Valuation Update: Dangers of FOMO (Fear of Missing Out)

What’s in Today’s Report:

  • Valuation Update:  Dangers of FOMO (Fear of Missing Out)

Futures are slightly lower as a potential “stall” in U.S./China trade talks and disappointing data weigh marginally on global stocks.

Chinese economic data was universally disappointing, as Fixed Asset Investment, Retail Sales and Industrial Production all missed estimates.  The soft numbers implied the global economic rebound expected by stocks isn’t a done deal just yet.

Today there are two notable economic reports, Jobless Claims (E: 215K) and PPI (E: 0.3%) and a figurative parade of Fed speakers including (in order of importance):  Powell (10:00 a.m. ET), Clarida (9:10 a.m. ET), Evans (9:10 a.m. ET), Daly (11:45 a.m. ET), Williams (12:00 p.m. ET), Bullard (12:20 p.m. ET).

But, the data points shouldn’t move markets, and neither should any of the Fed speak because Chair Powell spoke yesterday and clearly signaled the Fed is on hold, which is what the market expects and has priced in.

So, we can expect trade commentary and headlines to move markets.  Clearly the market is ignoring the phase one “stall” headlines, otherwise, stocks would be down sharply this morning.  But, headlines worsen and the stall increases the risk of a phase one breakdown, that will hit markets hard.

Valuation Update (Better, But Not Good)

What’s in Today’s Report:

  • Equity Risk Premium Update – Better, But Not Good
  • Updated Oil Outlook

Futures are marginally weaker following a quiet night as markets as markets further digest the 2019 rally.

Economic data was sparse although Euro Zone Core HICP (their CPI) met expectations at 1.0%, which remains near multi-month lows.

Today focus will remain on earning and we get some notable consumer companies reporting (in addition to more banks).  Some reports we’ll be watching include:  MS ($0.90), PPG ($1.10), NFLX ($0.25),and AXP ($1.79).  As has been the case so far in earnings season, the commentary on the economy will be just as important as the actual results.

We also get two notable economic reports, including Jobless Claims (E: 216K) and the Philadelphia Fed Business Outlook Survey (E: 10.0) plus one Fed speaker: Quarles (10:45 p.m. ET). Bottom line, if earnings continue to beat low expectations, stocks can grind higher for now.

Valuation Update

What’s in Today’s Report:

  • Valuation Update and a New “Fair Value” Trading Range

Futures are extending the late Thursday gains and are modestly higher thanks to momentum.

Economically, Japanese data disappointed as the Unemployment Rate (2.5% vs. (E ) 2.4%) and Retail Sales (1.4% vs. (E) 2.2%) missed expectations.

Today investors will see if the year-end bounce can continue.  There are a few economic reports including International Trade in Goods (E: -$75.7B), Chicago PMI (E: 62.4) and Pending Home Sales Index (E: 1.5%) but none of those should move markets materially.