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.
“Bolton is a known foreign policy hawk and, apparently, he and President Trump’s views began to diverge over time. Part of that very well could be that Trump’s keenly…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“The two most beat-up sectors in the August pullback (energy and financials) both rebounded hard yesterday and…” wrote Tom Essay, president of the Sevens Report, in a Tuesday note. Click here to read the full article.
“The trade war remains the market’s main focus and with new tariffs going into effect over the [past] weekend, investor sentiment towards U.S.-China relations are continuing to deteriorate…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply higher on more positive U.S./China trade “chatter” and political resolution in Italy.
Chinese officials made general comments about not wanting to further escalate the trade war and won’t retaliate to the recent tariffs, and that’s helping sentiment. But, to be clear, no actual progress has occurred – just vague rhetoric, and as far as we can tell the phone call between the two delegations has not occurred yet (remember it was loosely scheduled for Tuesday). Point being, things haven’t improved as much as the two day rally would imply.
Economic data was decent as German unemployment met expectations while EU Economic Sentiment was better than expected (103.1 vs. (E) 102.5). Regarding Italy, the country will avoid new elections, and while that’s not a sustainable positive catalyst for markets, it does, for now, remove another potential headwind.
Attendance and volumes will continue to decrease into the long weekend, but focus will remain on any trade related headlines. Economically, the notable reports today include Q2 Revised GDP (E: 2.0%), Jobless Claims (E: 213K) and Pending Home Sales (E: -0.3%) although none of those should move markets.
Bottom line, if Treasury yields are stable, stocks can hold these early gains, although we continue to caution this rally is being driven by month-end positioning more than any actual, positive progress on the headwinds facing this market.
Looking at the inventory data from a trend standpoint, “it appears the stretch of steep draws in crude supply, which were offering fundamental price support to…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“Looking ahead though, the outlook for oil remains neutral at best right now as global growth concerns remain the single biggest headwind for…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
