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An Analogy To Explain This Market (Investors Loved It)

What’s in Today’s Report:

  • An Analogy to Help Explain This Market (Investors Loved It)
  • Weekly Market Preview (Trade and Data Remain the Focus)
  • Weekly Economic Cheat Sheet (Global Growth Updates This Week)

Futures are modestly higher as global markets extended Friday’s jobs report and trade-driven rally.

On trade, U.S. and Chinese officials again repeated that substantial progress has been made on Phase One, while Wilbur Ross downplayed chances of auto tariffs (something that wasn’t ever priced into the market but was a peripheral risk).

Economically, EU and British manufacturing PMIs slightly beat estimates but remained in contraction territory (45.9 and 44.2 respectively).

Today there is one economic report, Factory Orders (E: -0.5%), and normally I don’t follow it, but it’ll give us greater insight into the current state of business spending, so a better than expected reading there will be a positive.  Additionally, there is one Fed speaker, Daly (3:05 p.m. ET) but she won’t move markets as Clarida and Powell made future Fed policy very clear last week – they’re done cutting barring an economic rollover.

What the U.S./China Trade Deal Means for Markets

What’s in Today’s Report:

  • What the U.S./China Trade Deal Means for Markets
  • Weekly Market Preview (All About Earnings)
  • Weekly Economic Cheat Sheet (Important Growth Data This Week)

Futures are modestly lower following reports that China wants “more talks” before signing phase one of Friday’s “deal.”

More broadly, there is some disappointment with Friday’s announcement as it does not provide material tariff relief or trade clarity (more on that in the issue).

Economically, Chinese exports missed estimates falling –3.2% vs. (E) -3.0% and that’s also weighing on sentiment as markets still need global growth to stabilize.

Today is the Columbus Day holiday so there are no economic reports or Fed speakers while banks and the bond markets are closed.  Given that, we can expect any U.S./China trade related headlines to again drive markets until the focus shifts to earnings tomorrow.

Is It Too Late for a Trade Truce?

What’s in Today’s Report:

  • Is It Too Late for a Trade Truce?
  • Weekly Market Preview (All About U.S./China trade)
  • Weekly Economic Cheat Sheet

Futures are modestly lower on digestion following Friday’s big rally, although there was also more soft economic data and a slightly negative U.S./China trade article.

German Manufacturers’ Orders missed expectations, falling -0.6% vs. (E) -0.4% and it’s yet another disappointing global manufacturing datapoint.

A Bloomberg article Sunday afternoon was a mild negative as it lowered expectations for a broad trade deal at this week’s talks, but there was no new news revealed.  To that point, we need to all brace for an avalanche of U.S./China trade headlines as we approach the Thursday start of senior-level talks, but cutting past the noise, the expectation is for a “Trade Truce” so anything that contradicts that expectation will be a negative for markets.

Today there is no notable economic data and two Fed speakers: Kashkari (10:20 a.m. ET) and Powell (1:00 p.m. ET).  Powell is clearly the more important of the two, but he’s giving opening remarks at a movie screening about the Fed (seriously) so I don’t think he’ll say anything market moving.

How Much Have Things Improved?

What’s in Today’s Report:

  • Updated Market Outlook:  How Much Have Things Improved?
  • Weekly Market Preview (ECB Thursday is the Key)
  • Weekly Economic Cheat Sheet (Retail Sales Friday)

Futures are marginally higher following a generally quiet weekend as markets continue to digest some (very) mild progress on U.S./China trade.

Economic data was mixed as Chinese exports missed expectations (-1.0% vs. (E) 2.5%) while German exports (0.7% vs. (E) -0.5%) and British Industrial Production (0.3% vs. (E) 0.1%) both beat expectations.

But, the reports aren’t moving markets as focus is on central banks this week (specifically the ECB on Thursday).

Today there are no notable economic reports nor are there any Fed speakers (they are entering the “blackout” period ahead of next Wednesday’s meeting) so we’ll be watching for any trade related headlines, and any continued improvement in the “tone” of relations will continue to support stocks.

What’s Next for Markets

What’s in Today’s Report:

  • What’s Next For Markets
  • Weekly Market Preview (Key earnings this week)
  • Weekly Economic Cheat Sheet (Important Growth Updates Wed/Thurs)

Futures are modestly lower following a quiet weekend as civil unrest in Hong Kong weighed on investor sentiment.

Protests in Hong Kong, which have been ongoing for weeks, intensified over the weekend as all flights out of Hong Kong have been canceled.  The turmoil is just adding to general geopolitical concerns and that’s pushing bond yields lower, which is why stock futures are down.  The 10 year Treasury yield broke below 1.70% this morning and is trading as of this writing at 1.68%.

Economic data was sparse over the weekend and there was no new news on U.S./China trade.  The next event in this drama is whether the September trade talks still occur (for now the answer is “yes” but that could change at any minute and if it does, stocks will drop).

Today the calendar is quiet as there are no economic reports and no Fed speakers, but any China related headlines will move markets.

The Most Important Week of the Year

What’s in Today’s Report:

  • Fed Week – Why This is the Most Important Fed Decision of the Year
  • Weekly Market Preview – Will the Fed Meet Incredibly Dovish Expectations?
  • Weekly Economic Cheat Sheet – One of the Busiest Weeks of the Year (Jobs Report, Inflation Data, Global PMIs)

Futures are little changed following a quiet weekend as all eyes now turn to the Fed decision on Wednesday.

