Are Commodities Bottoming?

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What’s in Today’s Report:

  • Are Commodities Bottoming?

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.

To access the full analysis Go Here

Valuation Update (New Target)

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What’s in Today’s Report:

  • Valuation Update

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.

To access the full analysis Go Here

New Highs

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What’s in Today’s Report:

  • Why Stocks Hit New Highs
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

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).

To read the full report Go Here

Tom Essaye’s Take on Market response to US legal and political drama on CNBC

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Market response to US legal and political drama is ‘appropriate’

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.

The Key to a Weaker Dollar (And Higher Stock Prices)

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What’s in Today’s Report:

  • The Key to a Weaker Dollar (And Higher Stock Prices)

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.

Read the full report here: Go Here

What Makes Politics a Bearish Gamechanger

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What’s in Today’s Report:

  • Political Update (What Makes This Drama a Bearish Gamechanger)
  • Oil Outlook Updated

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.

Go Here to read the detailed report.

Tom Essaye quoted on Nasdaq – August 21, 2018

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Morning Movers: TJX Jumps, Kohl’s Drops, Toll Brothers Soars

We always need a story to tell about why the market is heading higher, and the one that’s making the rounds this morning is about the dollar. In an interview, President Donald Trump criticized the U.S. Federal Reserve for raising interest rates, and that has added uncertainty to what had been all but certain. As a result, the U.S. Dollar Index has dropped 0.2% today because one way a currency gains value against another is by being from a country where rates are anticipated to be higher. And a weaker dollar is supposed to be helping risk appetite in the U.S. and abroad. “Those comments mostly affected the dollar (pushing it lower), which on a longer time frame is bullish for stocks,” writes The Sevens Report’s Tom Essaye.

Tyler Richey cited on MarketWatch – August 21, 2018

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By Myra P. Saefong and Mark Decambre

Oil scores 4th straight gain as investors watch Iranian sanctions

“Fundamentally there have been three headwinds on the market: 1) trade angst weighing on demand expectations, 2) fears that Saudi Arabia will more aggressively act to regain market share since the policy change in June, and 3) still steadily rising U.S. production,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch. “The first of those three has seen some relief so far this week and that has helped oil bounce so far this week with other risk assets.”

Good, Bad, Ugly Chart

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What’s in Today’s Report:

  • Good, Bad, Ugly Chart

Futures are modestly lower as investors digest yesterday’s failed attempt at a new all-time closing high.

Trump headlines dominated the newswires overnight although the legal developments regarding Cohen and Manafort do not alter the broader, positive backdrop for stocks.

Oil futures are up over 1% after the API reported a -5.1M bbl supply draw late yesterday, more than doubling analyst expectations of –2.0M ahead of today’s weekly EIA release.

As far as catalysts go today, the media will likely be fixated on the Cohen/Manafort drama (more on that below), but there is one economic report to watch: Existing Home Sales (E: 5.420M) and the FOMC Meeting Minutes from Aug. 1 are due out at 2:00 p.m. ET.

Regarding the Trump headlines, while they will likely dominate the media today, they are not a material headwind on stocks at this time for three reasons.

First, proof of criminal activity needs to appear (right now, it’s he-said-she-said).

Second, impeachment is a political process and even if Democrats won the House and Senate, they will not get close to the 2/3rds needed to remove a President.

And third, there’s no critical legislation that this news can derail (tax cuts already passed).

If anything, this weakens Trump’s leverage on trade and makes a compromise slightly more likely. As such, the dramatic political headlines from the last 12-18 hours will not have a material influence on the markets, at least at this point.

To read the full analysis Go Here

Contrarian View: Emerging Markets

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Pre 7:00 Look

• Stock futures are cautiously higher today as the dollar continues to pullback on Trump’s comments about the Fed while investors have doubts about the new round of trade talks between the US and China.

• The dollar is down another 30 basis points+ this morning, extending its multi-session downtrend which should continue to act as a modest tailwind for stocks this week.

• British CBI Industrial Trends Survey was a mild miss at 7 vs. (E) 10 as Brexit concerns continues to weigh on sentiment.

• There are no economic reports or Fed speakers today.

To read the full report Go Here