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What Market Bulls Are Assuming

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What’s in Today’s Report:

  • What Market Bulls Are Assuming
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Are Jobless Claims About to Rise Again?)

Futures are sharply higher thanks mostly to momentum from a big rally in Chinese stocks.

The Shanghai Composite surged nearly 6% on Monday, despite the lack of a discernable, positive catalyst.  Growing confidence in the economic recovery combined with a flood of retail investment fueled the stock gains.

In the U.S., coronavirus cases continued to rise over the weekend, although there was no material acceleration from the pace of the past several days.

Today the key economic report is the June ISM Non-Manufacturing PMI (E: 49.0), and if that can break above 50 that will be further confirmation that the economic recovery is happening faster than most thought possible (and it should be a tailwind on stocks).  Additionally, the White House has teased an announcement today of positive developments in treatment of the coronavirus, although the exact timing of this announcement, and what exactly it entails, is unclear.

Has There Been A Positive Change?

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What’s in Today’s Report:

  • Has There Been A Positive Change in Markets?
  • Jobs Day

Futures are solidly higher thanks mostly to continued momentum following Wednesday’s rally.

Economic data was sparse overnight, as the only notable report was the Eurozone Unemployment Rate, which slightly beat estimates (7.4% vs. (E) 7.7%).

Coronavirus cases continued to rise in the U.S. and hit a new daily record above 50k.

Today the focus will be on the Employment Situation Report, and the expectations are as follows: Job Adds: 3.000M, UE Rate: 12.4%, Wages: -0.8%).  As long as the number isn’t a major disappointment (say below 2.5MM) it likely won’t interrupt this week’s lift in markets.

We also get Jobless Claims (E: 1.400M) this morning, and while it’ll be overshadowed by the monthly jobs report, claims are actually more important, and if they can continue to decline towards 1MM (and beat expectations) that will be an additional tailwind on stocks.  Conversely, if claims start to move higher, that could offset even a better than expected monthly jobs report.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • A Historic Quarter for the Energy Markets

Stock futures are trading modestly lower this morning after the S&P 500 registered its best quarterly gain in over 20 years in Q2 while economic data was mostly better than expected overnight.

Economically, China’s Caixin Manufacturing PMI firmed to 51.2 in June from 50.7 in May while the Eurozone Manufacturing PMI rose to 47.4 from 39.4 in May pointing to a continued rebound in economic activity last month.

Today, we will get our first look at June jobs data with the ADP Employment Report (E: 3.500M) due out ahead of the bell while the ISM Manufacturing Index (E: 49.0) and Construction Spending (E: 0.8%) will both be released shortly after the open.

Later in the day, the only real catalyst to watch for is the release of the latest FOMC Meeting Minutes at  2:30 p.m. ET as traders will be looking for any additional insight into the Fed’s future stimulus plans or view of the state of the economy.

Risks to the Stimulus Driven Rally

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What’s in Today’s Report:

  • Bottom line: Risks to the Stimulus Driven Rally

Stock futures are slightly lower this morning as investors weigh a continued rise in coronavirus cases and escalating geopolitical tensions against positive economic data.

China’s CFLP Manufacturing PMI rose to 50.9 vs. (E) 50.5 in June indicating an acceleration in the economic recovery.

China’s parliament passed a new national security law for Hong Kong o/n but specific details have yet to be released.

Today, there are two economic reports to watch: S&P Case-Shiller HPI (E: 0.5%) and Consumer Confidence (E: 90.0) as well as a slew of Fed speak to monitor: Williams (7:00 & 11:00 a.m. ET), Powell (12:30 p.m. ET), Bostic (2:00 p.m. ET), and Kashkari (2:00 p.m. ET).

Powell’s testimony before Congress, alongside Treasury Secretary Mnuchin, will be the “main event” today and as long as they reiterate their plans for stimulus measures to continue for the foreseeable future, stocks should be able to end the second quarter in a relatively quiet manner this afternoon.

Are Rising COVID Cases A Reason to De-Risk?

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What’s in Today’s Report:

  • Is the Increase in COVID Cases a Reason to De-Risk?
  • Weekly Market Preview (Can the S&P 500 Hold 3000?)
  • Weekly Economic Cheat Sheet (Jobs Report on Thursday)

Futures are slightly higher following a quiet weekend as markets attempt to bounce following Friday’s selloff.

Coronavirus cases continued to rise, with new U.S. cases topping 40k for Friday, Saturday and Sunday.  More states (including California) are pausing re-openings, although none have re-imposed economic restrictions yet.

Economic data was sparse overnight as Euro Zone Economic Sentiment slightly missed expectations (75.7 vs. (E) 80).

Today there is just one economic report, Pending Home Sales (E: 11.3%) and one Fed speaker, Williams (3:00 p.m. ET) and neither should move markets.

Instead, focus will remain on the coronavirus and specifically whether more states pause, and potentially rollback, economic re-openings. Technically, the S&P 500 is sitting on support at 3,000, and if that’s broken, we could see a uptick in selling by programs and algos.

