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What the Bulls Need to Believe

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What’s in Today’s Report:

  • What the Bulls Need to Believe
  • Weekly Market Preview:  The Remdesivir trial results are the biggest event this week.
  • Weekly Economic Cheatsheet:  Fed meeting Wednesday (will they reiterate the promise to do whatever it takes to support the markets?)

Futures are moderately higher as markets are extending Friday’s rally following a very quiet weekend.

Anticipation for the reopening of the U.S. and global economy is the “reason” for the rally this morning, although nothing new occurred on that front over the weekend.  Instead, there was just a lot of chatter about reopening in the media, and that is helping stocks rally absent any other important news.

There were no economic reports overnight.

Notably, markets are ignoring a greater than 10% drop in oil prices this morning, as oil markets digest last week’s volatility (and late week rally).

Today there are no economic reports and no Fed speakers, so markets will remain focused on the rollout of reopening plans by states (larger states matter most), and the results from a Remdesivir trial, which will come literally any day this week.  The Remdesivir trial results need to meet optimistic expectations, otherwise we’ll likely see another drop in stocks similar to what we say last week.

Why Are Markets Ignoring Bad Economic Data?

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What’s in Today’s Report:

  • Why Are Markets Ignoring Bad Economic Data?
  • Important Context For Jobless Claims (Chart)

Futures are moderately higher following a quiet night of news.

Economic data was disappointing, again, as British Retail Sales dropped –5.1% vs. (E) -3.5%, while German Ifo Business Expectations declined to 69.4 vs. (E) 75.0.  But, once again markets are looking past current data and instead focusing on hope that the worst is behind us.

There was no notable coronavirus news overnight.

Today focus will be on economic data, specifically Consumer Sentiment (E: 68.1) as it offers us a more “real-time” gauge of economic activity.  Durable Goods (E: -11.4%) will also be closely watched, although it’s a March report so it won’t reflect the depths of the slowdown in business spending.

What’s Next for Oil?

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What’s in Today’s Report:

  • The Oil Crash and Contango Explained
  • Why Is Copper Considered to have a PhD?

Stock futures are enjoying a solid 1%+ bounce this morning while international markets were mixed overnight as oil prices are relatively steady following a two day rout.

WTI crude oil futures, which turned negative on Monday, are wavering between gains and losses this morning but are importantly well above yesterday’s lows ahead of the key weekly EIA inventory report this morning (10:30 ET).

There are no Fed speakers today and just one second tiered economic report that shouldn’t move markets: FHFA House Price Index (E: 0.4%).

Earnings season is in full swing, continuing today with reports from: DAL (-$0.72), T ($0.84), BIIB ($7.74), CSX ($0.92), AA (-$0.29), KMI ($0.24), DFS ($1.80), and STX ($1.29).

Investors remain shaken by the historic surge in oil market volatility this week and energy will continue to be a primary focus of the market today.

And if the EIA print mid-morning is bearish (big inventory builds, resilient U.S. production, low refinery runs), and oil comes for sale again, stocks will likely struggle to maintain this morning’s bid.

How Much Good News Is Already Priced In?

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What’s in Today’s Report:

  • How Much Good News Is Already Priced In?
  • Weekly Market Preview:  Focus remains on the global economic re-opening
  • Weekly Economic Cheatsheet:  Flash PMIs on Thursday are a big report

Futures are down more than 1% mostly on digestion of last week’s big rally, as the weekend was relatively quiet from a news standpoint.

WTI crude oil is down nearly 30% (not a typo) but that decline is about logistics, as there are fears of not enough storage in the U.S. for looming oil imports.  Conversely, Brent crude is down only 3%.  Point being, the declines are being driven by a logistical issue, not a fresh reduction in demand (i.e. lower than expected economic growth).

Economic data was sparse overnight, as German PPI fell slightly more than expected (-0.8% vs. (E) -0.7%).

Today there are no economic reports so focus will remain on “reopening” news, as the pace of normalization of the U.S. and global economy will decide whether stocks can hold last week’s gains.

Rotate Out of Growth and Into Value

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What’s in Today’s Report:

  • Is It Finally Time to Rotate Out of Growth and into Value?

Futures are sharply higher thanks to a positive article on a Gilead drug  effectively treating coronavirus.

GILD’s drug Remdesivir has been effective in reducing symptoms in a very small (125 people) study at a Chicago hospital, but the news is sending stocks higher. For those interested, a link to the article is here.

Economically, Chinese data was weaker than expected as Q1 GDP fell –6.8% vs. (E) -6.0%.

There are no notable economic reports today so focus will remain on any additional coronavirus information, along with earnings.  Some reports we’re watching today include: PG ($1.11), SLB ($0.25), CFG ($1.61).

The History of Bear Market Rallies

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What’s in Today’s Report:

  • A Look into the History of Bear Market Rallies
  • Economic Data Breakdown
  • EIA Analysis and Oil Update

Futures are cautiously higher this morning but international markets were mostly lower overnight as investors weigh the effectiveness of COVID-19 containment strategies against their longer term impact on the global economy.

