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Economic Breaker Panel Update

What’s in Today’s Report:

  • Economic Breaker Panel: May Update

U.S. stock futures are flat as investors look ahead to today’s release of the FOMC Minutes while most overseas markets bounced o/n in sympathy with the U.S. rally yesterday, although trade tensions remain elevated.

A NYT article released late yesterday revealed a modest escalation in the “tech war” as the U.S. will likely add several Chinese surveillance companies to the same “blacklist” that Huawei is on. This is an incremental negative as the odds of the broader “trade war” being resolved in the near-term continue to fall amid escalations in the U.S.-China “tech war.”

There are no major economic reports today but the calendar is relatively busy with the EIA Petroleum Status Report  due out at 10:30 a.m. ET (oil has traded with a sluggish tone this week and a selloff could drag stocks lower), while the main focus of the session will be on the release of the FOMC Meeting Minutes at 2:00 p.m. ET.

Additionally, there are multiple Fed speakers on the calendar: Williams (10:00 a.m. ET), Bostic (10:10 a.m. ET), and Kaplan (10:15 a.m. ET), however it is unlikely any of them move markets ahead of the Minutes.

Economic Breaker Panel: April Update

What’s in Today’s Report:

  • Economic Breaker Panel Update – More Improvement
  • Earnings Review – Not the Greatest Start

Futures are tracking international shares higher this morning amid dovish central bank speak and earnings optimism.

Both Evans and Rosengren made dovish comments regarding inflation which is helping influence mild risk-on money flows this morning.

Economically, the German ZEW Survey was mixed as the headline weakened for a seventh straight month while the forward looking business expectations rose for the sixth time in a row.

Today, there are two economic reports to watch: Industrial Production (E: 0.3%) and the Housing Market Index (E: 63), and Kaplan speaks at 2:00 p.m. ET.

Earnings however will remain the primary market focus with notable reports being released from BAC ($0.65) ahead of the bell and NFLX ($0.57) and IBM ($2.21) after the close. With a mixed start to the season, if we do not see corporate results begin to improve, underwhelming earnings will become a growing headwind on equities this week.

Economic Breaker Panel: March Update

What’s in Today’s Report:

  • What’s Next for Brexit
  • Economic Breaker Panel – March Update
  • Another (Potentially Bearish) Copper Development

Stock futures are marginally higher this morning after a very quiet night of news while no major international market moved more than 1% overnight.

Asian shares declined modestly after a report that Japanese Machine Orders fell –5.4% in January vs. (E) -1.9%.

In Europe, EU Industrial Production beat expectations (1.4% vs. E: 1.0%) while focus remains on today’s “hard Brexit” vote in the U.K. (which is very unlikely to pass).

Looking into today’s U.S. session, focus will be on economic data early with two reports due ahead of the bell: Durable Goods Orders (E: -0.8%), PPI (E: 0.2%), and one shortly after the open: Construction Spending (E: 0.3%).

There are no Fed officials speaking today so investor focus will shift to the “hard Brexit” vote but it is very unlikely to pass which will result in another vote to delay the Brexit date tomorrow. This scenario is priced in however and should not materially move markets.

Why The Dovish ECB Isn’t Good For Stocks

What’s in Today’s Report:

  • Why The Dovish ECB Decision Isn’t Good for Stocks

Futures are modestly lower following more disappointing economic data.

Chinese exports badly missed expectations at –20.7% vs. (E) -6.5%, although that number was likely skewed by the Lunar New Year, so it’s not as bad as it looks.  German Manufacturers’ Orders also missed (-2.6% vs. (E) 0.5%).  So, the data overnight is just adding to the growth worries that came from the ECB projections yesterday and that’s why stocks are down again.

Today the key will be the Employment Situation Report.  Estimates are:  Jobs: 178K, UE: 3.9%, Wages: 3.4% yoy), and thankfully the range for a “Just Right” number is wide, as we said in our Jobs Report Preview.  But, given the recent soft global economic data, while the range for a “Just Right” number is wide, the penalty for a number being “Too Cold” and causing growth concerns or “Too Hot” and resulting in a hawkish Fed will be extreme, and if either one of those outcomes occur, it’ll likely be a painful day in stocks.