New Coronavirus Growth Rate Tracker

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What’s in Today’s Report:

  • New Sevens Report Coronavirus Growth Rate Tracker (We Made an Important Change)

Futures are slightly higher as markets digest Thursday’s afternoon rally following a quiet night of news.

Coronavirus trends continued to deteriorate as the U.S. set a new daily high for new coronavirus infections (40,184).

But, no additional companies announced plans to slow re-openings, so the market is looking past the spike in cases for now.

There was no notable economic data out overnight.

Today there are two economic reports, Core PCE Price Index (E: 0.1%) and Consumer Sentiment (E: 78.9), but neither should move markets.  Instead, focus will remain on the coronavirus and as long as there aren’t any major corporations announcing a delay in re-opening plans, markets will continue to look past the surging coronavirus infections.

Why Surging Coronavirus Cases Aren’t Causing a Selloff

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What’s in Today’s Report:

  • Why Surging Coronavirus Cases Aren’t Causing a Selloff
  • Technical Take: S&P 500

Stock futures are trading higher with international shares as conflicting trade war headlines continue to be digested while economic data was mostly encouraging overnight.

White House trade advisor, Peter Navarro, said late Monday that the U.S.-China trade deal was “over,” but his comments were contradicted by a Trump tweet saying the deal was “intact,” which saw risk-off money flows reverse o/n.

Global Composite Flash PMIs largely topped expectations overnight, bolstering hopes that a swift economic recovery is underway.

Today, investor focus will be on economic data early as the U.S. Composite PMI Flash (E: 45.0) and New Home Sales (E: 630K) are both due out shortly after the opening bell.

There are no Fed officials scheduled to speak today but there is a 2-Year Treasury Note auction at 1:00 p.m. ET that could impact the yield curve and ultimately move the equity markets in the afternoon.

Aside from those potential catalysts, any further developments regarding the trade war or coronavirus infection rates will be closely watched as the market continues to look for direction with the S&P being tightly rangebound for the last week.

The Current Tug of War in this Market

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What’s in Today’s Report:

  • The Current Tug Of War in this Market
  • Weekly Market Preview:  Do Rising Coronavirus Cases Matter?
  • Weekly Economic Cheat Sheet:  Tomorrow’s Global Flash PMIs Are The Key Report This Week

Futures are moderately higher despite generally negative news over the weekend (the news wasn’t terrible, but it wasn’t good either, and certainly not worth a 75 bps rally in futures).

Coronavirus cases continue to move higher, as new cases rose above 30k in the U.S. for the first time since early May.

Politically, President Trump’s Tulsa rally undershot expectations, highlighting a still challenging path to re-election (the market still views the Trump administration is more business friendly than a Biden administration, yet despite the polls, markets are not pricing in virtually any chance of a Biden win in November, and we think that’s a risk going forward).

Today the calendar is quiet as there is only one economic report, Existing Home Sales (E: 4.29M).  So, incremental coronavirus headlines will likely move markets, and if we get any more headlines about companies closing stores/businesses in Florida/Arizona/Texas/California, that should weigh on markets.

New S&P 500 Measured Move Targets

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What’s in Today’s Report:

  • New S&P 500 Measured Move Targets

Futures are solidly higher following a generally quiet night as markets again try to extend this week’s rally.

Economically, British Retail Sales were much stronger than expected, rising 12% vs (E) 6.5% and adding to the better than expected data this week.

New daily coronavirus cases continued to increase in the U.S., but markets for now continue to look past the recent uptick.

Today there are no notable economic reports, although there are multiple Fed speakers including: Powell (1:00 p.m. ET), Rosengren (10:15 a.m. ET), Quarles (12:00 p.m. ET), Mester (1:00 p.m. ET).  But, given Powell’s testimony earlier this week, it’s unlikely any of the Fed officials say anything to materially move markets.

Finally, today is a “quad witch” quarterly options expiration, so we should expect big volumes and an uptick in volatility into the close.

The Four Phases of Fiscal Stimulus Explained

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What’s in Today’s Report:

  • The Four Phases of Fiscal Stimulus Explained
  • Weekly EIA Data Analysis and Oil Update

Stock futures are slightly lower this morning following a risk-off night of trade thanks to ongoing concerns about rising COVID-19 infections in the U.S., Europe, and China.

There were no market moving economic reports overnight however the 7-day moving average of daily new cases of coronavirus in the U.S. reached a one-month high yesterday which is pressuring risk assets this morning.

It is lining up to be a busy morning as the BOE Meeting Announcement will hit at the top of the 7 o’clock hour (ET), before U.S. economic data kicks off at 8:30 a.m. ET with: Jobless Claims (E: 1.220M) and the Philadelphia Fed Business Outlook Survey (E: -22.7), and then after the bell, Leading Indicators (E: 1.7%) will be released.

There are also three Fed officials scheduled to speak today: Kashkari (E: 11:00 p.m. ET), Mester (12:15 p.m. ET), and Daly (7:00 p.m. ET) but investors have been largely focused on coronavirus headlines over the last 12-18 hours so any fresh developments on testing, new case trends, or treatments will likely move markets.