Major indexes are mixed today after major companies like Microsoft, Twitter, and Tesla reported earnings. Founder of The Sevens Report Tom Essaye joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss. Click here to watch the full video.
What’s in Today’s Report:
Futures are little changed while most international markets rallied overnight as investors remain optimistic about the “phase one” trade deal, continue to eye the fluid Brexit situation, and look ahead to the peak of earnings season.
There were no market-moving headlines overnight.
There are a lot of moving pieces in the market today between economic data and earnings.
On the data front, Existing Home Sales (E: 5.445M) is due out shortly after the open and then things will quiet down until the early afternoon when the Dallas Fed’s Kaplan speaks at 1:00 p.m. ET.
There is also a 10-Yr Treasury Note Auction at 1:00 p.m. ET. Yields have been steadily grinding higher in recent sessions, so strong demand (low yields) could weigh on stocks in the afternoon.
Switching to earnings, there are multiple consumer, defense, and transport companies reporting today including: LMT ($5.03), MCD ($2.20), PG ($1.24), UPS ($2.05), UTX ($2.03), JBLU ($0.53), TRV ($2.39).
For now, the trend in stocks is cautiously positive, but any of the catalysts above could potentially trigger a pullback given the tentative nature of the latest rally.
What’s in Today’s Report:
Futures are slightly higher on continued hopes of Brexit resolution and improvement in U.S./China trade relations.
The vote on the new Brexit deal was delayed in Parliament on Saturday, but it’s likely to happen today or tomorrow and passage of the deal is (narrowly) expected.
On U.S./China trade, Chinese Vice Premier Liu He made positive comments on U.S./China trade negotiations although he didn’t say anything new.
Today there are no economic reports and just one Fed speaker, Bowman (11;40 a.m. ET). So, the focus will be on Brexit headlines as a final vote on the Brexit deal in Parliament could happen later today. If the Brexit deal passes Parliament, we could see a short term rally, although again I don’t think Brexit resolution is enough, by itself, to send stocks sustainably higher from here.
Tom Essaye, founder of Sevens Report Research, said this week there are three reasons why the S&P 500 won’t be breaking out above its summer highs in the 3,027 range unless investors see better trade news:
The Phase I deal provided no relief from current trade war tariffs and it contained no provisions that would boost global growth from current levels. The December tariff increases are still in play, so the Phase I deal didn’t even eliminate market uncertainty over whether things could get worse from here.
Click here to read the full article.
“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.
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.
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.
What’s in Today’s Report:
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.
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.
“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.
