“The unpredictability of the administration regarding tariffs/trade combined with a late cycle economy and a Fed seemingly on hold makes a 16x multiple…” says Tom Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures are higher as Tuesday’s “squeezy” rally carried over into international markets overnight thanks to the dovish Fed rhetoric over the last 24 hours and a handful of incremental positive macro developments.
Mnuchin will meet with Chinese officials this weekend and there is growing support by Republican Senators to block Mexican tariffs, both of which are trade war positives.
Economic data overnight was mixed but “goldilocks” as EU composite PMIs were largely better than feared, Eurozone Retail Sales were in line with expectations, while inflation statistics came in light.
Today, focus will be on economic data early with the ADP Employment Report (E: 175K) due out ahead of the bell while the ISM Non-Manufacturing Index (E: 55.8) will print shortly after the open.
There is also one Fed speaker: Bostic (9:45 a.m. ET) and if the general tone remains dovish, this week’s short-squeeze in stocks can continue with the S&P approaching the 2850 area.
However, because the macro backdrop has not materially improved so far this week (again the developments have just been “less bad”), it is unlikely at this point that the move is the beginning of a sustainable, longer term rally.
What’s in Today’s Report:
Futures are modestly lower following an uneventful weekend as investors digest Friday’s negative trade headline (that U.S./China trade discussions have been suspended).
On trade, there was no new news over the weekend, but several U.S. tech firms have stopped conducting business with Huawei, per the Commerce Department decision, and that’s just further escalating the U.S./China trade conflict.
Economically, there were no market moving reports (Japanese GDP was stronger than estimates but the details weren’t great).
There are no economic reports today but there are multiple Fed speakers, most important of which is Powell (7:00 p.m. ET), although he’s not expected to make extensive comments on policy. Other Fed speakers today include: Bostic (8:50 a.m. ET), Harker (9:30 a.m. ET), Williams & Clarida (1:00 p.m. ET).
Given the lack of data and important Fed speak, trade headlines should drive markets today and any formal retaliation by China for the Huawei decision will make the trade situation worse, and likely pressure stocks.
What would it take the push the market to new all-time highs? Tom Essaye quoted on Bloomberg to share his view on the market, U.S. – China trade, Fed and more. Read the full article here.
“This met current market expectations,” said Tom Essaye, founder of The Sevens Report. “But Fed officials also didn’t see any need to cut rates at this point either, and there wasn’t even much of a discussion…” Click here to read the full article.
“Looking forward, there’s been material progress in alleviating the earnings growth and Fed worries that caused the Q4 2018 correction. But it would be a…” Click here to read the full article.
What’s in Today’s Report: Seven “Ifs” Updated (Post FOMC and PMIs)
Stock futures are moderately higher with bond yields while the dollar is steady this morning as the volatility from late last week continues to be digested by global investors.
U.K. Parliament took control of the Brexit process from Prime Minister May late yesterday but the news is not having a material impact on markets so far today and there were no market moving economic releases overnight.
In the U.S. today, several reports on the housing market are due out this morning: Housing Starts (E: 1.201M), S&P CoreLogic Case-Shiller HPI (E: 0.3%), and FHFA House Price Index (E: 0.3%) while Consumer Confidence (E: 132.5) will hit in the first hour of trading.
Additionally, there are two Fed speakers ahead of the bell: Harker (8:00 a.m. ET) and then Rosengren (8:30 a.m. ET).
While a lot of news will hit this morning between the economic data and Fed chatter, the primary focus of the stock market will be bond yields and the curve. If yields continued to fall and the curve flattens further, stocks will have a very hard time staying in positive territory as growth concerns will continue to weigh on sentiment.
Tom interviewed with The Ticker’s Jackie DeAngelis on Yahoo Finance to discuss the 7 ‘ifs’ that would have to happen for markets to…Click here to watch the entire clip or click on the video below.
What’s in Today’s Report:
Futures are decidedly higher after Congress reached a deal to avert another government shutdown late yesterday and investors remain optimistic about trade talks between the US and China as negotiations in Beijing continue this week.
The NFIB Small Business Optimism Index fell to 101.2 vs. (E) 103 in January underscoring business owners’ uncertain outlook on the economy.
Today, there is one economic report: December JOLTS (E: 6.950M) and several Fed speakers to watch: Powell (12:45 p.m. ET), George (5:30 p.m. ET), and Mester (6:30 p.m. ET).
As long as Powell does not change his recent narrative when he speaks over the lunch hour, investors will likely remain focused on additional updates regarding the new funding deal lawmakers agreed to late Monday and more importantly, the ongoing trade talks in Beijing.
What’s in Today’s Report:
Futures are trading slightly lower this morning on an uptick in trade war fears following an otherwise quiet night.
After the close yesterday, the WSJ ran an interview with Trump where he said he was ready to move forward with increasing tariff rates (from 10% to 25%) in early 2019 and delaying the hike per China’s request was “highly unlikely.”
Today, there are a few potential catalysts on the schedule. Economically, there are three reports due out: S&P CoreLogic Case-Shiller HPI (E: 0.3%), FHFA HPI (E: 0.3%) and Consumer Confidence (E: 136.5).
Meanwhile on the Fed front, Clarida speaks ahead of the open (7:45 a.m. ET) while Bostic, George, and Evans speak on a panel in NY this afternoon (2:30 p.m. ET).
With Powell’s speech later this week still a major focus of the market, the Fed chatter will be watched closely while the market will remain very sensitive to any further rhetoric on the trade front (the other big event being the G20) after Trump’s comments yesterday afternoon.