The Sevens Report’s Tom Essaye said this week that the trade war is one of several key uncertainties creating volatility in the market. A major divide seems to exist between market expectations for three…Click here to read the full article.
“Momentum can carry this market higher especially into the Trump/Xi G20 summit, but the bigger (and longer-term more important) question regarding…” says Tom Essaye. Click here to read the full article on CNBC.
What’s in Today’s Report:
Futures are modestly lower following a night of bad micro and macro-economic news.
On the micro front, Broadcom (AVGO), a major semi-conductor company, missed earnings and provided ugly guidance for 2H ‘19, citing the trade war as a major negative on demand.
On the macro front, Chinese economic data was on balance disappointing as Fixed Asset Investment and Industrial Production both missed estimates, although Retail Sales was a mild beat.
Looking ahead to today, the major number is the Retail Sales report (E: 0.7%), and the market would welcome a slightly disappointing number as it would further solidify the expectations for a Fed rate cut in July, and likely spur a rebound this morning. We also get Industrial Production (E: 0.2%) and Consumer Sentiment (E: 98.4) this morning as well.
“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.
What’s in Today’s Report:
Futures are marginally higher following a busy night of news, but none of it shifted the current market outlook.
If there is a “reason” for the gains this morning it’s hopes for more Chinese stimulus as Chinese Vice Premier Hu called for more stimulus to help the economy, although no specifics were given and China’s already been aggressively stimulating the economy for months – so this isn’t exactly incremental news.
Geo-politically, Brent crude oil surged 3% after two tankers were attacked via a torpedo and mine strike overnight in the Gulf of Oman (near the mouth of the Strait of Hormuz). It’s unclear who is responsible at this point but that’s obviously increasing tensions in an already unstable part of the globe.
The remaining big event for the week comes tonight via the Chinese economic data, so today will be spent watching the headlines for any trade updates, while on the economic front we get Jobless Claims (E: 216K) and Import & Export Prices (E: -0.3%, 0.1%), but neither should move markets materially. Finally, there is a 30 Yr. T-Bond Auction at 1:00 p.m. ET and we’ll be watching to see if there are any signs of a Chinese “buyers strike” for Treasuries (so far, it’s not happening).
Tom Essaye was quoted in CNBC on June 11, 2019. “You had a market that became very pessimistic and then all of a sudden we had the Fed’s dovish rhetoric and no Mexican tariffs, and that’s basically causing a squeeze…” Click here to read the full article.
What’s in Today’s Report:
S&P futures are down roughly 10 points as the recent melt-up rally continues to be digested ahead of key inflation data in the U.S. while trade headlines were negative overnight.
Trade sentiment deteriorated over the last 12 hours as expectations of a G20 deal are fading while protests in Hong Kong over an extradition bill pressured the Hang Seng to fall nearly 2%.
Economically, Chinese CPI and PPI met estimates overnight while Japanese Machine Orders rose 5.2% vs. (E) 0.5% helping the Nikkei outperform with a loss of just 0.35%.
Today’s focus will be on inflation data due out ahead of the bell: CPI (E: 0.1%). There are no other notable reports due to be released and no Fed officials are scheduled to speak today.
The digestive tone will likely continue as the blistering rally of the last week was overdone however the “pain trade” remains higher and if the CPI print is soft, we could see another run back to and potentially through 2900 in the S&P today.
What’s in Today’s Report:
It is a risk-on morning with U.S. stock futures tracking international equity markets higher after China announced a new wave of stimulus measures overnight.
The PBOC explained that the program would support infrastructure investment through special bond issuance which helped mainland China shares rally 2.6% on the session.
Economically, the NFIB Small Business Optimism Index was 105.0 vs. (E) 102.0. in May despite the elevated trade tensions, which helped S&P futures extend pre-market gains during the last hour.
Today, the calendar is relatively quiet although there is one inflation figure due out ahead of the open: PPI (E: 0.1%) and even though it is a lesser followed report, a “hot” print could still cause an uptick in volatility after the melt up we have seen over the last week.
There are no Fed officials scheduled to speak today which will leave investors looking for any further updates on the trade war, but even though the market is near-term overbought, no news is good news as sentiment is very positive and momentum alone could help stocks continue higher today.
What’s in Today’s Report:
Futures are modestly higher on the avoidance of Mexican tariffs, although trade news was more mixed than good this weekend.
On trade, positively the 5% tariff on Mexican exports to the U.S. was avoided. Negatively, and more importantly, there was no progress on U.S.-China trade at the G-20 Finance Ministers meeting and no U.S.-China trade talks are planned before the G-20 meeting later this month.
Economic data was also mixed as Chinese exports slightly beat estimates but imports badly missed, while British GDP and Industrial Production also underwhelmed. So, like the trade news from the weekend, there was a positive event, but on the whole the results were more mixed than good.
Today there are no material economic reports so focus will remain on the news wires and any trade related headlines. Anything that implies renewed talks between the U.S. and China will likely extend this rally and test resistance at 2900 in the S&P 500.
What’s in Today’s Report:
Futures are moving higher on dovish optimism following soft economic data overseas ahead of today’s jobs report but trade war developments were actually negative overnight.
German data disappointed overnight as Industrial Production fell -1.9% vs. (E) -0.5% while the trade surplus narrowed to 17.0B euros, a 9-month low.
The data is fueling hopes of a dovish policy shift from the ECB, however, after Draghi cited soft manufacturing trends as a concern earlier in the week which is helping EU shares outperform this morning.
Trade news was a net negative overnight as Mexican tariffs are still expected to be implemented on Monday (hopes of a delay pushed stocks higher yesterday afternoon) while there were no material developments on the China front.
Today, investors will be primarily focused on the Employment Situation Report due out at 8:30 a.m. ET (E: +180K job adds, 3.7% UR, 3.2% wage growth YoY).
Due to the huge dovish shift in Fed policy expectations over the last week, bad news will be good news for stocks as the odds of a summer rate cut will rise and the biggest risk for stocks is a “hot” print this morning, especially on wages.