Economically, Eurozone Industrial Production was the only release overnight (-0.1% vs. E: -0.1%) but it was a February number and therefor largely dismissed by the markets.

This morning, focus will be on what will likely be the most important economic release of the week: Jobless Claims (E: 5.50M) as a larger than expected number of claims will point to further deterioration in the labor market while a smaller number will suggest the government stimulus efforts are beginning to work in supporting the U.S. jobs market.

There are two other economic reports to watch: Housing Starts (E: 1.32M) and the Philadelphia Fed Business Outlook Survey (E: -29.5) while no Fed officials are scheduled to speak.

Beyond economic data, investors will be sifting through more Q1 earnings releases including results from: BLK ($6.69), ABT ($0.58), TSM ($0.66), and BK ($0.90), as well as any new developments on the broader COVID-19 situation.

Economic Breaker Panel: April Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – April Update

Futures are decidedly lower with global markets this morning as optimism for a V-shaped economic recovery fades ahead of key economic data and more important earnings today.

Additionally, Trump cut funding to the WHO, raising tensions with China while WTI crude oil prices fell to fresh 18-year lows, below $20/barrel, overnight as a complete lack of demand continues to weigh on the broader energy markets right now.

Looking into today’s session, it is lining up to be a busy one from a potential catalyst standing.

First, there are several important economic reports due to be released including: Retail Sales (E: -7.0%), Empire State Manufacturing Survey (E: -35.0), Industrial Production (E: -4.2%), and the Housing Market Index (E: 60) while there is one Fed official schedule to speak: Bostic (1:00 p.m. ET).

Earnings will also be a major focus today with Q1 results due out from: BAC ($0.65), C ($1.83), GS ($2.83), PNC ($2.24), USB ($0.87), PGR ($1.44), and BBBY ($0.21).

Stocks have become near-term overbought over the last few weeks so any notably negative news flow regarding economic data, earnings, or the coronavirus pandemic could cause a potentially volatile wave of profit taking.

Earnings Season Preview

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What’s in Today’s Report:

  • Five Keys to the Q1 2020 Earnings Season
  • Oil Futures Point to Mid-Summer Economic Recovery

Futures are higher with most overseas markets today as COVID-19 case growth continues to slow in the U.S., economic data was better than feared overnight and investor focus is shifting ahead to Q1 earnings season.

In March, Chinese exports fell -6.6% vs. (E) -15.0% and imports were down -0.9% vs. (E) -8.0% suggesting the economic fallout from the coronavirus pandemic may be less than initially feared.

Today, there is one lesser followed economic report: Import and Export Prices (E: 3.1%, -2.0%), and two Fed officials are scheduled to speak: Bullard (11:05 a.m. ET) and Evans (12:30 p.m. ET).

But, the market’s main focus will be the start of Q1 earnings season, which is going to be extremely important as the corporate results and forecasts will provide much needed context on the outlook for 2020 EPS expectations in the coming weeks. Today, JPM ($2.49), WFC ($0.61), JNJ ($2.08), and FAST ($0.34) all report before the bell while JBHT ($2.22) will release results after the close.

Can Gold Continue to Rally?

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What’s in Today’s Report:

  • Market Multiple Price Chart: S&P 500
  • A Quick Note on Coronavirus Data
  • Can Gold Continue Higher? Yes, Here’s Why

International markets were mixed o/n and U.S. stock futures are little changed in choppy trade as investors continue to look for clarity on infection and death statistics related to COVID-19 while digesting a volatile start to the week.

Economically, Japanese Machine Orders rose 2.3% in Feb. vs. (E) -2.7, underscoring the resilience of the manufacturing sector as the coronavirus outbreak began to accelerate.

There are no economic reports due to be released today but the Treasury will hold a 30-Yr Bond Auction at 1:00 p.m. ET and then the Minutes of the most recent FOMC Meeting will be released at 2:00 p.m. ET.

With investors still primarily focused on any developments regarding the coronavirus pandemic, it is unlikely that those two catalysts will move markets today however if there are any surprises, we could see a reaction as volatility remains elevated amid an uncertain macro backdrop.

Market Multiple Table Update

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What’s in Today’s Report:

  • Market Multiple Table Update
  • Oil Rig Counts Continue to Plunge

Futures are solidly higher this morning, tracking overnight gains in most international equity markets amid optimism that global efforts to contain COVID-19 are working.

Coronavirus “hot spots” such as Italy and New York City are reporting early statistics that show “lock down” measures are working to contain the outbreak as the number of new cases is slowing while death rates are stabilizing.

German Industrial Production was the only notable economic report overnight and it was better than feared in February (0.3% vs. E: -0.8%), helping support the risk-on money flows today.

Looking into today’s session, there are two economic reports due to be released today: JOLTS (E: 6.638M) in the morning and Consumer Credit (E: $14.2B) in the afternoon, however investor focus will remain almost exclusively on coronavirus headlines as hope that the outbreak is being contained is the primary reason for this week’s stock rally.