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Trump/XI Meeting Day (Finally)

What’s in Today’s Report:

  • What’s Caused The Late Week Rally (Don’t Forget It’s Quarter End Too)
  • A Positive Sign in Housing
  • Trump and Xi meet at 10:30 p.m. ET tonight so look for I’ll be looking for headlines starting around 11:30 p.m.

Futures are modestly positive again this morning on more U.S.—China trade optimism.

President Trump said he thought talks with President Xi would be “productive” and that’s boosting futures.

Economic data largely met expectation although Japanese IP (2.3% vs. (E) 0.3%) and EU HICP (their CPI) slightly beat estimates (1.1% vs. 1.0% yoy).

Focus will clearly be on the looming Trump/Xi meeting but there’s an important economic data point to watch today:  Core PCE Price Index (E: 0.1% m/m, 1.5% y/y).  If that shows inflation that’s stronger than estimates, it’ll reduce the chances of a rate cut (bad for stocks), while a soft number will result in a “bad is good” reaction in markets.

 

Tom Essaye Quoted in Seeking Alpha on June 12, 2019

Tom Essaye quoted in Seeking Alpha. Analysts are also starting to reassess the June market comeback, with some saying it doesn’t quite make sense. “This rally is not fundamentally backed. Instead what we are seeing is a…” Click here to read the full article.

Tom Essaye Headshot

Tom Essaye Quoted in International Business Times on June 11, 2019

“This rally is not fundamentally backed. Instead what we are seeing is a bunch of people getting swung around and now they are chasing stocks higher,” said Tom Essaye. Click here to read the full article.

New York Stock Exchance

Tom Essaye Quoted in U.S. News on April 5, 2019

7 Things Need to Happen For Stocks to Move Higher

Tom Essaye, founder of Sevens Report Research, recently compiled this list of seven things that need to happen for the market to make it back to new highs this year. Click here to read the full article.

What Caused Last Week’s Rally (And Can It Continue?)

What’s in Today’s Report:

  • Justification For Last Week’s Rally?
  • Market Internals – Not As Strong As You’d Think
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

Futures are only slightly lower despite disappointing U.S./China trade headlines over the weekend and more underwhelming global economic data.

The South China Morning Post reported that a Trump/Xi trade summit (to end the trade war) might not happen until June, later than the current April expectation, as talks on key issues continue to drag out.

Global economic data remained underwhelming as Japanese exports missed expectations, falling –1.2% vs. (E) 0.7%.

Today there is only one economic report, Housing Market Index (E: 63.0), and no Fed speakers (they’re in the blackout period ahead of Wednesday’s meeting) so unless we get a surprise U.S./China trade headline (and chatter there seems to be rising following the weekend) I’d expect digestion of last week’s big rally.

Why Stocks Have Rallied

What’s in Today’s Report:

  • Why Stocks Have Rallied (FOMO)
  • An Important Gap Between Stocks and Bonds
  • EIA Analysis and Oil Market Update

Futures are slightly lower following a quiet night as markets digest more mixed economic data following the big three day rally.

Chinese economic data was mixed as Industrial Production missed estimates (5.3% vs. (E) 5.5%) while Fixed Asset Investment slightly beat and Retail Sales met expectations.

Geo-politically it was a quiet night as there were no updates to U.S./China trade.

Today focus will be on economic data via the Jobless Claims (E: 225K), Import Export Prices (E: 0.3%, 0.2%) and New Home Sales (E: 620K), as well as testimony before Congress by Treasury Secretary Mnuchin.  Finally, there’s a GE guidance update later this morning, and if that’s particularly soft, that could hit stocks.