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FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview (Wildcard to Watch)
  • What Do Rising Treasury Yields Really Mean?

S&P 500 futures are down roughly 1% this morning tracking European shares lower after German trade data showed a much larger than anticipated drop in exports during the depths of the COVID-19 pandemic in April.

Eurozone GDP and the NFIB Small Business Optimism Index slightly beat expectations however German exports declined by the most on record in April, tumbling by -24.0% on the month which is weighing heavily on EU shares today.

Looking into today’s session, there are two lesser followed economic reports due to be released: April JOLTS (E: 5.750M) and Wholesale Trade (E: 0.4%) which are not likely to move markets while there are no Fed speakers as the June FOMC Meeting Begins today.

With tomorrow’s Fed announcement and Powell’s press conference coming into focus, it is possible we see a continued wave of profit taking today, especially given the disappointing economic data out of Europe, however a sense of “Fed paralysis” should keep the losses somewhat limited.

Market Multiple Levels: S&P 500

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What’s in Today’s Report:

  • Market Multiple Levels S&P 500 Chart

U.S. equity futures are tracking European shares higher this morning thanks to ongoing hopes that the global economy will reopen and normalize quickly amid coordinated efforts while economic data was not quite as bad as feared overnight

Economically, the EU Composite PMI was 13.6 vs. (E) 13.5 in April while March Retail Sales declined -11.2% vs. (E) -12.0%. Both figures were considerably better than some analysts had feared helping boost risk assets.

Looking into today’s session, focus will be on the first look at April payrolls data in the U.S. in the form of the ADP Employment Report, for which the consensus analyst estimate is for a staggering drop of 20 million in private payrolls. Later in the day, Atlanta Fed President, Bostic, will speak at 1:30 p.m. ET.

While investors are primarily concerned with the economy reopening, Q1 earnings continue to roll in with several notable releases that could move markets today: SHOP (-$0.19), CVS ($1.63), GM ($0.18), SQ ($0.13), PYPL ($0.76), LYFT (-$1.08), and WYNN (-$1.05).

Valuation Support in the S&P (Updated)

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What’s in Today’s Report:

  • How Intense Was the Selling Yesterday?
  • Valuation Support and Technical Update: S&P 500

Stock futures enjoyed a “relief rally” overnight but have since returned to the flat mark as yields continue to bleed lower amid coronavirus fears however there were no materially negative developments regarding the outbreak since yesterday’s close.

There were no market-moving economic reports overnight.

While investor focus will continue to be on the COVID-19 outbreak, there are a handful of additional catalysts on the calendar today that could move markets.

First, there are four economic reports to watch: S&P CoreLogic Case-Shiller HPI (E: 0.5%), FHFA House Price Index (E: 0.3%), Consumer Confidence (E: 132.5), and the Richmond Fed Manufacturing Index (E: 13). Two Fed officials are also scheduled to speak during market hours: Kaplan (9:45 a.m. ET) and Clarida (3:00 p.m. ET).

Finally, the U.S. Treasury will hold a 2-Yr Note Auction at 1:00 p.m. ET. This could be an important event to watch as the results of the auction could shed further light on the market’s expectations for rate cuts in the months ahead (which have risen significantly this week) and potentially compress the 10s-2s yield curve spread to fresh multi-month lows which could further stoke fears of a global slowdown.

Why Can’t the S&P 500 Get Through 3000?

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What’s in Today’s Report:

  • Why Can’t the S&P 500 Get Through 3000?
  • Brexit Resolution Today?
  • Weekly Market Preview (There’s a big speech coming on Thursday)
  • Weekly Economic Cheat Sheet

Futures are slightly higher on continued hopes of Brexit resolution and improvement in U.S./China trade relations.

The vote on the new Brexit deal was delayed in Parliament on Saturday, but it’s likely to happen today or tomorrow and passage of the deal is (narrowly) expected.

On U.S./China trade, Chinese Vice Premier Liu He made positive comments on U.S./China trade negotiations although he didn’t say anything new.

Today there are no economic reports and just one Fed speaker, Bowman (11;40 a.m. ET).  So, the focus will be on Brexit headlines as a final vote on the Brexit deal in Parliament could happen later today.  If the Brexit deal passes Parliament, we could see a short term rally, although again I don’t think Brexit resolution is enough, by itself, to send stocks sustainably higher from here.

Tom Essaye Quoted in Barron’s on May 2, 2019

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Keep an eye on how the market overall responds to Wednesday’s drop. “Traders will be focused on whether the S&P 500 can hold yesterday’s low…” Click here to read the full Barron’s article.

 

S&P 500 Back At 2900: What’s Changed Since October

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What’s in Today’s Report:

  • S&P 500 Back At 2900:  What’s Changed Since October.
  • Weekly Market Preview (All About Earnings)
  • Weekly Economic Cheat Sheet (More Important Chinese Data)
  • I’ll be joining Liz Claman on Countdown to the Closing Bell at 3:55 p.m. today on Fox Business to Discuss the Markets.  Tune In!

Futures are flat following a quiet weekend as markets digest last week’s rally.

Expectations of a U.S./China trade deal continue to rise, with some anticipating an announcement this week.  The WSJ, Reuters and others had positive articles this morning.  But, as a reminder, the market has already priced in a deal, so the real focus of any announcement will be when tariffs are removed, and the sooner, the better.

There was no notable international or U.S. economic data overnight.

Today there is one notable economic report, Empire State Manufacturing Index (E: 6.8) and one Fed speaker, Evans at 8:30 a.m. & noon.  Given that somewhat light calendar, focus will be on earnings, and some numbers we are watching today include: C ($1.78), GS ($5.05), JBHT ($1.25).  If data and earnings are solid, this rally can continue.

Tom Essaye Quoted in CNBC on March 5, 2019

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“On a valuation basis this market has risen to reflect a macro environment that is materially more positive than the one we currently have, and as a fundamentals-driven analyst, that makes me nervous over…” says Tom Essaye. Click here to read the full article.

Why QT Matters to This Market

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What’s in Today’s Report:

  • Why QT Matters To This Market

Futures are flat as more reports of an impending U.S./China trade deal offset disappointing economic data.

Japanese & EU flash manufacturing PMIs both fell below 50 in February.  The Japanese PMI dropped to 48.5 while the EU reading fell to 49.2 (vs. (E) 50.4).

Multiple media outlets reported a U.S./China trade deal is almost done, but we don’t know if tariffs will be reduced.

Today focus will be on economic data as we get several potentially important reports.  They are, in order of importance:  Flash Composite PMI (E: 54.4), Philly Fed Mfg Index (E: 14.0), Durable Goods (E: 1.0%), Jobless Claims (E: 225k),  Existing Home Sales (E: 5.04M).

If the data is good, that will fuel a further rally towards 2800 in the S&P 500, although I don’t think good data today will be enough to get us through that level (it’ll take more dovish Fed commentary on the balance sheet to do that in the near term).