Posts

Why Average Inflation Matters

/in /by

What’s in Today’s Report:

  • Why Average Inflation Matters to You

Stock futures are slightly lower this morning after a quiet night of news. There were no economic releases overnight leaving investor focus primarily on earnings.

Oil is notably hitting fresh 2019 highs this morning which should continue to drive outperformance in the energy sector today.

Looking to the calendar for today, there is one economic report due out of Europe: Eurozone Consumer Confidence Flash (E: -6.9) and two reports on the U.S. housing market: FHFA House Price Index (E: 0.4%) and New Home Sales (E: 645K). There are no Fed speakers today.

Additionally, price action in stocks has been especially sensitive to the bond market since the March Fed meeting and while volatility has eased in both markets, there is a 2 Year Treasury Note Auction at 1:00 p.m. ET that could move markets.

Investors’ primary focus however will remain on earnings. Some notable releases today include: TWTR ($0.15), KO ($0.46), PG ($1.04), SNAP ($0.12), and EBAY ($0.63).

Tom Essaye Quoted in CNBC on March 27, 2019

/in /by

“We need global growth to stabilize to help propel stocks higher from here. The currency and bond markets continue to flash large and…” Click here to read the full article.

New Earnings Risks

/in /by

What’s in Today’s Report:

  • Why the Stronger Dollar and Commodity Prices Matter to Stocks
  • Housing Market Data Update
  • More Evidence a Rate Cut Might Be Coming

S&P futures have turned negative in pre-market trading as bond yields continue to bleed lower with the benchmark 10-yr yield hitting fresh lows in the mid-2.30% range overnight.

Economically, Chinese Industrial Profits were down -14.0% YTD, falling from -1.9% in December.

The Reserve Bank of New Zealand was the latest central bank to turn decidedly dovish overnight citing concerns about the global economy while Brexit angst also persists amid new votes in Parliament today.

The list of catalysts in the Wall Street session is a short one today with only one economic report due out: International Trade (E: -$57.4B) and just one Fed speaker later in the evening: George (7:00 p.m. ET).

That will again leave the market primarily focused on the bond market and to a lesser degree the dollar. Recession fears are front and center right now with Fed funds futures pricing in more than 80% odds of a rate cut in the next 10 months as of this writing.

Bottom line, without a rebound in yields and at least a steady dollar (a pullback would be more favorable) then it will be very difficult for stocks to mount any sort of rally today.

Why Stocks Dropped

/in /by

What’s in Today’s Report:

  • Why Stocks Dropped Friday
  • Weekly Market Preview (All About Growth)
  • Weekly Economic Cheat Sheet

Futures are slightly lower thanks to continued momentum from Friday’s sell off.  Outside of politics, it was a generally quiet weekend.

Economically, we got an upside surprise from German IFO Business Expectations, which rose to 95.6 vs. (E) 94.0 and that offsets a small part of last week’s bad PMIs (but not nearly enough to address growth concerns).

Politically, the release of the Mueller report dominated headlines over the weekend, but as has been the case for nearly two years, this topic is not an influence on markets.

There are no economic reports today and no material Fed commentary, so focus today will be on whether the S&P 500 can stabilize and hold 2800.  The Mueller report will continue to dominate media coverage, but again this simply isn’t an influence on stocks, Treasuries or the dollar.

Technical Update

/in /by

What’s in Today’s Report:

  • Technical Update – What The Charts Are Saying About This Market

Futures are moderately lower following more disappointing European economic data.

EU flash PMIs were a disappointment again, as the composite EU PMI fell to 51.3 vs. (E) 51.4.  Manufacturing was especially bad as the EU flash manufacturing PMI dropped to 47.6 vs. (E) 49.5, a five year low.

Today the highlight will be the Flash Composite PMI (E: 55.2).  That number was always going to be important, but it’s even more important now following the disappointing EU economic data, as markets will need more proof the U.S. can withstand failing global growth to continue this rally.  Other events today include  Existing Home Sales (E: 5.080M), Wholesale Trade (E: 0.1%) and Fed speaker  Bostic (9:30 p.m. ET) but none of those should move markets.

