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The Most Important Week of the Year

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What’s in Today’s Report:

  • Fed Week – Why This is the Most Important Fed Decision of the Year
  • Weekly Market Preview – Will the Fed Meet Incredibly Dovish Expectations?
  • Weekly Economic Cheat Sheet – One of the Busiest Weeks of the Year (Jobs Report, Inflation Data, Global PMIs)

Futures are little changed following a quiet weekend as all eyes now turn to the Fed decision on Wednesday.

Former Fed Chair Yellen endorsed a rate cut over the weekend, but did not advocate for sustained easing.   And, this gets right to the heart of this market.  We know the Fed will cut 25 bps this week, but we don’t know if they’ll signal the start of a sustained easing campaign (i.e. 75-100 bps of cuts by year-end) and that’s something the market has already aggressively priced in at these levels.

Economic data was sparse over the weekend although Japanese Retail Sales (0.3% vs. (E) 0.1%) beat estimates.

There was no notable U.S.-China trade news over the weekend and expectations are low for any actual progress at the talks this week.

Today there are no notable economic reports nor any important central bank speak, so focus will remain on earnings (this is the last important week of earnings) and on any U.S.-China trade headlines (although none are expected).

What the ECB Decision Means for Markets (Slightly Disappointing)

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What’s in Today’s Report:

  • What the Slightly Disappointing ECB Decision Means for Markets

Futures are modestly higher thanks to better than expected earnings.

Earnings after Thursday’s close were solid as GOOGL, INTC and SBUX all beat estimates and rallied after hours.  The results are offsetting Wednesday’s underwhelming results.

There were no notable economic reports overnight and no new U.S./China trade news, so markets are continuing to digest a slightly disappointing ECB meeting and focus has now turned to the Fed meting this coming Wednesday.

Today there is only one economic report, Initial Q2 GDP (E: 1.9%), which might have more of an impact on markets than usual given Wednesday’s Fed meeting, especially if it’s a big surprise in either direction (very strong or very weak).  If it’s a strong number, that will weaken the case for sustained Fed easing (which the market has priced in) and if it’s a weak number, it’ll strengthen the case for sustained Fed easing (so stocks will likely rally on a “bad is good” reaction).

What Falling RV Sales Mean for the Economy

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What’s in Today’s Report:

  • What Falling RV Sales Mean for the Economy (Not Necessarily What You Think)
  • Oil/Energy Market Update

Futures are flat following a busy night of earnings as investors look ahead to the ECB decision later this morning.

Economic data again disappointed as the German IFO Business Expectations missed estimates (92.2 vs. (E) 94.0).

There was an earnings deluge overnight and results, on balance, were slightly negative although the Q2 earnings season remains better than feared.

Today the most important event is the ECB Decision and we get the announcement at 7:45 a.m. and the press conference at 8:30 a.m.  The key for this meeting is how definitive the ECB will be on more rate cuts and QE.

If they cut rates and announce the start of a new QE plan, that’ll be a dovish surprise (good for stocks), if they effectively promise a rate cut and more QE at the September meeting, that will meet expectations (not a big market reaction) and if they merely state both moves are possibilities if growth slows further, that will be a hawkish disappointment (stocks likely will fall).

Outside of the ECB we get two notable economic reports via Durable Goods Orders (E: 0.7%) and Jobless Claims (E: 210K).

ECB Preview (The Most Important Catalyst of the Week)

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What’s in Today’s Report:

  • ECB Preview
  • The Threat to Oil Prices and the Potential Effect on Bonds

S&P futures are down 10 points this morning after the U.S. DOJ announced an antitrust probe into big tech firms late yesterday while EU economic data badly missed estimates.

The EU PMI Composite Flash for July was 51.5 vs. (E) 52.1 but the German Manufacturing component was especially weak at 43.1 vs. (E) 45.2 rekindling fears of a further, and potentially accelerating, slowdown in the global economy.

