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Tom Essaye Quoted in Barron’s on September 26, 2019

In fact, the market seems to be worrying more about China and the state of the U.S. economy than impeachment, according to Sevens Report’s Tom Essaye. U.S./China trade remains the singular most important issue facing this market, and as long as markets have ‘hope’ of a U.S./China trade ‘truce,’ it’ll be hard to…” he writes.

Trump

Presidential Cycles and Markets

What’s in Today’s Report:

  • The Presidential Cycle and Financial Markets

Futures are higher with most overseas markets thanks to positive trade headlines and easing Brexit concerns.

Treasury Secretary Mnuchin said last night that Chinese Vice Premier Liu He will travel to Washington for high level trade negotiations in two weeks and that China has encouragingly made significant agricultural purchases so far this week.

British courts ruled the suspension of Parliament by Boris Johnson unlawful, reducing odds of a no-deal Brexit.

Today, there are a few economic reports to watch: S&P Case-Shiller HPI (E: 0.1%), FHFA House Price Index (E: 0.2%), and Consumer Confidence (E: 133.6) and no Fed speakers are scheduled to speak.

There is however a 2-Yr Treasury Note auction at 1:00 p.m. and the results have recently led to sizeable moves in the bond market and subsequently influenced stocks, so there is a potential for volatility in the early afternoon.

Is the Trade War A Bearish Gamechanger Now?

What’s in Today’s Report:

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

Futures are modestly higher after positive U.S./China trade comments by President Trump.

Trump stated early this morning that China “called” and conveyed a desire to get back to the negotiating table.

It’s unclear exactly what Trump means (Chinese officials say no call has happened between the U.S. and China today) but the generally optimistic tone is helping to reverse some of Friday’s declines.

Today any U.S./China trade-related headlines will move markets but it’ll take more than just vague commentary by officials to undo the damage done to markets and investors’ psyches on Friday.

Economically, Durable Goods (E: 1.1%) will be released later this morning and it’s an important number, as any potential economic slowdown will emanate from reduced business spending and investment.  The bottom line, a solid number here will help economic sentiment.