Another Update From Dr. Copper (It’s Been Right)

What’s in Today’s Report:

  • Another Update From Dr. Copper (It’s Been Right)

Futures are modestly weaker following disappointing Chinese economic data.  Nothing new happened over night with U.S./China trade.

Chinese Retail Sales (7.2% vs. (E) 8.6%), Fixed Asset Investment (6.1% vs. (E) 6.4%) and Industrial Production (5.4% vs. (E) 6.3%) all missed estimates, implying the Chinese economic recovery might not be as solid as thought.

Today focus will shift back to economic data.  The Chinese data was underwhelming and that will put more pressure on today’s U.S. data to reassure markets about growth.

The key reports today (in order of importance) are:  Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 9.0), Industrial Production (E: 0.0%), Housing Market Index (E: 64).  Again, “bad” numbers from these reports that makes the Fed more dovish may cause a temporary bounce in stocks, but that’s not good for stocks in the medium/longer term.

Finally, there are two Fed Speakers, Quarles (9:30 a.m. ET) and Barkin (1:00 p.m. ET) but neither should move markets.

Sectors Insulated from the Trade War

What’s in Today’s Report:

  • Context for U.S.-China Trade: Identifying Sectors Insulated from Trade Risks

U.S. stock futures are bouncing with EU shares this morning as the outlook on trade improved modestly overnight.

China’s retaliatory tariff deadline of June 1st and Trump’s indecision on the next round of tariffs were received as incremental positives, helping risk assets rise this morning.

The German ZEW Survey, EU Industrial Production, and the NFIB Small Business Optimism Index did not offer any surprises and are largely being shrugged off by investors so far this morning.

Trade is obviously going to continue to dominate the headlines amid the recent resurgence of volatility but there is one economic report to watch today: Import & Export Prices (E: 0.7%, 0.6%) and one Fed speaker: George (12:45 p.m. ET).

The Right Sectors To Own If There’s A Rebound In Growth

Today’s Report is attached as a PDF.

What’s in Today’s Report:

  • The Right Sectors To Own If There’s A Rebound In Growth

Futures are slightly higher following a generally quiet night as markets wait for this morning’s jobs report.

President Trump said he hoped the U.S./China trade deal would be done in the next four weeks, which again generally meets markets expectations.

Economic data was sparse but German Industrial Production rose 0.7% vs. (E) 0.5%, somewhat offsetting Thursday’s disappointing German Manufacturers’ Orders report.

Today the focus will be on the jobs report and the expectations are as follows:  Jobs Adds 170K, UE Rate 3.8%,  Wages 3.4% yoy.

The best outcome for stocks today would be a jobs number in the mid 100k range (not too strong, but not too weak), positive revisions to the February data and a wage number below 3.5% yoy.  That outcome likely can spark a further rally.  Conversely, any extremes on the job adds (very good or very bad) along with another hot wage number may lead to profit taking in stocks on fears of slowing growth or a more hawkish Fed.