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Economic Breaker Panel Update

What’s in Today’s Report:

  • Economic Breaker Panel: May Update

U.S. stock futures are flat as investors look ahead to today’s release of the FOMC Minutes while most overseas markets bounced o/n in sympathy with the U.S. rally yesterday, although trade tensions remain elevated.

A NYT article released late yesterday revealed a modest escalation in the “tech war” as the U.S. will likely add several Chinese surveillance companies to the same “blacklist” that Huawei is on. This is an incremental negative as the odds of the broader “trade war” being resolved in the near-term continue to fall amid escalations in the U.S.-China “tech war.”

There are no major economic reports today but the calendar is relatively busy with the EIA Petroleum Status Report  due out at 10:30 a.m. ET (oil has traded with a sluggish tone this week and a selloff could drag stocks lower), while the main focus of the session will be on the release of the FOMC Meeting Minutes at 2:00 p.m. ET.

Additionally, there are multiple Fed speakers on the calendar: Williams (10:00 a.m. ET), Bostic (10:10 a.m. ET), and Kaplan (10:15 a.m. ET), however it is unlikely any of them move markets ahead of the Minutes.

Tom Essaye Quoted in Barron’s on May 20, 2019

Tom Essaye quoted in Barron’s on May 20, 2019. “Several U.S. tech firms have stopped conducting business with Huawei, per the…” Click here to read the full article.

Downward graph

Trade Update: Good/Bad/Ugly

What’s in Today’s Report:

  • Trade Update: Good/Bad/Ugly

Futures are rebounding with EU markets from yesterday’s sharp, tech-led losses thanks to some encouraging Huawei news o/n and a benign speech by Powell late Monday.

The U.S. announced some temporary exemptions will be issued for companies exporting to Huawei (mainly for existing products) which is helping ease some of yesterday’s elevated trade angst.

Overseas, there were no notable economic reports but the RBA cited risks to global growth in their most recent meeting minutes release, which pressured the aussie.

Looking into today’s U.S. session, focus will largely remain on the trade war and specifically any further information on the Huawei exemptions for U.S. exporters.

There are a few other potential catalysts however, including one economic report: Existing Home Sales (E: 5.37M) and a few Fed speakers: Bostic (7:50 a.m. ET), Evans (10:45 a.m. ET), and Rosengren (12:00 p.m. ET) but none of these are expected to materially move markets amid the most recent trade war developments.

Updated Market Outlook

What’s in Today’s Report:

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

Futures are modestly lower following an uneventful weekend as investors digest Friday’s negative trade headline (that U.S./China trade discussions have been suspended).

On trade, there was no new news over the weekend, but several U.S. tech firms have stopped conducting business with Huawei, per the Commerce Department decision, and that’s just further escalating the U.S./China trade conflict.

Economically, there were no market moving reports (Japanese GDP was stronger than estimates but the details weren’t great).

There are no economic reports today but there are multiple Fed speakers, most important of which is Powell (7:00 p.m. ET), although he’s not expected to make extensive comments on policy.  Other Fed speakers today include:  Bostic (8:50 a.m. ET), Harker (9:30 a.m. ET), Williams & Clarida (1:00 p.m. ET).

Given the lack of data and important Fed speak, trade headlines should drive markets today and any formal retaliation by China for the Huawei decision will make the trade situation worse, and likely pressure stocks.

 

Tom Essaye Quoted in Markets Insider on May 15, 2019

Tom Essaye was quoted in Markets Insider on May 15, 2019. The red metal has been the “single-best leading indicator for stocks over the past 18 months,” and is flashing a warning sign for…” Click here to read the full article.

Tom Essaye Quoted in CNBC on May 13, 2019

Tom Essaye quoted in CNBC on May 13, 2019. “Volatility surged to multi-month highs last week as US-China trade war drama unexpectedly escalated…” Click here to read the full article.

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Latest on Trade (Why Are Stocks Down?)

What’s in Today’s Report:

  • Latest on Trade – Why Are Stocks Down This Morning?
  • Market Set Up Beyond Trade (Two Problems)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Wednesday is an Important Day)

Futures are down more than 1% as markets digest the U.S./China trade situation.

Nothing specifically bad happened over the weekend on U.S./China trade, but Friday’s talks ended without a clear next step and that’s weighing on markets.

Additionally, Friday’s afternoon rally came despite any concrete,  positive catalyst, so we are seeing those gains reversed and then some.

There are no economic reports today and just two Fed speakers, Rosengren (9:05 a.m. ET) and Clarida (9;10 a.m. ET), and neither should reveal anything new.

So, focus will be on the trade headlines and tea leaves.  Anything that points to a specific next step (a date or event) in the U.S./China trade negotiation should help stocks rebound, while a continued lack of a concrete next step will increase market anxiety the longer it goes on.

Tom Essaye Quoted in CNBC on May 9, 2019

Tom Essaye Quoted in CNBC on May 9, 2019. “Small caps are most sensitive to overall economic growth. I think small caps are declining because…” Click here to read the full CNBC article.

U.S. President Donald Trump and Chinese President Xi Jinping

Another VIX-Driven Air Pocket?

What’s in Today’s Report:

  • The Latest in the Trade Drama
  • Is this the Start of Another VIX-Driven Air Pocket?

U.S. stock futures are decidedly in the red again this morning tracking Chinese shares lower as trade tensions continue to dominate global markets.

There were however, no notable trade developments overnight.

Economically, Chinese Imports rose 4.0% vs. (E) -0.4% while German Industrial Production rose 0.5% vs. (E) -0.5%, both of which were incremental, macro positives.

Today, there are no economic reports due to be released but the Fed’s Brainard speaks at 8:30 a.m. ET, and the EIA will release weekly inventory data at 10:30 a.m. ET which could move energy markets and, in turn, influence stocks.

Additionally, there is a 10 Yr. T-Note auction at 1:00 p.m. ET and if high demand pressures yields to new lows for the week, expect that to become another headwind on stocks.

When Is the Dovish Fed Good for Stocks?

What’s in Today’s Report:

  • When Is the Dovish Fed Good for Stocks? It’s the Difference Between “Aggressive” and “Appropriate”

Stock futures are trading lower by 0.50% this morning as trade tensions escalated further late Monday with several U.S. trade officials confirming plans to hike tariffs Friday.

Overnight, it was reported that Chinese Vice-Premier Liu He would still come to the U.S for negotiations this week but for just 2 days rather than the originally planned 4 which was seen as an incremental negative.

Economically, German Manufacturers’ Orders rose 0.6% vs. (E) 1.0% in March which weighed modestly on EU shares.

Looking into today’s session, trade news will still dominate the markets however there are a few other catalyst to watch including March JOLTS data (E 7.215M) and one Fed speaker: Kaplan (7:00 a.m. ET).