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.

Fed Expectations (What’s The Best Scenario?)

What’s in Today’s Report:

  • The Right Fed Expectation for This Market
  • More Proof There’s No Chinese Buyers Strike for Treasuries (That’s a Positive)

Futures are modestly lower following a night of bad micro and macro-economic news.

On the micro front, Broadcom (AVGO), a major semi-conductor company, missed earnings and provided ugly guidance for 2H ‘19, citing the trade war as a major negative on demand.

On the macro front, Chinese economic data was on balance disappointing as Fixed Asset Investment and Industrial Production both missed estimates, although Retail Sales was a mild beat.

Looking ahead to today, the major number is the Retail Sales report (E: 0.7%), and the market would welcome a slightly disappointing number as it would further solidify the expectations for a Fed rate cut in July, and likely spur a rebound this morning. We also get Industrial Production (E: 0.2%) and Consumer Sentiment (E: 98.4) this morning as well.