Whether or not the performance of these cyclical stocks trading at cheap valuations can continue to lead the market depends on whether faith in an accelerating economy is correct. Tom Essaye, president of the Sevens Report, is not ready to endorse this view just yet. “In the last few days there have been hints of stabilization in the growth data, but just hints…” he wrote in a Tuesday note to clients. Click here to read the full article.
“People had aggressively pushed cyclicals higher over the past two weeks. But in order for that to work out beyond the short term, we need to see…” said Tom Essaye, founder of the Sevens Report. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed following mixed Chinese economic data.
Chinese GDP missed estimates at 6.0% vs. (E) 6.1%, while Retail Sales met expectations at 7.8% and Industrial Production beat (5.8% vs. (E) 4.9%). In sum, the data is slightly underwhelming but isn’t changing expectations for global growth.
Looking forward to today, there are no economic reports but there are a lot of Fed speakers including (in order of importance): Clarida (11:30 a.m. ET), George (10:00 a.m. ET), Kaplan (9:00 & 11 a.m. ET), Kashkari (10:30 a.m. ET). But, none of them should say anything too surprising and they shouldn’t move markets.
So, markets will stay focused on earnings and Brexit headlines. Regarding Brexit, a vote on the new Brexit deal will happen Saturday in Parliament, and at this point passage looks to be a 50/50 chance. So, there’s more drama yet in the three plus year Brexit saga.
“On Saturday, the Treasury Department stated it’s not considering blocking Chinese companies from listing on U.S. exchanges ‘at this time,’ refuting the Bloomberg story from Friday, which caused the declines in stocks…” wrote Tom Essaye, president of the Sevens Report, in a note to clients. Click here to read the full article.
Stocks quickly rolled over Thursday after the comments came to light, finishing near the lows of the session. As Sevens Report Research founder Tom Essaye wrote to clients, the algos that scan the internet for headlines took control after Pillsbury’s comments. The machines were right to…Click here to read the full article.
“The staples are actually poised to be in a pretty good spot,” said Tom Essaye, founder of the Sevens Report. He said he thinks positive but slowing economic growth could continue to benefit the group. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply higher on more positive U.S./China trade “chatter” and political resolution in Italy.
Chinese officials made general comments about not wanting to further escalate the trade war and won’t retaliate to the recent tariffs, and that’s helping sentiment. But, to be clear, no actual progress has occurred – just vague rhetoric, and as far as we can tell the phone call between the two delegations has not occurred yet (remember it was loosely scheduled for Tuesday). Point being, things haven’t improved as much as the two day rally would imply.
Economic data was decent as German unemployment met expectations while EU Economic Sentiment was better than expected (103.1 vs. (E) 102.5). Regarding Italy, the country will avoid new elections, and while that’s not a sustainable positive catalyst for markets, it does, for now, remove another potential headwind.
Attendance and volumes will continue to decrease into the long weekend, but focus will remain on any trade related headlines. Economically, the notable reports today include Q2 Revised GDP (E: 2.0%), Jobless Claims (E: 213K) and Pending Home Sales (E: -0.3%) although none of those should move markets.
Bottom line, if Treasury yields are stable, stocks can hold these early gains, although we continue to caution this rally is being driven by month-end positioning more than any actual, positive progress on the headwinds facing this market.
What’s in Today’s Report:
Futures are solidly higher thanks to continued momentum following Thursday’s positive close.
Stocks were short term oversold and due for a bounce, but if there’s a “reason” behind the early rally it was a Washington Post article stating the Trump administration is getting concerned about future economic growth, which might lead to a trade deal.
There were no notable economic reports overnight.
Today the calendar is more quiet as we only have two economic reports, Housing Starts (E: 1.260M) and Consumer Sentiment (E: 97.5). But, the Huawei waiver deadline is Monday the 19th so if there are going to be waivers given, it could happen literally at any minute (generous waivers will supercharge today’s early rally if they come).
Wall Street reactions to China trade escalation marked by fear, uncertainty
“It’s not good, obviously. I think that it really surprised a lot of people and I think it underscores that this is not a problem that’s going to be solved in the near-term…” said Tom Essaye, a former trader who founded “The Sevens Report” newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally higher again and this morning is largely a repeat of Wednesday morning as a news article that is positive on U.S.—China trade in tone, yet offers no new information, is causing a mild rally.
The South China Morning Post (a government media source) posted an article stating the U.S. and China will reach a temporary trade “truce” at the G-20.
Economic data was sparse and is not moving markets.
Today we do get some notable economic reports, including Final Q1 GDP (E: 3.1%), Jobless Claims (E: 218K) and Pending Home Sales (E: 0.6%).
The GDP report will get the most attention but the claims data is the most important release today, but that said none of these reports should move markets. Instead, we will continue to be glued to the scrolling ticker for any reports or updates on what’s expected at the G-20, as that event continues to hover like a cloud over all markets this week.
