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Economic Breaker Panel Update

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What’s in Today’s Report:

  • Economic Breaker Panel: May Update

U.S. stock futures are flat as investors look ahead to today’s release of the FOMC Minutes while most overseas markets bounced o/n in sympathy with the U.S. rally yesterday, although trade tensions remain elevated.

A NYT article released late yesterday revealed a modest escalation in the “tech war” as the U.S. will likely add several Chinese surveillance companies to the same “blacklist” that Huawei is on. This is an incremental negative as the odds of the broader “trade war” being resolved in the near-term continue to fall amid escalations in the U.S.-China “tech war.”

There are no major economic reports today but the calendar is relatively busy with the EIA Petroleum Status Report  due out at 10:30 a.m. ET (oil has traded with a sluggish tone this week and a selloff could drag stocks lower), while the main focus of the session will be on the release of the FOMC Meeting Minutes at 2:00 p.m. ET.

Additionally, there are multiple Fed speakers on the calendar: Williams (10:00 a.m. ET), Bostic (10:10 a.m. ET), and Kaplan (10:15 a.m. ET), however it is unlikely any of them move markets ahead of the Minutes.

Trade Update: Good/Bad/Ugly

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What’s in Today’s Report:

  • Trade Update: Good/Bad/Ugly

Futures are rebounding with EU markets from yesterday’s sharp, tech-led losses thanks to some encouraging Huawei news o/n and a benign speech by Powell late Monday.

The U.S. announced some temporary exemptions will be issued for companies exporting to Huawei (mainly for existing products) which is helping ease some of yesterday’s elevated trade angst.

Overseas, there were no notable economic reports but the RBA cited risks to global growth in their most recent meeting minutes release, which pressured the aussie.

Looking into today’s U.S. session, focus will largely remain on the trade war and specifically any further information on the Huawei exemptions for U.S. exporters.

There are a few other potential catalysts however, including one economic report: Existing Home Sales (E: 5.37M) and a few Fed speakers: Bostic (7:50 a.m. ET), Evans (10:45 a.m. ET), and Rosengren (12:00 p.m. ET) but none of these are expected to materially move markets amid the most recent trade war developments.

Updated Market Outlook

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What’s in Today’s Report:

  • Updated Market Outlook (Post U.S./China Trade Breakdown)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

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.

 

Another Update From Dr. Copper (It’s Been Right)

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What’s in Today’s Report:

  • Another Update From Dr. Copper (It’s Been Right)

Futures are modestly weaker following disappointing Chinese economic data.  Nothing new happened over night with U.S./China trade.

Chinese Retail Sales (7.2% vs. (E) 8.6%), Fixed Asset Investment (6.1% vs. (E) 6.4%) and Industrial Production (5.4% vs. (E) 6.3%) all missed estimates, implying the Chinese economic recovery might not be as solid as thought.

Today focus will shift back to economic data.  The Chinese data was underwhelming and that will put more pressure on today’s U.S. data to reassure markets about growth.

The key reports today (in order of importance) are:  Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 9.0), Industrial Production (E: 0.0%), Housing Market Index (E: 64).  Again, “bad” numbers from these reports that makes the Fed more dovish may cause a temporary bounce in stocks, but that’s not good for stocks in the medium/longer term.

Finally, there are two Fed Speakers, Quarles (9:30 a.m. ET) and Barkin (1:00 p.m. ET) but neither should move markets.

Trade War Update (After Tariff Increases)

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What’s in Today’s Report:

  • Tariff/Trade War Update

Futures are marginally weaker as the U.S. increased tariffs on Chinese imports, as expected.

Positively, the trade talks will continue today, and the consensus market outlook remains that a deal does get done, likely in the next few weeks.

Away from trade, economic data was solid.  Japanese Household Spending, British GDP and UK Industrial Production all beat estimates.

Today most of us will spend the day watching for any trade related headlines, and there are likely to be plenty.  But, barring a total breakdown in negotiations, trade shouldn’t be too big of a negative on markets today.

Away from trade, we also get the most important economic data point of the week:  CPI (E: 0.4%).  PPI was more firm than it seemed, and if CPI is also firm then that will reduce the possibility of a preventative Fed rate cut, which will be another headwind on stocks.  Finally, there are multiple Fed speakers today: Brainard (8:30 a.m. ET), Bostic (9:05 a.m. ET), Williams (10:00 a.m. ET) but none should move markets.

When Is the Dovish Fed Good for Stocks?

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What’s in Today’s Report:

  • When Is the Dovish Fed Good for Stocks? It’s the Difference Between “Aggressive” and “Appropriate”

Stock futures are trading lower by 0.50% this morning as trade tensions escalated further late Monday with several U.S. trade officials confirming plans to hike tariffs Friday.

