Posts

Tyler Richey Quoted in Yahoo Finance on June 25, 2019

“Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war and global economy, the demand…” says Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Man at Oil Rig

Tom Essaye Quoted in Yahoo Finance on June 12, 2019

The Sevens Report’s Tom Essaye said this week that the trade war is one of several key uncertainties creating volatility in the market. A major divide seems to exist between market expectations for three…Click here to read the full article.

Market Scenario Update (Good/Bad/Ugly)

What’s in Today’s Report:

  • How Good Was Last Week? (Good/Bad/Ugly Scenario Update)

It is a risk-on morning with U.S. stock futures tracking international equity markets higher after China announced a new wave of stimulus measures overnight.

The PBOC explained that the program would support infrastructure investment through special bond issuance which helped mainland China shares rally 2.6% on the session.

Economically, the NFIB Small Business Optimism Index was 105.0 vs. (E) 102.0. in May despite the elevated trade tensions, which helped S&P futures extend pre-market gains during the last hour.

Today, the calendar is relatively quiet although there is one inflation figure due out ahead of the open: PPI (E: 0.1%) and even though it is a lesser followed report, a “hot” print could still cause an uptick in volatility after the melt up we have seen over the last week.

There are no Fed officials scheduled to speak today which will leave investors looking for any further updates on the trade war, but even though the market is near-term overbought, no news is good news as sentiment is very positive and momentum alone could help stocks continue higher today.

Economic Breaker Panel Update

What’s in Today’s Report:

  • Economic Breaker Panel: May Update

U.S. stock futures are flat as investors look ahead to today’s release of the FOMC Minutes while most overseas markets bounced o/n in sympathy with the U.S. rally yesterday, although trade tensions remain elevated.

A NYT article released late yesterday revealed a modest escalation in the “tech war” as the U.S. will likely add several Chinese surveillance companies to the same “blacklist” that Huawei is on. This is an incremental negative as the odds of the broader “trade war” being resolved in the near-term continue to fall amid escalations in the U.S.-China “tech war.”

There are no major economic reports today but the calendar is relatively busy with the EIA Petroleum Status Report  due out at 10:30 a.m. ET (oil has traded with a sluggish tone this week and a selloff could drag stocks lower), while the main focus of the session will be on the release of the FOMC Meeting Minutes at 2:00 p.m. ET.

Additionally, there are multiple Fed speakers on the calendar: Williams (10:00 a.m. ET), Bostic (10:10 a.m. ET), and Kaplan (10:15 a.m. ET), however it is unlikely any of them move markets ahead of the Minutes.

Trade Update: Good/Bad/Ugly

What’s in Today’s Report:

  • Trade Update: Good/Bad/Ugly

Futures are rebounding with EU markets from yesterday’s sharp, tech-led losses thanks to some encouraging Huawei news o/n and a benign speech by Powell late Monday.

The U.S. announced some temporary exemptions will be issued for companies exporting to Huawei (mainly for existing products) which is helping ease some of yesterday’s elevated trade angst.

Overseas, there were no notable economic reports but the RBA cited risks to global growth in their most recent meeting minutes release, which pressured the aussie.

Looking into today’s U.S. session, focus will largely remain on the trade war and specifically any further information on the Huawei exemptions for U.S. exporters.

There are a few other potential catalysts however, including one economic report: Existing Home Sales (E: 5.37M) and a few Fed speakers: Bostic (7:50 a.m. ET), Evans (10:45 a.m. ET), and Rosengren (12:00 p.m. ET) but none of these are expected to materially move markets amid the most recent trade war developments.

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).