S&P 500 At 3000? (Not So Fast)

What’s in Today’s Report:

  • One of Two S&P 500 3000 Conditions Met
  • Why the Dollar and Bond Yields Have Decoupled

Futures are little changed following a night of no new trade news and slightly underwhelming economic data.

Global markets all rallied on momentum from the Thursday gains in the U.S., but nothing new occurred on trade overnight.

Economic data was slightly disappointing as EU Composite PMI (54.2 vs. (E) 54.3) slightly missed estimates while EU Manufacturing PMI (53.3 vs. (E) 54.2) badly missed.

Today focus will be on the U.S. September PMI Composite Flash (E: 55.1), and as always we’ll be looking for stability in the economic data to imply this strong economy isn’t losing momentum.  Additionally,  today is quadruple witching options expiration, so don’t be surprised by big volumes and an uptick in volatility into the close.

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Yield Curve Update (Positive)

What’s in Today’s Report:

  • Bank Update – Positive Catalyst Looming?
  • 10’s-2’s Curve Update (Positive)
  • Weekly EIA and Oil Outlook

Futures are very slightly higher following a quiet night of news.

There was no trade news overnight so cautiously optimistic sentiment towards trade remained in place – and all eyes remain on next week’s U.S./China summit which, for now, is still on.

British Retail Sales was the only notable economic report, and it beat estimates at 0.3% vs. (E) 0.1%, continuing a recent run of good British data.

Today focus will be, of course, on any trade headlines, especially pertaining to next week’s U.S./China trade summit.  Beyond that, we get some notable economic data, starting with Philadelphia Fed Business Outlook Survey (E: 19.2).  We also get Jobless Claims (E: 210K) and Existing Home Sales (E: 5.360M) although neither should move markets.

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Emerging Market Update (Positive Risk/Reward)

What’s in Today’s Report:

  • Emerging Market Update (Finally A Positive Risk/Reward?)
  • A Path to Higher Bond Yields?

Futures are slightly higher as Chinese economic data was mixed but didn’t contain any negative surprises.

Chinese Fixed Asset Investment (5.3% vs. (E) 5.5%) and Industrial Production (6.0% vs. (E) 6.1%) missed estimates while Retail Sales (9.0% vs. (E) 8.8%) beat expectations.  So, while results were mixed, the data wasn’t weak enough to offset the positive EM news yesterday so momentum remains positive.

Today focus will be on economic data, and specifically the Retail Sales report (E: 0.4%), as strong consumer spending remains a critical part of U.S. economic growth.  We also get Industrial Production (E: 0.4%) and Consumer Sentiment (E: 97.0) and there is one Fed speaker, Evans (9:00 a.m. ET).

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Question on Banks

What’s in Today’s Report:

  • Subscriber Question on Banks
  • EIA’s Short Term Energy Outlook Analysis
  • Dollar Technical Update

Despite a handful of headlines regarding trade and emerging markets overnight there were no material macro developments leaving US futures, the dollar, and global shares little changed overnight.

The EU’s Juncker jawboned about trade o/n (but no policy change) and the Turkish Central Bank are set to raise rates tomorrow, but neither was a surprise or moved markets materially.

Economically, Eurozone Industrial Production fell -0.8% vs. (E) -0.5% in July pointing to a disappointing slowdown in Q3 manufacturing growth.

In the face of the recent dollar strength, investors were hoping to see better economic data in Europe rally the euro and pressure the dollar, but that is unfortunately not playing out so far in Q3.

Looking ahead to today’s Wall Street session, there is one inflation metric to watch: PPI (E: 0.2%), but unless it is a big surprise, it will likely be shrugged off ahead of the CPI report tomorrow. Additionally, there is one Fed speaker today: Brainard (12:45 p.m. ET).

With a lack of any notable, scheduled catalysts, focus will likely remain on US tech shares and any trade developments (and their subsequent influence on the dollar). As long as tech trades ok and the dollar doesn’t materially rally, stocks broadly should be able to continue to drift higher this week.

Read the detailed analysis here.

The Key Event This Week (Not What You Think)

What’s in Today’s Report:

  • The Most Important Central Bank Meeting This Week (it’s Not What You Think)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

Futures are modestly higher thanks to decent Chinese economic data, following a generally quiet weekend.