Overnight, it was reported that Chinese Vice-Premier Liu He would still come to the U.S for negotiations this week but for just 2 days rather than the originally planned 4 which was seen as an incremental negative.

Economically, German Manufacturers’ Orders rose 0.6% vs. (E) 1.0% in March which weighed modestly on EU shares.

Looking into today’s session, trade news will still dominate the markets however there are a few other catalyst to watch including March JOLTS data (E 7.215M) and one Fed speaker: Kaplan (7:00 a.m. ET).

What New Tariff Threats Mean for Markets

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What’s in Today’s Report:

  • What Trump’s Tariff Threats Mean for Markets
  • Updated Market Outlook (Beyond Tariffs/Trade)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (All About Inflation)

Futures are sharply lower after President Trump renewed tariff threats against China, putting the expectation for a U.S./China trade deal in doubt.

President Trump threatened to increase tariffs on Chinese imports to 25% on 200 billion this Friday if a trade deal is not complete.

Outside of trade, economic data was mixed.  Chinese composite PMI declined (52.7 vs. (E) 52.9) while Euro Zone composite PMI and retail sales slightly best estimates.

Today there is one Fed Speaker: Harker (9:30 a.m. ET) but obviously the focus of markets will be on any trade updates.  As of this writing, the Chinese trade delegation is still coming to the U.S. for more negotiations this week.  If that is cancelled, look for stocks to take another leg lower.  Conversely, if it’s announced Chinese Vice-Premier Liu He is attending the talks, that will be a positive.

From a technical standpoint, 2890 in the S&P 500 is notable support and if that’s broken, selling could accelerate.

Will the Fed Cut Rates?

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What’s in Today’s Report:

  • FOMC Preview

U.S. futures and most international equity markets were mildly lower overnight after corporate results from GOOGL missed estimates while economic data was mixed.

China’s PMI Manufacturing Index fell to 50.2 from 50.8 in April (but importantly remained above 50, in expansion territory) while the Eurozone Q1 GDP Flash was 1.2% vs. (E) 1.1% year-over-year which helped ease recently rising concerns about weakness in EU growth metrics.

Looking into today’s session, the calendar remains busy however with the FOMC Meeting getting underway, it would take a material surprise in economic data or multiple earnings shocks to really move the market ahead of tomorrow’s Announcement and Powell’s press conference.

Economically, there are four releases to watch this morning: Employment Cost Index (E: 0.7%), S&P Case-Shiller HPI (E: 0.3%), Consumer Confidence (E: 127.0) and Pending Home Sales (E: 0.7%).

On the earnings front, there are several notable companies releasing reports today including: GE ($0.09), MA ($1.67), BP ($0.68%), GM ($1.09), PFE ($0.76), and STX ($0.72) before the open and AAPL ($2.37) and AMD ($0.05) after the market close.

An Update from Dr. Copper

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What’s in Today’s Report:

  • An Update from Dr. Copper

Futures are little changed following more U.S./China trade optimism and mixed earnings.

President Trump said he expects to host Chinese Premier Xi at the White House “soon” and a trade deal could be signed in June.

Earnings after the bell were mixed at INTC badly missed, while F and AMZN both posted solid numbers.

There was no material economic data overnight.

Today should be a generally quiet day as the volume of earnings reports subsides (reports we’re watching include XOM ($0.75), AAL ($0.50) and CVX ($1.26)) and are just two economic reports: Preliminary Q1 ‘19 GDP (E: 2.2%) and Consumer Sentiment (E: 97.1).  If GDP is a bad miss (which is unlikely) that might temporarily pressure stocks, but really markets are already looking ahead to next week, which is absolutely full of important macro events and continued earnings.

Why Average Inflation Matters

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What’s in Today’s Report:

  • Why Average Inflation Matters to You

Stock futures are slightly lower this morning after a quiet night of news. There were no economic releases overnight leaving investor focus primarily on earnings.

Oil is notably hitting fresh 2019 highs this morning which should continue to drive outperformance in the energy sector today.

Looking to the calendar for today, there is one economic report due out of Europe: Eurozone Consumer Confidence Flash (E: -6.9) and two reports on the U.S. housing market: FHFA House Price Index (E: 0.4%) and New Home Sales (E: 645K). There are no Fed speakers today.

Additionally, price action in stocks has been especially sensitive to the bond market since the March Fed meeting and while volatility has eased in both markets, there is a 2 Year Treasury Note Auction at 1:00 p.m. ET that could move markets.

Investors’ primary focus however will remain on earnings. Some notable releases today include: TWTR ($0.15), KO ($0.46), PG ($1.04), SNAP ($0.12), and EBAY ($0.63).