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Pre-Fed Technical Update

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What’s in Today’s Report:

  • Pre-Fed Technical Update: Levels to Watch
  • Why Did Tech Lag so Badly Yesterday?

Futures are drifting modestly higher this morning as investors focus on the Fed, U.S.-China trade talks, and earnings.

News flows were slow overnight although the well-received AAPL earnings from late yesterday are helping US futures rally.

Today, primary focus will be on the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET followed by Chair Powell’s press conference at 2:30 p.m. ET.

There are two economic reports due out this morning: ADP Employment Report (E: 174K) and Pending Home Sales (E: 0.3%). The former will be closely watched but it is unlikely we see any sort of material move in markets ahead of the Fed.

Earnings season is reaching its peak so there are a slew of reports to watch today with: BABA ($1.65), BA ($4.52), T ($0.85) before the open and FB ($2.17), MSFT ($1.09), TSLA ($2.15), V ($1.25), and QCOM ($1.09) all due to report after the close.

Again, earnings and data will be followed today and ultimately will be digested by the market accordingly, but the Fed this afternoon will be the major focus and whether or not the outcome of the meeting is as dovish as recent Fed commentary has been will decide whether the S&P breaks higher towards 2700 or retests initial, key support at 2600.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview

U.S. equity futures are little changed this morning after a generally quiet night as investors focus turns to the Fed.

Late yesterday, the DOJ officially accused Huawei with financial fraud, stealing trade secrets, and sanctions violations and formally requested the extradition of the CFO from Canada which mildly pressured stock futures o/n.

Today, there are two, second tiered economic reports due to be released: S&P Case-Shiller HPI (E: 0.4%) and Consumer Confidence (E: 124.6), and the FOMC meeting begins which will likely bring a sense of “Fed paralysis” over the markets.

Earnings season remains in full swing and there are a few notable corporate releases on the calendar today: VZ ($1.09), MMM ($2.27), PFE ($0.63), AAPL ($4.17), AMD ($0.09), EBAY ($0.68).

If earnings are generally in-line (especially AAPL after the close) then the market will likely remain fairly choppy into tomorrow’s Fed Announcement and Powell’s press conference.

A Sector With Relative Clarity (and Opportunity)

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What’s in Today’s Report:

  • A Sector With Relative Clarity (and Opportunity)

Futures are slightly higher as momentum from yesterday’s positive earnings offset more disappointing economic data.

January flash PMIs in Japan and the EU were disappointing.  The Japanese manufacturing PMI fell to 50.0 vs. (E) 52.4 while the EU Composite PMI dropped to 50.7 vs. (E) 51.4.  But, markets haven’t traded off Japanese data in over a year, and the “Yellow Vest” disruptions are weighing on French PMIs, which dragged the composite EU PMI lower, so these disappointing numbers aren’t weighing on markets as much as they normally would.

Today the big number is the U.S. Flash Composite PMI (E: 54.2), as markets are looking for more signs of economic stabilization following the loss of momentum in December.  Anything that implies stabilization will be stock positive.

We also have an ECB Rate Decision (E: No Change to Rates) and the ECB Press Conference (8:30 a.m. ET) and the key will be whether ECB President Draghi is very dovish given more disappointing economic data (he’s not expected to be materially dovish).

Finally, earnings continue and generally the season, so far, has been better than expected.  Some results we’re watching today include: INTC ($1.22), NSC ($2.30), SBUX ($0.65), WDC ($1.50).

Key Earnings Week

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What’s in Today’s Report:

  • Earnings Update and Outlook

U.S. futures are tracking global shares lower on renewed economic growth concerns after Chinese GDP hit a near three-decade low of +6.6% in 2018 while the IMF reduced 2019 global economic growth forecasts to 3.5% from 3.7%.

Furthermore, news that the U.S. is pursuing formal extradition of Huawei’s Meng Wanzhou from Canada is further weighing on sentiment towards the delicate political relationship between the U.S.-China right now.

There was more underwhelming economic data o/n as the German ZEW headline whiffed (27.6 vs. E: 43.2), underscoring deterioration in analyst confidence in the EU’s largest economy.

Today there is just one economic report to watch: Existing Home Sales (E: 5.240M) and there are no Fed officials scheduled to speak.

That will leave investor focus on earnings and U.S.-China relations. Notable earnings today include: JNJ ($1.95) before the open and IBM ($4.81), COF ($2.40) after the bell.

Valuation Update (Better, But Not Good)

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What’s in Today’s Report:

  • Equity Risk Premium Update – Better, But Not Good
  • Updated Oil Outlook

Futures are marginally weaker following a quiet night as markets as markets further digest the 2019 rally.

Economic data was sparse although Euro Zone Core HICP (their CPI) met expectations at 1.0%, which remains near multi-month lows.

Today focus will remain on earning and we get some notable consumer companies reporting (in addition to more banks).  Some reports we’ll be watching include:  MS ($0.90), PPG ($1.10), NFLX ($0.25),and AXP ($1.79).  As has been the case so far in earnings season, the commentary on the economy will be just as important as the actual results.