In today’s U.S. session, there are two economic reports to watch: The PMI Composite Flash (E: 51.2) and New Home Sales (E: 655K) while no Fed officials are scheduled to speak ahead of next week’s FOMC Meeting.

There is a 5-Yr Note Auction by the Treasury at 1:00 p.m. ET today and the results could have an impact on the yield curve which could ultimately move stocks (like we saw with yesterday’s 2-Yr Auction).

Earnings season is continuing to pick up and today will be a very busy day of releases with BA (-$0.56), T ($0.89), CAT ($3.12), UPS ($1.93), NOC ($4.64), GD ($2.68), FCX (-$0.05), and NSC ($2.77) due to report before the open, and FB ($1.90), TSLA (-$0.52), PYPL ($0.73), and F ($0.30) will hit after the bell.

Tom Essaye Interviewed with TD Ameritrade on July 22, 2019

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Tom Essaye sat down with Jill Malandrino to discuss the macro picture of the market, earnings season, what the market is expecting, Federal rate cut and more. Watch the full interview below..

Tom Essaye Interview with TD Ameritrade

Key Levels To Watch in the Yield Curve

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What’s in Today’s Report:

  • Signals from the “Smart Market” – Good, Bad, and Ugly Scenarios

Stock futures are flat to slightly higher this morning as investors continue to digest mixed earnings reports, incremental progress between the U.S. and China on trade, and yesterday’s very dovish Fed chatter.

U.S. and Chinese officials held phone conversations last night and it appears more face-to-face meetings are likely in the near term, underscored by a near 2% rally in copper this morning.

Looking into today’s session, there is one economic report to watch: Consumer Sentiment (E: 98.6) and two Fed officials are scheduled to speak: Bullard (11:05 a.m. ET) and Rosengren (4:30 p.m. ET).

Earnings will remain in focus as there are several notable companies releasing Q2 results before the bell: BLK ($6.52), KSU ($1.61), AXP ($2.05), and SYF ($0.96), but yesterday’s rally was all about dovish Fed expectations so investors will be watching for any further clues as to whether the Fed will cut by 25 or 50 basis points at the July FOMC meeting.

Tom Essaye Quoted in Televisa.news on July 16, 2019

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“Si miramos esta temporada de resultados, la pregunta clave es: ¿llevará la incertidumbre en materia comercial a que las empresas frenen sus inversiones y reduzcan sus gastos…” se planteó el experto Tom Essaye, fundador de Sevens Report.

Tom Essaye Quoted in Invezz on July 17, 2019

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“Looking at this earnings season, the key question is: Will trade uncertainty cause businesses to pull back on spending and investment enough so that it begins to weigh on earnings?” Tom Essaye, founder of the Sevens Report, said in a note. Click here to read the full article.

The Four Key Influences on this Market

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What’s in Today’s Report:

  • The Four Key Influences on this Market (and How to Easily Monitor Them)
  • EIA Analysis and Oil Update

Futures are modestly lower this morning as the market digests several disappointing earnings releases (notably CSX and NFLX) while U.S.-China trade concerns linger after multiple negative news articles were released overnight.

Economically, U.K. Retail Sales beat (1.0% vs. E: -0.3%), which is helping the pound recover from fresh 2019 lows.

News flow will remain steady today with two economic reports to watch: Jobless Claims (E: 215K) and Philadelphia Fed Business Outlook Survey (E: 4.5) while there is one Fed official scheduled to speak: Williams (2:15 p.m. ET).

Over the last 24-36 hours, earnings became a more significant driver of the broader stock market so today’s corporate results will be important to watch. Before the bell UNH ($3.46), MS ($1.13), HON ($2.08), and UNP ($2.12) all release results and MSFT ($1.21), and COF ($2.84) will report after the bell.

Tom Essaye on Yahoo Finance on July 16, 2019

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“Looking at this earnings season, the key question is: Will trade uncertainty cause businesses to pullback on spending and…” said Tom Essaye, founder of the Sevens Report, in a note. Click here to read the full Yahoo Finance article.

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