Posts

The Four Problems Facing Stocks (Print This List)

/in /by

Today’s Report is attached as a PDF.

What’s in Today’s Report:

  • Market Strategy Update:  The Four Problems Facing Stocks And Positive/Negative Outcomes for Each (I’m printing this list).
  • Weekly Market Preview (It’s Going to Be a Busy Week)
  • Weekly Economic Cheat Sheet

Futures are marginally lower following a busy weekend of news, but one that provided no significant surprises.

Global May manufacturing PMIs were mixed but a bit better than feared.  Chinese Manufacturing PMI was 50.2 vs. (E) 50.0, while the EU PMI met estimates at 47.7.  The British PMI was the disappointment at 49.4 vs. (E) 52.0.

On trade, a Mexican delegation is headed to Washington on Wednesday and there were some relatively positive comments from China, but neither situation has improved.

Today the key event will be the May ISM Manufacturing PMI (E: 52.9).  If that number meets expectations, that will alleviate some growth concerns, while a miss will only worsen the growing worries that the economy is rolling over.  From a Fed standpoint, there are two speakers today (Bullard 1:25 p.m. ET, Daly 9:45 p.m. ET) but neither should move markets as they aren’t part of Fed leadership.

Tom Essaye Quoted in Barron’s on May 31, 2019

/in /by

Tom Essaye Quoted in Barron’s on May 31, 2019.

Investors have to consider what  Tom Essaye calls the “worst case scenario.” In this case, the governments of Mexico and China decide to wait until the next election…click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on May 31, 2019

/in /by

Tom Essaye Interviewed with Yahoo Finance on May 31, 2019. A lot of important topics to talk about lately. Watch the full video here.

Tom Essaye Quoted in MarketWatch on May 30, 2019

/in /by

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.

Computer chips

What Mexican Tariffs Mean for Markets

/in /by

What’s in Today’s Report:

  • What Mexican Tariffs Mean for Markets (New Worst Case Scenario)
  • Two Leading Indicators of Market Contagion We’re Watching
  • Fed Policy Update
  • EIA/Oil Outlook

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).

Tom Essaye Quoted in Fox2Now on May 29, 2019

/in /by

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.

 

Technical Update (Important Levels to Watch)

/in /by

What’s in Today’s Report:

  • Market Technical Update – Important Support and Resistance Levels To Watch
  • Have Stocks Fallen Too Far Too Fast?

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.

The Bond Market Is Screaming For a Rate Cut

/in /by

What’s in Today’s Report:

  • Why The Bond Market Is Screaming For a Rate Cut

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 Appeared on TD Ameritrade on May 23, 2019

/in /by

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.

A U.S.-China Tech War Too?

/in /by

What’s in Today’s Report:

  • Why the Trade War is Becoming a Tech War (And That’s Bad)
  • Brexit Update – Is a “No Deal” Brexit A Possibility (Yes)
  • EIA and Oil Update – Bearish Supply News

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.