“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.
“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.
What’s in Today’s Report:
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.
What’s in Today’s Report:
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.
What’s in Today’s Report:
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.
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.
What’s in Today’s Report:
Futures are modestly lower following attacks on Saudi oil infrastructure over the weekend.
Oil surged 10% overnight after half of Saudi oil production was taken offline following attacks this weekend, as higher oil prices and increased geo-political tensions (the U.S. & Saudi are blaming Iran) are pressuring futures.
Meanwhile, Chinese economic data was universally disappointing as Fixed Asset Investment, Retail Sales, and Industrial Production all missed estimates. This is being somewhat ignored given the oil markets, but there remains little actual proof the Chinese economic has stabilized (and with the S&P 500 at 3000, that’s priced in).
Today focus will be on geo-politics and any further escalation in tensions between the U.S. and Iran will weigh on stocks. Beyond the short term, barring a U.S./Iran conflict (which is still very unlikely) the net impact of this weekend’s news will be to strengthen the valuation “ceiling” at 17X 2020 S&P 500 EPS (so 3,026 in the S&P 500), as it’s hard to justify stocks above that level given elevated geo-political risks.
Economically, there’s only one notable number today, the September Empire Manufacturing Survey (E: 4.9), and any evidence of stabilization in manufacturing will help stabilize stocks.
What’s in Today’s Report:
Futures are slightly higher as “chatter” about an interim U.S./China trade deal continues to build. Otherwise, it was a quiet night.
Nothing official has been released or confirmed, but based on multiple press reports the market now expects: 1) No more tariff increases and 2) Large agricultural purchases by China (which is essentially where we were back in June, although now we have more actual tariffs).
Economically, EU trade balance met expectations.
Today the focus will be on Retail Sales (E: 0.3%) and for stocks to continue this rally, we need to see a “Goldilocks” number (better than expectations but not too strong). If that happens, then the S&P 500 will hit new all time highs, likely led by cyclical sectors (XLY/XLF/XLB/XLI).
Today’s Report is attached as a PDF.
What’s in Today’s Report:
Futures are marginally higher ahead of the ECB decision and following a short tariff delay by President Trump.
Trump announced that the October 1 tariff increases (25% to 30% on 250 bln of imports) will be delayed till October 15th as a gesture of “goodwill.”
Economic data was again soft as German Industrial Production dropped –0.4% vs. (E) -0.1%, continuing the trend of disappointing EU manufacturing data.
Today the key event is the ECB Meeting. The decision is at 7:45 a.m. and the Press Conference will be held at 8:30 a.m. For the ECB to meet expectations we need to see 1) A rate cut, 2) More QE and 3) A “Tiered” deposit system. Outside of the ECB we also get two important economic reports, CPI (E: 0.1%) and Jobless Claims (E: 215K) and they could move markets if they are surprises (especially is CPI runs hot).
What’s in Today’s Report:
U.S. stock futures are suffering mild losses this morning as investors digest yesterday’s more pronounced sector-rotation money flows amid mixed economic data with focus turning to central bank events over the next week.
Chinese CPI and PPI were slightly firmer than expected in August, while French and Italian Industrial Production figures were underwhelming.
In the U.S., the NFIB Small Business Optimism Index was a mild disappointment at 103.1 vs. (E) 103.5 mostly due to declining growth expectations.
The mixed economic data, however, was not enough to materially affect investor sentiment and therefore is only having a modest impact on price action this morning.
Today, there is just one economic report to watch: July JOLTS (E: 7.311M) and there are no Fed officials speaking as they are in their “blackout period” ahead of next week’s FOMC meeting.
That will leave investors focused on the recently emerging “rotation trade,” and due to the heavyweight that tech stocks carry in the major indexes, if big tech names remain under pressure today, that will likely be a drag on the broader market.
