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Tom Essaye Quoted in Barron’s on September 27, 2019

“U.S./China trade talks are officially scheduled for October 10 and 11th and rhetoric from both sides remains positive ahead of the event. “At this point, a pretty comprehensive…” writes The Sevens Report’s Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Barron’s on September 26, 2019

In fact, the market seems to be worrying more about China and the state of the U.S. economy than impeachment, according to Sevens Report’s Tom Essaye. U.S./China trade remains the singular most important issue facing this market, and as long as markets have ‘hope’ of a U.S./China trade ‘truce,’ it’ll be hard to…” he writes.

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Tom Essaye Quoted in Barron’s on September 20, 2019

And maybe that’s because there’s still so much uncertainty out there regarding trade? Yes, the U.S. has exempted more than 400 goods from tariffs, and come as both the two sides get ready for October negotiations. “On U.S./China trade, the staffer meeting in preparation for the October meeting will continue, and absent any ‘real’ news today any chatter that’s positive on…” writes The Sevens Reports’ Tom Essaye. Click here to read the full article.

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Macro Outlook: Better, But Is It This Good?

What’s in Today’s Report:

  • Macro Outlook Update:  Better, But Is It This Good?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Today and Friday are the key days)

Futures are flat as economic data was weak, but countering that was positive comments on U.S./China trade.

September EU flash composite PMIs were ugly, as the headline dropped to 50.4 vs. (E) 52.0 while manufacturing fell to 45.6 vs. (E) 47.3.  As usual, U.S./China trade is over shadowing everything else, but these are not good numbers and they do not imply global economic stabilization is occurring.

On U.S./China trade, the Chinese Ministry of Finance called last week’s talks “constructive” and that’s alleviating fears the earlier than expected departure implied a breakdown.

Today the key number is the Sept. Flash PMI (E: 51.2) and it needs to meet or beat expectations, otherwise concerns will continue to rise about the future growth of the U.S. economy.

There are also three Fed speakers (Williams (9:50 a.m.), Bullard (1:00 p.m.), Daly (2:30 p.m.)) we got a lot of Fed speak on Friday and it didn’t change the current outlook, so there’s no reason to think that will happen today.

Tom Essaye Quoted in CNBC on September 17, 2019

Cramer’s comments echo that of the Stevens Report founder Tom Essaye’s, who said in a note that “the drama is centered on just how strongly the Fed will signal that it’s going to cut rates again by the end of 2019.” Click here to read the full article.

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Tom Essaye Quoted in MarketWatch on September 12, 2019

“The S&P 500 has now fully retraced the August pullback, and in doing so has priced in a lasting U.S.-China trade truce and aggressive [global] central bank easing…” wrote Tom Essaye, president of the Sevens Report in a Thursday note to clients. Click here to read the full article.

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Tom Essaye Quoted in CNBC on August 30, 2019

“For U.S.-China trade to cause a sustainable rally, we need some proof of actual movement towards a trade ‘truce,’” said Tom Essaye, founder of the Sevens Report, in a note. Click here to read the full article.

Has There Been Actual U.S./China Trade Progress?

What’s in Today’s Report:

  • Has There Been Actual U.S./China Trade Progress?
  • The Most Important Economic Number to Watch Going Forward

Futures are moderately higher as more positive U.S./China trade chatter fuels the rebound.

There was more vague, but positive, commentary on the tone of current U.S./China communications, as China called the conversations ”effective.”

There was a lot of economic data overnight and it was decidedly mixed.  Japanese IP beat estimates but German Retail Sales (-2.2% vs. (E) 1.1%) disappointed.  Bottom line, the outlook on the global economy remains decidedly mixed.

Today should be quiet given the looming holiday weekend, but the key number to watch is the Core PCE Price Index (E: 0.2% m/m, 1.7% y/y).  If that runs very “hot” (so a number close to 2.0%) that will be taken as slightly hawkish and could reverse some of this week’s rally.

What’s Next for U.S.-China Trade?

What’s in Today’s Report:

  • What’s Next for U.S.-China Trade?
  • Durable Goods Report Takeaways

It’s a mixed morning in the global financial markets as equity indexes are largely directionless while safe-haven assets have a mild bid after a mostly quiet night of news.

Longer duration Treasuries are outperforming so far today which is resulting in the 10s-2s Treasury yield spread inverting to new cycle lows, below –2 basis points as of this writing.

Economically, Chinese Industrial Profits rose +2.6% in July from –2.4% in June while Q2 German GDP met estimates at +0.4% year/year, but neither release materially moved markets.

Looking into today’s session, there are no Fed speakers, but several economic reports to watch: S&P CoreLogic Case-Shiller HPI (E: 2.3%), FHFA House Price Index (E: 0.3%), and Consumer Confidence (E: 130.0).

There is also a 2-Yr Treasury Note auction today (1:00 p.m. ET) and if demand is soft (so yields rise), it could further invert the yield curve and cause another wave of recession fears as we saw earlier this month.

Lastly, another round of U.S. – China trade talks were scheduled for today although there have been no updates on the topic. So any positive news regarding those talks will be well received by investors, while if they end up not actually taking place, that will weigh on stocks and other risk assets today.

Progress on U.S./China Trade?

What’s in Today’s Report:

  • Updated Market Outlook
  • Weekly Market Preview (This Week is More Important Than It Might Seem)
  • Weekly Economic Cheat Sheet (All About Growth)

Futures are solidly higher again as the Commerce Department extended Huawei waivers for 90 days, which is a mild positive in the U.S./China trade situation.

There were a lot of trade-related headlines out over the weekend (and some of them were conflicting) but the net/net is that tensions appear to be receding somewhat, which is helping to support an extension of Friday’s rally.

The only notable economic report was Japanese exports, which met expectations at –1.6% m/m and isn’t moving markets.

There are no economic reports today and no Fed speakers, so focus will be on any trade-related headlines and while we’re sure to get conflicting messages via twitter and other mediums, the bottom line is that tensions appear to be receding – which is positive for stocks.

Looking forward to this week, it’s an important one.  Powell’s Jackson Hole speech on Friday, combined with FOMC Minutes Wednesday and the global flash PMIs will give us important updated insight into 1) Whether central banks are going to try and correct the hawkish disappointments from July, and 2) If global growth is trying to stabilize.  If the answer is “yes” to both, then stocks can extend the rally.