We also get two notable economic reports, including Jobless Claims (E: 216K) and the Philadelphia Fed Business Outlook Survey (E: 10.0) plus one Fed speaker: Quarles (10:45 p.m. ET). Bottom line, if earnings continue to beat low expectations, stocks can grind higher for now.

Brexit Vote Preview

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What’s in Today’s Report:

  • Citi Earnings: Not a Bad Start to the Season
  • Brexit “Meaningful Vote” Preview

U.S. futures are modestly higher this morning, tracking gains in Asian shares thanks to chatter of further stimulus measures by the Chinese government.

EU markets are underperforming however as focus remains on today’s Brexit vote and more key bank earnings.

Looking to the Wall Street session, the major focus will be on earnings as JPM ($2.20), WFC ($1.17), and DAL ($1.27) all report before the bell. The banks will be the main focus after C’s results were received well yesterday.

Economically, PPI (E: 0.2%) is due out ahead of the bell while the Empire State Manufacturing Survey (E: 12.0) will print at the top of the 10 o’clock hour. The Empire number could potentially move markets as survey-based data badly underwhelmed in December, contributing to the last wave of significant volatility in 2018.

Lastly, there are three Fed speakers today: Kashkari (11:30 a.m. ET),  Kaplan (1:00 p.m. ET), and George (1:00 p.m. ET) but their comments should not materially move markets as they are expected to reiterate a more dovish stance on future policy.

Market Outlook (After the Bounce)

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What’s in Today’s Report:

  • Market Outlook (After the Bounce)
  • Weekly Economic Cheat Sheet (Important First Looks at January Data)
  • Weekly Market Preview (All About Earnings)

Futures are sharply lower following more disappointing global economic data.

Chinese exports badly missed expectations falling –4.4% vs. (E) 4.8%, further stoking fears of a Chinese economic slowdown.  Data in Europe wasn’t much better, as Euro Zone Industrial Production fell –1.7% vs. (E) 0.5%.

Geopolitically, it was a generally quiet weekend as markets are looking past Trump’s economic threat to Turkey.

There are no notable economic reports today so focus will be on earnings, as the Q4 season officially kicks off with C ($1.55).  The key for this report (and all reports this season) will be the guidance and management commentary – and anything that downplays a slowing global economy will be welcomed by markets.

Rebound Update

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What’s in Today’s Report:

  • Bottom Line: Rebound Update
  • Jobs Report Preview (Abbreviated Version)

Futures are decidedly higher this morning after Chinese shares led global equities higher overnight thanks to continued optimism about a US-China trade deal.

A Bloomberg article released early this morning reported that the Trump Administration has begun working on the terms of a trade agreement to present to President Xi at the G20 spurring sizeable risk-on money flows overnight.

Looking ahead to today’s session, focus will be on economic data early with the Employment Situation (E: 190K), International Trade (E: -$53.3B), and Factory Orders (E: 0.4%) figures all due out within an hour of the open. There are no Fed officials scheduled to speak today.

On the earnings front, there are several notable releases to watch ahead of the bell: BABA ($1.09), XOM ($1.21) and STX ($1.55).

Once earnings and economic data are digested, focus will likely return to momentum, technicals, and any incremental news on trade. On the charts, the S&P’s 200 day moving average is sitting at 2765 which will be an initial upside target if the bullish momentum continues today.

Was Yesterday an “All Clear?”

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What’s in Today’s Report:

  • Dusting Off An Old Leading Indicator for Recessions
  • Was Yesterday an “All Clear?”

Futures are extending Tuesday’s rally thanks to decent overnight earnings and despite universally disappointing economic data.

FB earnings beat after the bell yesterday and the stock rallied 3% after hours, capping a decent day of earnings.

Economically, Chinese Oct. Manufacturing PMI declined to 50.2 vs. (E) 50.6.  Japanese IP and German Retail Sales also missed expectations.

Today focus will remain on earnings.  GM ($1.26) is the highlight but if the broad number of results are “ok” that should continue to help sentiment.  Economically the ADP Employment Report (E: 178K) and Employment Cost Index (E: 0.7%) are the two key reports, and both need to show “Goldilocks” readings (firm but not strong enough to make the Fed hawkish) for this bounce to continue.

What If It Is Peak Earnings? (Market Outlook)

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What’s in Today’s Report:

  • What If It Is Peak Earnings? (It Hasn’t Been That Bad in the Past)

Futures are bouncing from yesterday’s carnage following good earnings reports overnight.

MSFT, F, V, XLNX, TSLA and WHR all posted solid earnings and that is helping stocks to bounce moderately.

Economic data was sparse as German IFO Business Expectations was the only report and it slightly missed estimates.

Today there are actually multiple macro events including an ECB Decision (No Change is expected to rates or QE but we’ll be watching to see if Draghi notes equity market volatility), Durable Goods Orders (E: -1.4%), Jobless Claims (E: 212K) and Pending Home Sales (E: 0.0%) plus there are two Fed speakers:  Clarida (12:15 p.m. ET), Mester (7:00 p.m. ET).

But, despite that busy calendar, barring dovish commentary from the ECB or Fed speakers (which isn’t expected) focus will remain on earnings, and this market needs more solid results to break the current negative feedback loop.