Posts

Repo Market Update (Not Fixed Yet)

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What’s in Today’s Report:

  • Repo Market Update (Not Fixed Yet)

Futures are modestly higher on more U.S./China optimism following a quiet night of actual news.

U.S./China trade talks are officially scheduled for October 10th and 11th and rhetoric from both sides remains positive ahead of the event.  At this point, a pretty comprehensive U.S./China trade truce is fully expected by the market.

Economically, EU Economic Sentiment and Chinese Industrial Profits both slightly missed estimates although neither number is moving markets.

Today there are two notable economic reports, Durable Goods (E: -1.2%) and Core PCE Price Index (E: 0.2% m/m, 1.8% y/y) and we need to see a “Goldilocks” result of solid Durable Goods (to ease fears about business spending and investment) and tame inflation (Core PCE Price Index is the Fed preferred measure of inflation and it needs to print sub 2%).

There are also two Fed speakers today, Quarles (8:30 p.m. ET) and Harker (12:00 p.m. ET), but neither should move markets.

Tyler Richey Interviewed with Mid-day Movers with TD Ameritrade on September 25, 2019

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Tyler Richey interviewed with Mid-Day Movers from TD Ameritrade discussing Nike, Foot Locker, Under Armour earnings, markets, and more…Click here to watch the full video.

Tyler Richey Interview

Tom Essaye Quoted in Barron’s on September 24, 2019

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“Futures are higher with most overseas markets thanks to positive trade headlines…” writes the Sevens Reports’ Tom Essaye. Click here to read the article.

Farm

Is Impeachment a Negative for Markets?

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What’s in Today’s Report:

  • What Impeachment Means for Markets
  • Economic Breaker Panel September Update

Stock futures are extending losses this morning and international equity markets were broadly lower overnight as political and trade uncertainties weigh on sentiment.

Speaker of the House, Nancy Pelosi, formally announced an impeachment inquiry regarding President Trump’s interactions with the President of Ukraine which has added to an already crowded list of potential market headwinds.

Otherwise, it was a relatively quiet night of news with no material economic data releases and no trade war developments.

Today, there is one economic report to watch: New Home Sales (E: 665K) and a relatively busy schedule of Fed speakers: Evans (8:00 a.m. ET), George (10:00 a.m. ET), and Kaplan (7:00 p.m. ET). There is also a 5-Yr Treasury Note Auction at 1:00 p.m. ET and based on yesterday’s very solid 2-Yr Auction that helped steepen the yield curve, the results could once again influence the stock market.

Beyond those scheduled market catalysts, investors will be focused on the fluid impeachment situation as well as sensitive to any trade war developments.

Tyler Richey Quoted in MarketWatch on September 24, 2019

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“Gold has fallen into a broad, near-term trading range between support at $1,500 and resistance above at $1,560. There are multiple influences on gold right now that could trigger…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Gold Bars

Tom Essaye Quoted in CNBC on September 23, 2019

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“These are not good numbers and they do not imply global economic stabilization is occurring,” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.

Treasury Chart

Presidential Cycles and Markets

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What’s in Today’s Report:

  • The Presidential Cycle and Financial Markets

Futures are higher with most overseas markets thanks to positive trade headlines and easing Brexit concerns.

Treasury Secretary Mnuchin said last night that Chinese Vice Premier Liu He will travel to Washington for high level trade negotiations in two weeks and that China has encouragingly made significant agricultural purchases so far this week.

British courts ruled the suspension of Parliament by Boris Johnson unlawful, reducing odds of a no-deal Brexit.

Today, there are a few economic reports to watch: S&P Case-Shiller HPI (E: 0.1%), FHFA House Price Index (E: 0.2%), and Consumer Confidence (E: 133.6) and no Fed speakers are scheduled to speak.

There is however a 2-Yr Treasury Note auction at 1:00 p.m. and the results have recently led to sizeable moves in the bond market and subsequently influenced stocks, so there is a potential for volatility in the early afternoon.

Macro Outlook: Better, But Is It This Good?

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What’s in Today’s Report:

  • Macro Outlook Update:  Better, But Is It This Good?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Today and Friday are the key days)

Futures are flat as economic data was weak, but countering that was positive comments on U.S./China trade.

September EU flash composite PMIs were ugly, as the headline dropped to 50.4 vs. (E) 52.0 while manufacturing fell to 45.6 vs. (E) 47.3.  As usual, U.S./China trade is over shadowing everything else, but these are not good numbers and they do not imply global economic stabilization is occurring.

On U.S./China trade, the Chinese Ministry of Finance called last week’s talks “constructive” and that’s alleviating fears the earlier than expected departure implied a breakdown.

Today the key number is the Sept. Flash PMI (E: 51.2) and it needs to meet or beat expectations, otherwise concerns will continue to rise about the future growth of the U.S. economy.

There are also three Fed speakers (Williams (9:50 a.m.), Bullard (1:00 p.m.), Daly (2:30 p.m.)) we got a lot of Fed speak on Friday and it didn’t change the current outlook, so there’s no reason to think that will happen today.

Why Earnings Still Matter

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What’s in Today’s Report:

  • Why We Can’t Get Complacent on Earnings
  • Dow Theory Turns Positive

Futures are marginally higher after China cut interest rates, although the cut was less than expected.

China cut its Loan Prime Rate (LPR) by five basis points.  The rate cut was expected but it was supposed to be a 10-15 basis point cut, so the action isn’t as strong as hoped for and Chinese economic growth will remain a concern.

Economic data was sparse overnight as Japanese CPI met expectations at 0.5% yoy.

Today there aren’t any economic reports but there are several Fed speakers, including Bullard who already spoke and was dovish (which isn’t a surprise, he wanted a 50 bps cut this week).  The most important speaker today is Williams (8:15 a.m. ET) as he’s considered part of Fed leadership, and if he advocates for more cuts that’ll be a dovish tailwind on stocks.  Other speakers today include Rosengren (11:20 a.m. ET) and Kaplan (1:00 p.m. ET).

On U.S./China trade, the staffer meeting in preparation for the October meeting will continue, and absent any “real” news today any chatter that’s positive on U.S./China trade and/or dovish will help stocks rally.

Tom Essaye Quoted in CCN

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The Sevens Report founder Tom Essaye said:

“The drama is centered on just how strongly the Fed will signal that it’s going to cut rates again by the end of 2019. It’ll be the ‘dots’ and statement that determine whether the Fed meets market expectations…” Click here to read the full article.

New York traders