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.
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).
What Is Dow Theory Saying Now?
What’s in Today’s Report:
- What is Dow Theory Saying Now
- 10’s-2’s Yield Spread and Bank Stock Outlook (Post Powell’s Press Conference)
Futures are bouncing slightly ahead of the jobs report and following yesterday’s modest declines. Generally it was a quiet night of news.
EU Core HICP (their CPI) was stronger than expected, rising 1.2% vs. (E) 1.0% and incrementally added to the modest hawkish shift in the global central bank outlook following Powell’s press conference.
Today the headline numbers are the Employment Situation Report (Jobs: 180K, UE: 3.8%, Wages: 0.2% m/m) and the ISM Non-Manufacturing PMI (E: 57.3). If the jobs number is very strong (job adds above 250k, UE below 3.7% and wages above 3.5% yoy, that might cause a decent sell off given Powell’s hawkish surprise on Wednesday, but barring that it shouldn’t impact markets too much.
Absent a jobs report surprise, the two biggest events today are comments by Fed Vice Chair Clarida (11:30 a.m. ET) and Williams (1:45 a.m. ET). Specifically markets will be looking to see whether they echo Powell’s “transitory” comments about inflation, or if they sound more concerned. The former will pressure stocks, while the later might provide some relief.
Other Fed officials speaking today include: Evans (10:15 a.m. ET), Bowman (3:00 p.m. ET) and after the market close: Bullard, Daly, Kaplan, Mester.
Curve Steepening: Buy Banks?
What’s in Today’s Report:
- 10’s-2’s Showing Signs of Life – Good for the Banks?
S&P futures are indicating stocks will open at all-time highs today thanks to strong earnings and Fed optimism after President Trump mentioned rate cuts and QE yesterday.
AAPL beat on earnings and revenue in Q1 but also notably revised guidance solidly higher citing improvement in Chinese markets. The company’s shares are trading up roughly 6% in the pre-market.
Most overseas markets are closed for holidays today and the market’s main focus will be the Fed events this afternoon: FOMC Meeting Announcement (2:00 p.m. ET), Fed Chair Press Conference (2:30 p.m. ET).
There are a however a few important economic reports that could move markets this morning: ADP Employment Report (E: 180K), ISM Manufacturing Index (E: 55.0), and Construction Spending (E: 0.2%).
Bottom line, the market is looking for more dovish rhetoric out of the Fed today and if Powell delivers, another set of closing highs in U.S. stock indexes is likely.
Will the Fed Cut Rates?
What’s in Today’s Report:
- FOMC Preview
U.S. futures and most international equity markets were mildly lower overnight after corporate results from GOOGL missed estimates while economic data was mixed.
China’s PMI Manufacturing Index fell to 50.2 from 50.8 in April (but importantly remained above 50, in expansion territory) while the Eurozone Q1 GDP Flash was 1.2% vs. (E) 1.1% year-over-year which helped ease recently rising concerns about weakness in EU growth metrics.
Looking into today’s session, the calendar remains busy however with the FOMC Meeting getting underway, it would take a material surprise in economic data or multiple earnings shocks to really move the market ahead of tomorrow’s Announcement and Powell’s press conference.
Economically, there are four releases to watch this morning: Employment Cost Index (E: 0.7%), S&P Case-Shiller HPI (E: 0.3%), Consumer Confidence (E: 127.0) and Pending Home Sales (E: 0.7%).
On the earnings front, there are several notable companies releasing reports today including: GE ($0.09), MA ($1.67), BP ($0.68%), GM ($1.09), PFE ($0.76), and STX ($0.72) before the open and AAPL ($2.37) and AMD ($0.05) after the market close.
An Update from Dr. Copper
What’s in Today’s Report:
- An Update from Dr. Copper
Futures are little changed following more U.S./China trade optimism and mixed earnings.
President Trump said he expects to host Chinese Premier Xi at the White House “soon” and a trade deal could be signed in June.
Earnings after the bell were mixed at INTC badly missed, while F and AMZN both posted solid numbers.
There was no material economic data overnight.
Today should be a generally quiet day as the volume of earnings reports subsides (reports we’re watching include XOM ($0.75), AAL ($0.50) and CVX ($1.26)) and are just two economic reports: Preliminary Q1 ‘19 GDP (E: 2.2%) and Consumer Sentiment (E: 97.1). If GDP is a bad miss (which is unlikely) that might temporarily pressure stocks, but really markets are already looking ahead to next week, which is absolutely full of important macro events and continued earnings.
Earnings Season Takeaway (Mild Positive)
What’s in Today’s Report:
- Earnings Season Early Takeaway (Mildly Positive)
- Sector Winners From a U.S./China Trade Deal Announcement (It’s Coming Any Day Now)
- EIA and Oil Market Update
Futures are little changed following a generally quiet night as earnings remain in focus. Economic data was sparse overnight and isn’t moving markets.
Results after hours Wednesday were good as FB and MSFT both beat estimates, although that’s being offset partially by ugly MMM results this morning.
Today there are two notable economic reports, Durable Goods (E: 0.8%) and Jobless Claims (E: 209K) and it’ll be important to see some sort of stabilization in business spending via Durable Goods.
But, the real focus today will remain on earnings, as we get several important reports. If numbers are good in aggregate, this rally can continue. Some earnings we’re watching include – Pre-Open: UPS ($1.42), MMM ($2.50), MO ($0.92). After the Close: AMZN ($4.72), INTC ($0.87), SBUX ($0.56).