Tom Essaye, president of the Sevens Report, said in a Thursday note to clients that trade on Wednesday “somewhat shockingly saw outright gains by China ETFs and emerging market ETFs along with banks. That flies in the face of…” click here to read the full article.
What’s in Today’s Report:
Futures are down 1% as President Trump announced tariffs against Mexican imports in response to the border crisis, while Chinese economic data missed expectations.
Trump announced a 5% tariff on Mexican imports in June and rising each month there after until they hit 25%.
The March Chinese manufacturing PMI missed estimates at 49.4 vs. (E) 49.9 adding to global growth worries.
Today the key number is the Core PCE Price Index (E: 1.6% yoy) and if that number prints stronger than estimates, expectations for a Fed rate cut will drop further and given everything else happening today, markets could get ugly. Conversely, a soft inflation number will increase calls for a rate cut, and stocks could steady on that news.
The other key event today is a speech by New York Fed President Williams, and markets will want to see if he has a dovish tone following the tariff announcement and recent soft data (if he does, that’s a positive).
The bond market is once again sending a big fat warning sign about the US economy. “For stocks to continue to rally we need to see higher Treasury yields driven by hopes for better growth…” said Tom Essaye, editor of the Sevens Report.
What’s in Today’s Report:
Futures are enjoying a modest oversold bounce following a quiet night of news.
There was no new trade news or notable economic data overnight.
Sentiment has turned negative very quickly this week, despite the lack of any incremental bad news (so far) and this morning we’re seeing stocks attempt to bounce.
There are multiple economic reports today including (in order of importance): Revised Q1 GDP (E: 3.0%), Jobless Claims (E: 215K), Pending Home Sales Index (E: 0.5%) and International Trade in Goods (E: -$71.9B).
But, the most important event of the day will be a speech by Fed Vice Chair Clarida at 12:00 p.m. ET, and the key here will be whether he sounds more open to a preventative rate cut, or whether he reaffirms the Fed’s “transitory” view of low inflation. The former will be positive for stocks, the later will be negative.
What’s in Today’s Report:
Futures are bouncing modestly following some hopeful comments by President Trump on U.S.-China trade.
Late yesterday President Trump made comments expressing optimism about an eventual U.S.-China trade deal that includes a solution for Huawei. No specifics or new details were provided, however.
Brexit entered a new phase as PM May announced she will resign on June 7th. But, until a “No Deal” becomes more likely, the global markets will continue ignore Brexit.
Today focus will be on Durable Goods Orders (E: -2.0%) and support at 2800 in the S&P 500. Yesterday that support level held and that’s a key number to watch going forward, as a violation of 2800 could open up an “air pocket” in stocks.
Regarding Durable Goods, it’d be nice if the data was solid, but it’s an April number so it won’t reflect activity following the flare up of U.S.-China trade tensions, and the headline is likely to be negatively skewed by cancellations for the 737, which started last month.
Tom Essaye interviewed with Ben Lichtenstein with TD Ameritrade on what is driving the market right now and who is it affecting the most: Banks, crude, energy…& more importantly what will it take to turn the market around? Click here to watch the full video.
What’s in Today’s Report:
It’s an ugly morning as futures are down about one percent as markets digest disappointment from the week’s two big events, the FOMC Minutes and the global flash PMIs.
EU flash PMIs missed estimates at 51.6 vs. (E) 51.7 but EU and German manufacturing PMIs were especially weak (47.7 & 44.3) and that’s negative for global growth.
Yesterday’s FOMC Minutes were slightly hawkish and confirmed the Fed isn’t close to a rate cut right now.
Given the soft foreign data, the key report today is the flash Composite PMI (E: 52.4). If that number is soft, it’ll further stoke worries about global growth and will be a negative for stocks. Other reports today include Jobless Claims (E: 215K) and New Home Sales (E: 680K).
Bottom line, this market is facing several headwinds and support at 2800 is now important, but should likely hold unless hopes for a Trump/Xi meeting at the G-20 meeting are dashed, or U.S. growth begins to roll over.
What’s in Today’s Report:
U.S. stock futures are flat as investors look ahead to today’s release of the FOMC Minutes while most overseas markets bounced o/n in sympathy with the U.S. rally yesterday, although trade tensions remain elevated.
A NYT article released late yesterday revealed a modest escalation in the “tech war” as the U.S. will likely add several Chinese surveillance companies to the same “blacklist” that Huawei is on. This is an incremental negative as the odds of the broader “trade war” being resolved in the near-term continue to fall amid escalations in the U.S.-China “tech war.”
There are no major economic reports today but the calendar is relatively busy with the EIA Petroleum Status Report due out at 10:30 a.m. ET (oil has traded with a sluggish tone this week and a selloff could drag stocks lower), while the main focus of the session will be on the release of the FOMC Meeting Minutes at 2:00 p.m. ET.
Additionally, there are multiple Fed speakers on the calendar: Williams (10:00 a.m. ET), Bostic (10:10 a.m. ET), and Kaplan (10:15 a.m. ET), however it is unlikely any of them move markets ahead of the Minutes.
Tom Essaye quoted in Barron’s on May 20, 2019. “Several U.S. tech firms have stopped conducting business with Huawei, per the…” Click here to read the full article.
What’s in Today’s Report:
Futures are rebounding with EU markets from yesterday’s sharp, tech-led losses thanks to some encouraging Huawei news o/n and a benign speech by Powell late Monday.
The U.S. announced some temporary exemptions will be issued for companies exporting to Huawei (mainly for existing products) which is helping ease some of yesterday’s elevated trade angst.
Overseas, there were no notable economic reports but the RBA cited risks to global growth in their most recent meeting minutes release, which pressured the aussie.
Looking into today’s U.S. session, focus will largely remain on the trade war and specifically any further information on the Huawei exemptions for U.S. exporters.
There are a few other potential catalysts however, including one economic report: Existing Home Sales (E: 5.37M) and a few Fed speakers: Bostic (7:50 a.m. ET), Evans (10:45 a.m. ET), and Rosengren (12:00 p.m. ET) but none of these are expected to materially move markets amid the most recent trade war developments.