Former Fed Chair Yellen endorsed a rate cut over the weekend, but did not advocate for sustained easing.   And, this gets right to the heart of this market.  We know the Fed will cut 25 bps this week, but we don’t know if they’ll signal the start of a sustained easing campaign (i.e. 75-100 bps of cuts by year-end) and that’s something the market has already aggressively priced in at these levels.

Economic data was sparse over the weekend although Japanese Retail Sales (0.3% vs. (E) 0.1%) beat estimates.

There was no notable U.S.-China trade news over the weekend and expectations are low for any actual progress at the talks this week.

Today there are no notable economic reports nor any important central bank speak, so focus will remain on earnings (this is the last important week of earnings) and on any U.S.-China trade headlines (although none are expected).

Fed Expectations and Earnings

What’s in Today’s Report:

  • Weekly Market Preview (Fed Expectations and Earnings)
  • Weekly Economic Cheat Sheet (July Flash PMIs this week).

Futures are slightly higher on positive U.S.-China trade headlines following an otherwise quiet weekend.

Tech firms will meet today with administration officials to discuss the Huawei tech ban, while multiple reports stated China will increase soybean purchases and a face to face meeting between Chinese & U.S. officials could occur soon.

Fed policy expectations continue to shift back to a 25 basis point rate cut next week as hope for a 50 basis point cut continues to recede.

Today there are no economic reports and no Fed speakers as we enter the “quiet period” ahead of next Wednesday’s rate decision.  So, there’s not much on the calendar today that could cause volatility, although headlines from the tech company/administration meeting today on Huawei is something to watch, as any hints at relaxing of the ban will be a mild positive for stocks.  Earnings are sparse today as well although I’ll be watching Whirlpool (WHR $3.80) results after the close for any insight into the state of the U.S. consumer.

What the Strong Jobs Report Means for Markets

What’s in Today’s Report:

  • What Friday’s Jobs Report Means for the Markets
  • Weekly Market Preview (Powell’s testimony is the big event this week)
  • Weekly Economic Cheat Sheet (Fed Minuets and CPI)

Futures are slightly lower this morning following a quiet weekend of news, as markets digest what Friday’s jobs report means for future Fed rate cuts.

Following the jobs report, investors still expect a rate cut this month, but what’s now in doubt is whether we see additional cuts after that, something the market is assuming and has already priced in.  Doubts over the number of future cuts is why stocks dipped Friday and are marginally lower this morning.

Economic data was again underwhelming as Japanese Machine Orders (-7.3% vs. (E) -3.0%) and German Industrial Production (-3.7% vs. (E) -3.2%) missed estimates, while German exports were slightly better (-1.1% vs. (E) -0.9%).

The important events this week come Wednesday via Fed Chair Powell’s testimony before Congress (will he telegraph a rate cut?), the FOMC Minutes (also out Wednesday – is there consensus for a cut?) and CPI (out Thursday).  So, today should be generally quiet as there are no economic reports or notable Fed speakers, although U.S.-China trade negotiations will re-start, so we’ll have to watch for any headlines from there.

S&P 500 Back At 2900: What’s Changed Since October

What’s in Today’s Report:

  • S&P 500 Back At 2900:  What’s Changed Since October.
  • Weekly Market Preview (All About Earnings)
  • Weekly Economic Cheat Sheet (More Important Chinese Data)
  • I’ll be joining Liz Claman on Countdown to the Closing Bell at 3:55 p.m. today on Fox Business to Discuss the Markets.  Tune In!

Futures are flat following a quiet weekend as markets digest last week’s rally.

Expectations of a U.S./China trade deal continue to rise, with some anticipating an announcement this week.  The WSJ, Reuters and others had positive articles this morning.  But, as a reminder, the market has already priced in a deal, so the real focus of any announcement will be when tariffs are removed, and the sooner, the better.

There was no notable international or U.S. economic data overnight.

Today there is one notable economic report, Empire State Manufacturing Index (E: 6.8) and one Fed speaker, Evans at 8:30 a.m. & noon.  Given that somewhat light calendar, focus will be on earnings, and some numbers we are watching today include: C ($1.78), GS ($5.05), JBHT ($1.25).  If data and earnings are solid, this rally can continue.

Can The S&P 500 Breakthrough 2900?

What’s in Today’s Report:

  • The Next Positive Catalyst For Stocks (Potentially)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Chinese Exports The Big Number This Week)

Futures are slightly weaker following a generally quiet weekend as markets digest last week’s rally.

Economic data was mixed and is putting mild pressure on stocks this morning as German exports missed expectations (-1.3% vs. (E) 0.1%), reminding markets the global economy isn’t healed yet.

U.S./China trade talks ended last week without an announcement of a deal but talks will continue this week via video-conference and a deal is still widely expected.

Today there are no economic reports and no Fed speakers, so focus will remain on any U.S./China headlines (again a deal could be announced any minute).  But, barring any surprises today should be generally quiet as the big events of the week (FOMC Minutes, Chinese data, bank earnings) happen Wed-Friday.