Chinese August exports beat expectations, rising 10.0% vs. (E) 9.8%, providing more evidence that economic stimulus measures from Chinese officials are starting to work.

On trade, Friday afternoon President Trump again threatened to tax all Chinese exports to the U.S., but that threat is a repeat, and nothing new happened over the weekend.

Today there are no economic reports and only one Fed speaker, Bostic (11:30 a.m. ET), so focus will remain on any trade headlines regarding the $200 billion in additional Chinese tariffs.  Any hints the tariffs are imminent and near the stated total of $200 billion will hit markets, and without support from the tech sector, the chances of a short term pullback in stocks remain uncomfortably high.

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Tariff Preview: Good, Bad, Ugly

What’s in Today’s Report:

  • Tariff Preview:  Good, Bad & Ugly

Futures are modestly lower following a night of mixed economic data and a somewhat negative trade headline.

The WSJ published a trade article that implied the chances of a near term U.S./China deal were declining, but also said a decision on the 200 bln in new tariffs was weeks away.

Economic data was mixed as German Industrial Production missed estimates (-1.1% vs. (E) 0.3%) while Japanese Household Spending beat (0.1% vs. (E) 1.0%).

Today focus will be on the jobs report, and the expectations are: Jobs (E: 195K), Unemployment (E: 3.8%) and Wages (E: 0.3% m/m, 2.8% y/y).  As has been the case for the last few jobs report, as long as we don’t have “3’s” across the board (300k job adds, 3% unemployment and 3.0% yoy wage gains) this report shouldn’t be too much of a headwind on stocks.

Finally, in addition to the jobs report we also have two Fed speakers, Rosengren (8:30 a.m. ET) and Mester (9:00 a.m. ET), but neither should move markets.

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Gasoline and heating-oil futures – Tyler Richey on Market Watch, September 6, 2018

“Gasoline and heating-oil futures are still in the driver seat of the energy markets, after early week rallies due to [Gulf storm] Gordon have steadily come unwound since the short trading week started on Tuesday,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch.

Read the full article here

Five Big Catalysts Left

What’s in Today’s Report:

  • Five Catalysts to Decide the Year (Abridged Version)
  • ISM Manufacturing PMI Takeaways
  • Hurricane Gordon and Energy Markets

Futures are down roughly 10 points, the dollar is modestly higher, and international markets were broadly lower o/n amid fresh trade angst and concerns that the Chinese economy may be slowing.

The privately published Caixin China General Services PMI fell to a five month low in August, contradicting government data that showed continued growth last month.

Today, investor focus will return to trade as talks with Canada are set to resume and the initial tariff deadline for the next wave of tariffs on China, looms.

There is one economic report to watch: International Trade (E: -$50.2B), and several Fed speakers on the schedule: Williams (12:30, 3:00, 5:30 p.m. ET), Kashkari (4:00 p.m. ET), and Bostic (6:30 p.m. ET).

The dollar remains the single best indicator for near term moves in the market right now, so if the dollar continues to extend last week’s rally, stocks will likely remain under pressure, especially emerging market shares. But, if the dollar starts to fade, and fall back towards key support, stocks should be able to retest recent highs.

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Weekly Market Outlook

What’s in Today’s Report:

  • Weekly Market Outlook

Futures are marginally higher this morning and global markets were mostly flat overnight after a very quiet and uneventful holiday weekend as focus turns to data this week.

Economically, Eurozone PPI was solid at 4.0% YoY, but most of the rise was due to energy prices and core inflation levels remain slow but steady in the EU.

Energy prices are notably higher this morning due to Tropical Storm Gordon’s near term threat to Gulf oil operations.

Today, focus will be on economic data early: ISM Manufacturing Index (E: 57.6) and Construction Spending (E: 0.4%) while there are no Fed speakers scheduled to speak.

Beyond data, investors will largely be focused on trade relations this week, more so with China but negotiations with Canada will also be important.

The dollar has been a good, inverse indicator for investor sentiment towards trade and it is handily higher this morning. If the dollar strength continues, it will be hard for stocks to continue last week’s gains this week.

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