“Trade war headlines have been the main driver of the energy markets, but since late last week, OPEC+ policy expectations, economic data, and inventory/production releases have…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Sevens Report co-editor Tyler Richey was interviewed by Ben Lichtenstein from TD Ameritrade Network, discussing oil, energy trade war, commodities and more…Click here to watch the full interview.
The bearish supply and production data by the Energy Information Administration and “lack of clarity” on the U.S.’s plans for tariff policy changes as part of the phase one trade deal with China, are “both negative influences on the market…” said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full article.
“The rising tensions between the U.S. and China over the last 24 hours has resulted in a broad risk-off move. Oil is being dragged down with stocks and other assets sensitive to global growth expectations, which continue to fall under pressure…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“Those comments about Saudi oil production and capacity by Al-Buainain were certainly a bearish catalyst for today’s price weakness. Speculation that production would be back online much quicker than initially thought was the main driver of…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
U.S. supplies rose more than expected last week, though was “largely offset by the less-bearish to mildly bullish inventory statistics for the refined products…” said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full report.
The report also showed that U.S. oil output held steady last week at 12.4 million barrels a day, just 100,000 barrels a day less than the all-time high reached last month… said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full article.
“Going forward, the main driver of prices will be time, specifically how long the Saudi…” said Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.
What’s in Today’s Report:
Futures are suffering mild losses this morning while international markets were little changed overnight as oil prices are stabilizing, economic data was mixed, and investor focus is shifting to the Fed.
Economically, the German ZEW Survey showed the Current Conditions index fell to –19.9 vs. (E) -15.0 but the Business Expectations figure was encouragingly –22.5 vs. (E) -38.0, easing concerns about the future outlook for the EU economy.
The PBOC left rates unchanged overnight, disappointing some investors looking for a cut after a recent string of soft economic data which weighed on Asian markets.
Looking into today’s session, there are two economic reports to watch: Industrial Production (E: 0.1%) and the Housing Market Index (E: 66) but a sense of “Fed paralysis” is already falling over the markets as focus turns to tomorrow’s announcement and press conference.
Lastly, after oil’s huge moves yesterday, the energy complex will continue to get attention and with the geopolitical situation still very fluid, oil prices and U.S.-Iran tensions could affect trading in stocks today.
What’s in Today’s Report:
Futures are modestly lower following attacks on Saudi oil infrastructure over the weekend.
Oil surged 10% overnight after half of Saudi oil production was taken offline following attacks this weekend, as higher oil prices and increased geo-political tensions (the U.S. & Saudi are blaming Iran) are pressuring futures.
Meanwhile, Chinese economic data was universally disappointing as Fixed Asset Investment, Retail Sales, and Industrial Production all missed estimates. This is being somewhat ignored given the oil markets, but there remains little actual proof the Chinese economic has stabilized (and with the S&P 500 at 3000, that’s priced in).
Today focus will be on geo-politics and any further escalation in tensions between the U.S. and Iran will weigh on stocks. Beyond the short term, barring a U.S./Iran conflict (which is still very unlikely) the net impact of this weekend’s news will be to strengthen the valuation “ceiling” at 17X 2020 S&P 500 EPS (so 3,026 in the S&P 500), as it’s hard to justify stocks above that level given elevated geo-political risks.
Economically, there’s only one notable number today, the September Empire Manufacturing Survey (E: 4.9), and any evidence of stabilization in manufacturing will help stabilize stocks.