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FOMC Preview: Is a Dovish Surprise Looming?

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What’s in Today’s Report:

  • FOMC Preview – Is a Dovish Surprise Looming?
  • Chart: An End to QT Means More Liquidity, More Stimulus

Futures are flat while most international markets are modestly lower as traders digest the sizeable two-day rally in stocks ahead of the October Fed meeting decision and several Mag-7 earnings releases.

Today, there are a handful of private-sector economic releases to watch including the Case-Shiller Home Price Index (E: 1.9%), the FHFA House Price Index (E: 0.1%), the Richmond Fed Manufacturing Index (E: -14), and Consumer Confidence (E: 93.4).

With the October FOMC meeting getting underway, expect a growing sense of Fed paralysis in equity markets to begin to take hold, however there is a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move yields and shake up stocks on an intraday basis.

Earnings season continues to peak this week with notable reports today including SOFI ($0.09), UNH ($2.80), PYPL ($1.19), UPS ($1.31), V ($2.97), BKNG ($96.10), and RCL ($5.67).

Bottom line, positive earnings and upbeat economic data would offer equity market tailwinds today with a Fed rate cut all but a certainty tomorrow, however, the trade war situation remains a “wildcard” risk that could spark risk-off money flows into tomorrows FOMC decision.

 

Why Are Chinese Stocks So Weak? (And Is There an Opportunity?)

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Why Are Chinese Stocks So Weak? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Are Chinese Stocks So Weak? (And Is There an Opportunity?)
  • Chart: Leading Economic Indicators Remain Deeply Negative

U.S. futures are flat amid mixed trade overseas as European shares pulled back modestly after a weak ECB Lending Survey while Asian shares bounced solidly amid news China is planning a $278B “market rescue package” aimed at stabilizing the nation’s volatile capital market environment.

Looking into today’s session, there is one regional Fed survey release: Richmond Fed Manufacturing Index (E: -15). And while the Richmond release is less popular than other regional Fed reports, it will be more closely monitored today after both the Empire and Philly Fed surveys badly disappointed last week.

December M2 Money Supply will also be released at 1:00 p.m. ET which could move markets in early afternoon trade (especially if there is a sharp and unexpected contraction in money supply).

There are no Fed officials scheduled to speak today but there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could offer fresh insight into market expectation for Fed policy outlook. A weak auction sending yields higher, would be a negative catalyst for stocks today.

Finally earnings season is continuing to pick up with: VZ ($1.07), MMM ($2.31), GE ($0.90), PG ($1.70), JNJ ($2.27), and SYF ($0.96) reporting before the open, and NFLX ($2.20) and TXN ($1.46) releasing results after the close.

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