Why Stocks Have Rallied

/in /by

What’s in Today’s Report:

  • Why Stocks Have Rallied (FOMO)
  • An Important Gap Between Stocks and Bonds
  • EIA Analysis and Oil Market Update

Futures are slightly lower following a quiet night as markets digest more mixed economic data following the big three day rally.

Chinese economic data was mixed as Industrial Production missed estimates (5.3% vs. (E) 5.5%) while Fixed Asset Investment slightly beat and Retail Sales met expectations.

Geo-politically it was a quiet night as there were no updates to U.S./China trade.

Today focus will be on economic data via the Jobless Claims (E: 225K), Import Export Prices (E: 0.3%, 0.2%) and New Home Sales (E: 620K), as well as testimony before Congress by Treasury Secretary Mnuchin.  Finally, there’s a GE guidance update later this morning, and if that’s particularly soft, that could hit stocks.

Economic Breaker Panel: March Update

/in /by

What’s in Today’s Report:

  • What’s Next for Brexit
  • Economic Breaker Panel – March Update
  • Another (Potentially Bearish) Copper Development

Stock futures are marginally higher this morning after a very quiet night of news while no major international market moved more than 1% overnight.

Asian shares declined modestly after a report that Japanese Machine Orders fell –5.4% in January vs. (E) -1.9%.

In Europe, EU Industrial Production beat expectations (1.4% vs. E: 1.0%) while focus remains on today’s “hard Brexit” vote in the U.K. (which is very unlikely to pass).

Looking into today’s U.S. session, focus will be on economic data early with two reports due ahead of the bell: Durable Goods Orders (E: -0.8%), PPI (E: 0.2%), and one shortly after the open: Construction Spending (E: 0.3%).

There are no Fed officials speaking today so investor focus will shift to the “hard Brexit” vote but it is very unlikely to pass which will result in another vote to delay the Brexit date tomorrow. This scenario is priced in however and should not materially move markets.

Leading Indicators

/in /by

What’s in Today’s Report:

  • Some Leading Indicators of the 2018 Correction Are Teetering Again

U.S. futures are up small while Asian markets were notably higher overnight as the indexes continued to play “catch up” to the big gains in the US since mid-day Friday while EU markets are flat as investors eye today’s Brexit vote.

News that the EU made some last minute concessions to the Brexit agreement ahead of today’s vote in Parliament was seen as a positive o/n but a deal still remains unlikely.

The NFIB Small Business Optimism Index was 101.7 vs. (E) 102.5 in February but encouragingly some of the forward looking details did improve.

The two primary catalysts in the U.S. today both hit before the open with CPI (E: 0.2%) at 8:30 a.m. ET and then the Fed’s Brainard speaks at 8:45 a.m. ET. Focus will then return to today’s Brexit vote and while a “deal” is not likely, it will be the lack of a delay to the deadline that would hit the pound and risk assets globally.

Why The Dovish ECB Isn’t Good For Stocks

/in /by

What’s in Today’s Report:

  • Why The Dovish ECB Decision Isn’t Good for Stocks

Futures are modestly lower following more disappointing economic data.

Chinese exports badly missed expectations at –20.7% vs. (E) -6.5%, although that number was likely skewed by the Lunar New Year, so it’s not as bad as it looks.  German Manufacturers’ Orders also missed (-2.6% vs. (E) 0.5%).  So, the data overnight is just adding to the growth worries that came from the ECB projections yesterday and that’s why stocks are down again.

Today the key will be the Employment Situation Report.  Estimates are:  Jobs: 178K, UE: 3.9%, Wages: 3.4% yoy), and thankfully the range for a “Just Right” number is wide, as we said in our Jobs Report Preview.  But, given the recent soft global economic data, while the range for a “Just Right” number is wide, the penalty for a number being “Too Cold” and causing growth concerns or “Too Hot” and resulting in a hawkish Fed will be extreme, and if either one of those outcomes occur, it’ll likely be a painful day in stocks.

Outside of the jobs report we also get Housing Starts (E: 1.17M) and two Fed Speakers:  Daly (10:00 a.m. ET) and Powell (10:00 p.m. ET).

Tom Essaye Quoted in Bloomberg on March 6, 2019

/in /by

“The outlook for China has been steadily improving for the past two months, and this MSCI announcement is another tailwind. Clearly this isn’t a risk-free trade and a lot can still…”

Click here to read the article.