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Which Sectors Benefit From Trump’s Policies

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Which Sectors Benefit From Trump’s Policies: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Government Shutdown Update
  • Which Sectors Benefit From Trump’s Policies
  • “Short-Volatility Trade” Update: Chart

Futures are little changed this morning as investors digest a hotter than expected inflation print out of Japan and still cautious gauge of consumer sentiment in Europe ahead of a busy day of economic data in the U.S.

Overnight, Japanese Core CPI fell to 3.5% vs. (E) 3.3% while the German GfK Consumer Climate Index edged up by a modest 0.7 points to -29.0 vs. (E) -29.6. Neither release was particularly positive for markets but futures are stable ahead of today’s domestic data.

Looking into today’s session, there are four economic reports to watch this morning: Durable Goods Orders (E: -4.5%), Case-Shiller Home Price Index (E: 0.2%), FHFA House Price Index (E: 0.1%), Consumer Confidence (E: 115.0). Markets will want to see stability in the housing market data and easing but not collapsing growth and sentiment numbers in order for stocks to hold near the recently established record highs.

There are no Fed officials scheduled to speak today but there is a 7-Yr Treasury Note auction at 1:00 p.m. ET. Yesterday’s 2-Yr and 5-Yr Note auctions were weak, putting upward pressure on yields and if today’s 7-Yr auction is weak as well, expect the benchmark 10-Yr yield to test the critical 4.30% level which could weigh on equity markets.

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CPI Preview: Good, Bad and Ugly

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What’s in Today’s Report:

  • CPI Preview:  Good, Bad, and Ugly

Futures are slightly lower thanks to more tech stock weakness following a mostly quiet night of macroeconomic news.

Micron (MU) became the second large semiconductor company to produce negative earnings guidance (Monday it was Nvidia) as MU slashed its outlook, and that’s weighing on markets this morning.

Geo-politically, the FBI raid on Mar-a-Lago is dominating news coverage, but it has no impact on markets.

Today’s focus will remain on inflation via Unit Labor Costs (E: 9.3%) and if they come to light, that will further strengthen the idea that inflation is peaking and help to support stocks into tomorrow’s CPI report.

Tom Essaye Quoted in MarketWatch on January 17, 2020

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“Nothing in phase one will specifically add much to global [economic] growth…” wrote Tom Essaye, president of the Sevens Report in a Thursday note to clients. Click here to read the full article.

President Trump and Chinese Vice Premier Liu

Tyler Richey Quoted in MarketWatch on September 11, 2019

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“Bolton is a known foreign policy hawk and, apparently, he and President Trump’s views began to diverge over time. Part of that very well could be that Trump’s keenly…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil Rig

Tom Essaye Quoted in CNBC on June 27, 2019

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“We’ve consistently repeated that the rally in stocks to essentially new highs has been driven by hopes of Fed rate cuts and a U.S.-China trade truce…” said Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Trump

Tom Essaye Quoted in CNBC on June 12, 2019

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“Momentum can carry this market higher especially into the Trump/Xi G20 summit, but the bigger (and longer-term more important) question regarding…” says Tom Essaye. Click here to read the full article on CNBC.

Stock Buyer on the stock exchange floor

Tom Essaye Interviewed with Yahoo Finance on May 6, 2019

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Tom Essaye joined Yahoo Finance’s Zack Guzman and Heidi Chung to discuss how Trump’s tariff threat could influence global markets. Click here or the video below to watch the full interview.

Yahoo Finance video clip

 

Time to Chase Stocks? Not So Fast

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What’s in Today’s Report:

  • Time to Chase Stocks? Not So Fast.

Money flows were risk-on overnight thanks to continued trade-war optimism but stock futures are off the highs following more soft economic data overseas.

Trump said he would push back the March 1st tariff deadline, which was previously considered a “hard date,” if there is “good progress” towards a trade deal at that time while President Xi is now expected to attend talks on Friday. Both are incremental positives for the prospects of a successful deal.

Economic data out overnight was less optimistic however. EU Industrial Production fell –4.2% vs. (E) -3.2% Y/Y in December which is just the latest release fueling concerns about a global economic slowdown.

Today, the January CPI Report (E: 0.1%) will be watched closely ahead of the open while there are several Fed speakers before lunch: Bostic (7:15 a.m. ET), Mester (8:50 a.m. ET), Harker (12:00 p.m. ET).

The major focus of the market right now however remains the trade negotiations in Beijing and stocks will be most sensitive to any material headlines regarding the ongoing talks.

Was that the Bottom? (Technical Update)

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What’s in Today’s Report:

  • Technical Update: Was that the Bottom?

Futures are lower and giving back about 1/3 of yesterday’s massive rally on digestion and potentially negative U.S./China headlines.  There was no notable economic data overnight.

The Trump administration is considering an executive order banning U.S. companies from using Huawei and ZTE products (both Chinese firms).  This represents a potential escalation in ongoing U.S,/China tech/trade conflict, although so far China has viewed the trade and tech issues separately, and that needs to continue otherwise this market will face additional headwinds.

Today markets will try and digest yesterday’s massive rally with the best case scenario being a continued rally that sees the Dow and S&P 500 close above near resistance levels.  Economically, we do get multiple reports including  Jobless Claims (E: 217K), FHFA House Price Index (E: 0.2%), New Home Sales (E: 560K) and Consumer Confidence (E: 134.0) although none of those should move markets materially.

Tom Essaye quoted on Nasdaq – August 21, 2018

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Morning Movers: TJX Jumps, Kohl’s Drops, Toll Brothers Soars

We always need a story to tell about why the market is heading higher, and the one that’s making the rounds this morning is about the dollar. In an interview, President Donald Trump criticized the U.S. Federal Reserve for raising interest rates, and that has added uncertainty to what had been all but certain. As a result, the U.S. Dollar Index has dropped 0.2% today because one way a currency gains value against another is by being from a country where rates are anticipated to be higher. And a weaker dollar is supposed to be helping risk appetite in the U.S. and abroad. “Those comments mostly affected the dollar (pushing it lower), which on a longer time frame is bullish for stocks,” writes The Sevens Report’s Tom Essaye.