Between the lines: That likely paints the Fed into a corner in addressing the program at its meeting tomorrow, Tom Essaye, director of Sevens Report Research, says in a note.
What’s in Today’s Report:
Futures are modestly higher following a quiet night of news as markets continued to digest that the actual text of the phase one trade deal largely meet expectations.
Economic data was sparse as the only report was German CPI and it met estimates at 1.5% yoy.
Today focus will be on economic data and earnings, as there are several important economic reports including (in order of importance): Retail Sales (E: 0.3%), Philly Fed (E: 3.4), Jobless Claims (E: 214K), and Housing Market Index (E: 75). There is also one Fed speaker, Bowman (10:00 a.m. ET), but he shouldn’t move markets.
On the earnings front, results have been mixed so far this week, and focus will turn more towards earnings now that phase one is a done deal. Some important reports we’ll be watching today include: MS ($0.98), SCHW ($0.64), BK ($0.99), TSM ($0.72), CSX ($0.97), PPG ($1.35).
What’s in Today’s Report:
Stock futures are flat and international markets were little changed overnight amid very quiet newswires while investors look ahead to today’s Fed decision.
Economically, the Japanese PPI release was the only report out overnight and the headline met expectations at 0.2% which did not move markets.
In the energy market, oil futures are down nearly 1% after the API reported an inventory build of +1.4MM bbls vs. (E) -2.8MM ahead of today’s EIA report.
Today, the focus will be on the Fed decision with the Meeting Announcement at 2:00 p.m. ET and the Fed Chair Press Conference following shortly after at 2:30 p.m. ET.
Any significant market moves before the Fed are unlikely but there is one economic report to watch: CPI (E: 0.2%), and the EIA report at 10:30 a.m. ET could trigger a reaction in the energy market which could affect sector trading.
Beyond those catalysts, the trade war remains the single biggest influence on this market right now so investors will be looking for any incremental developments regarding the Dec. 15 tariff plans or news on a phase one trade deal.
What’s in Today’s Report:
Futures are marginally higher as better than expected economic data is being offset by some confusion on trade.
Global manufacturing PMIs were better than expected as the Chinese (50.2 vs. (E) 49.5) and Euro Zone (46.9 vs. (E) 46.6) readings beat estimates and furthered the idea that the worst of the global slowdown is over.
On trade, headlines were mixed as Axios reported the Dec. 15 tariffs will be delayed (a positive) although a somewhat hawkish Trump trade tweet this morning is weighing on sentiment (Trump reinstituted steel and aluminum tariffs on Brazil and Argentina and that’s causing an uptick in general tariff anxiety in the market).
Today focus will (of course) remain on any trade tweet or headline, while the key economic report is the ISM Manufacturing PMI (E: 49.4), and the stronger the number, the better.
“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, founder of The Sevens Report, in a note.
“The sooner … phase one is signed (regardless of the details) the better, because both sides want a deal, so the longer it’s delayed, the more the market will begin to…” Tom Essaye, founder of market research firm Sevens Report Research, wrote in a note to clients. Click here to read the full article.
“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today…” Tom Essaye, founder of The Sevens Report, said in a note this summer. Click here to read the full article.
What’s in Today’s Report:
Global markets are trading with a moderate risk-off tone this morning as the trade war weighs on sentiment.
It remains unclear whether the U.S. will offer relief on existing tariffs as part of the “phase one” trade deal with China (which has been priced into stocks in recent weeks), or just cancel the scheduled December tariffs, which would be a disappointment.
Meanwhile, on the economic front, Eurozone Industrial Production was largely overlooked because of trade angst but the release was not as bad as feared (0.1% vs. E: -0.3%) further easing recession concerns in Europe.
There were other headlines overnight including escalating protests in Hong Kong which saw the Hang Seng underperform (down nearly 2%) and chatter about the public impeachment hearings in Washington today but neither are materially affecting U.S. stocks at this point as the market’s main focus remains the trade war.
Looking into today’s session, there is one economic report to watch: CPI (E: 0.3%) before focus will turn to Powell’s testimony before Congress on the state of the economy at 11:00 a.m. ET. Later in the day, there are two other Fed officials scheduled to speak before the closing bell: Barkin (12:30 p.m. ET) and Kashkari (1:30 p.m. ET).
Bottom line, there are a lot of headlines this morning but the trade war remains the single most important influence on this market so if expectations for tariff removal continue to fade, stocks are likely to trade with a heavy tone.
“The last 24 hours have seen a bit of whiplash in the U.S./China trade drama, as a potentially negative headline yesterday has been more than offset by a positive one this morning. But “it’s fair to say that at these levels…” said Tom Essaye, founder of The Sevens Report, in a note to clients. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher following news of a new Brexit agreement.
The EU and Britain have agreed to a new Brexit deal that solves the Northern Ireland border issue. However, it remains unclear if the deal can get through Parliament, and remember that Parliament killed the last Brexit agreement between Britain and the EU
Economically, British Retail Sales slightly missed estimates (flat vs. (E) 0.2%) but that’s not moving markets.
Today focus will be on earnings (some notable reports include MS: $1.10, PM: $1.35 and UNP: $2.29).
Additionally, there are several economic reports including (in order of importance): Philly Fed (E: 7.1), Industrial Production (E: -0.2%), Jobless Claims (E: 210k) and Housing Starts (E: 1.3M). Broadly speaking, the stronger the data, the better for stocks.
