened to tax all Chinese exports to the U.S., but that threat is a repeat, and nothing new happened over the weekend.

Today there are no economic reports and only one Fed speaker, Bostic (11:30 a.m. ET), so focus will remain on any trade headlines regarding the $200 billion in additional Chinese tariffs.  Any hints the tariffs are imminent and near the stated total of $200 billion will hit markets, and without support from the tech sector, the chances of a short term pullback in stocks remain uncomfortably high.

Read the full report here

Tom’s Take on the Tech Weakness on Seeking Alpha, September 6, 2018

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stock market update

“Yesterday’s tech weakness, even if it just part of a healthy pullback in an extended sector, does set up a potential danger spot for stocks over the coming days,” says Tom Essaye of The Sevens Report, noting tech has powered stock gains this year even in the face of trade uncertainty.

Read the full article here.

Tyler Richey on Seeking Alpha on September 5, 2018

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Oil price drops most in three weeks as Gulf storm fears ease

“Gordon largely turned out to be a non-event for the energy market, and if anything, the sell-the-news aspect of the tropics trade has triggered a profit-taking pullback across the space,” says Tyler Richey of the Sevens Report.

Read the full article here

Tariff Preview: Good, Bad, Ugly

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What’s in Today’s Report:

  • Tariff Preview:  Good, Bad & Ugly

Futures are modestly lower following a night of mixed economic data and a somewhat negative trade headline.

The WSJ published a trade article that implied the chances of a near term U.S./China deal were declining, but also said a decision on the 200 bln in new tariffs was weeks away.

Economic data was mixed as German Industrial Production missed estimates (-1.1% vs. (E) 0.3%) while Japanese Household Spending beat (0.1% vs. (E) 1.0%).

Today focus will be on the jobs report, and the expectations are: Jobs (E: 195K), Unemployment (E: 3.8%) and Wages (E: 0.3% m/m, 2.8% y/y).  As has been the case for the last few jobs report, as long as we don’t have “3’s” across the board (300k job adds, 3% unemployment and 3.0% yoy wage gains) this report shouldn’t be too much of a headwind on stocks.

Finally, in addition to the jobs report we also have two Fed speakers, Rosengren (8:30 a.m. ET) and Mester (9:00 a.m. ET), but neither should move markets.

To read the full report Go Here

Gasoline and heating-oil futures – Tyler Richey on Market Watch, September 6, 2018

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“Gasoline and heating-oil futures are still in the driver seat of the energy markets, after early week rallies due to [Gulf storm] Gordon have steadily come unwound since the short trading week started on Tuesday,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch.

Read the full article here

Jobs Report Preview

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What’s in Today’s Report:

  • Why the Market is Vulnerable to a Short Term Pullback
  • Jobs Report Preview

Futures are slightly higher following a generally quiet night of news.

There was no new trade news overnight so markets continue to wait for the administration decision on the 200 billion in new Chinese tariffs (it can come any day now).

Economically the only notable report was German Manufacturers’ Orders, which missed estimates (-0.9% vs. (E) 2.1%).

Today markets will be watching the news wires for any tariff related headlines.  But, outside of that, we get thee notable economic reports, the most important of which is the ISM Non-Manufacturing Index (E: 56.8).  On the employment front, we also get the ADP Employment Report (E: 182K) and Jobless Claims (E: 213K) and both reports should show continued strength in the job market.

Read the full report here

Tyler Richey on Market Watch – His take on Energy Market and Trade – Sep 5, 2018

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Oil prices settled on Wednesday at their lowest levels in about a week as a major storm that passed through the Gulf of Mexico missed the bulk of the oil and natural-gas operations in the region.

“Gordon largely turned out to be a non-event for the energy market, and if anything, the sell-the-news aspect of the tropics trade has triggered a profit-taking pullback across the space,” said Tyler Richey, co-editor of the Sevens Report.

Read the full article here.