Outside of the jobs report we also get Housing Starts (E: 1.17M) and two Fed Speakers:  Daly (10:00 a.m. ET) and Powell (10:00 p.m. ET).

January Economic Breaker Panel Update

What’s in Today’s Report:

  • Some Improvement in the Economic Breaker Panel: Three Breakers Tripped, January Update

Futures are cautiously higher this morning mostly thanks to optimism about the US-China trade situation as “mid-level” meetings concluded in Beijing overnight.

President Trump’s address to the nation last night regarding border security and the government shutdown did not have a material effect on markets.

Economically, the Eurozone Unemployment Rate fell to 7.9% vs. (E) 8.1% in November but relative to the first half of 2018, the labor market in the EU continues to show signs of losing momentum.

Oil is up over 2% in the wake of the bullish API print late Tuesday that showed a significant draw in oil stockpiles ahead of today’s official weekly EIA report.

There are no economic reports in the U.S. today but several Fed events to watch including speakers: Bostic (8:20 a.m. ET), Evans (9:00 a.m. ET), and Rosengren (11:30 a.m. ET) before the December FOMC Meeting Minutes are released midafternoon (2:00 p.m. ET).

Stocks continue to have positive momentum right now as the trade war backdrop improves and monetary policy outlook has become less hawkish over the last week but the market is becoming moderately overbought at current levels, on a near term basis, and a profit taking pullback should not come as a surprise.

Economic Breaker Panel December Update

What’s in Today’s Report:

  • Economic Breaker Panel December Update (More Signs of Weakness)
  • EIA Analysis – Can the Bounce in Oil Hold?

Futures are slightly higher following a very quiet night of news, as markets digest recent volatility.

There was no change in U.S./China trade overnight but that’s a net positive as there has been legitimate and concrete progress on U.S./China trade over the past week.

Economic data was sparse as German CPI was the only notable number and it met expectations (2.3% yoy).

Today the highlight event is the ECB Meeting (E: No Change to Rates) but other than a potentially dovish tone from Draghi at the press conference, this shouldn’t impact markets too much.  Outside of the ECB, we get Jobless Claims (E: 228K) and Import & Export Prices (E: -1.0%, 0.1%).

Bottom line, geo-political headlines remain key but as long as nothing implies a reversal of U.S./China trade progress, then stocks can extend this rally, led by tech and other China sensitive sectors (industrials, materials, consumer discretionary).

Finally, at a subscribers suggestion (thank you Maria!) we are now including the 10’s-2’s Treasury yield spread in the currencies and bonds table.  Given how close the curve is to inversion, we’ll update that spread daily going forward so you’ll have a consistent place to check and see the latest levels.  We hope you find it useful.

Another Breaker Tripped

What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – October Update: A Macro Breaker Flipped

US stock futures are slightly lower this morning as EU shares are declining on renewed concerns about Italy’s budget despite mostly good economic data overnight.

The Italian Parliamentary Budget Office raised doubts about the government’s growth forecast of 1.5% in 2019 which would ultimately mean a larger budget deficit than previously expected, and that has triggered risk-off money flows this morning.

Economically speaking however, Industrial Production data across Europe was generally better than expected and revisions were mostly positive. While that is currently being overshadowed by the Italian budget drama, it is a positive for the medium term outlook for EU markets.

Today, we get our first of two notable inflation figures this week: PPI (E: 0.2%) as well as Wholesale Trade (E: 0.8%) and there are two Fed speakers to watch: Evans over the lunch hour (12:15 p.m. ET) and Bostic after the close (6:00 p.m. ET).

Otherwise, focus will remain on bond yields and tech shares. For stocks to continue to stabilize or turn higher this week, we will need to see the former hold steady or even pullback slightly and the latter once again outperform.