Posts

The Current Tug of War in this Market

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What’s in Today’s Report:

  • The Current Tug Of War in this Market
  • Weekly Market Preview:  Do Rising Coronavirus Cases Matter?
  • Weekly Economic Cheat Sheet:  Tomorrow’s Global Flash PMIs Are The Key Report This Week

Futures are moderately higher despite generally negative news over the weekend (the news wasn’t terrible, but it wasn’t good either, and certainly not worth a 75 bps rally in futures).

Coronavirus cases continue to move higher, as new cases rose above 30k in the U.S. for the first time since early May.

Politically, President Trump’s Tulsa rally undershot expectations, highlighting a still challenging path to re-election (the market still views the Trump administration is more business friendly than a Biden administration, yet despite the polls, markets are not pricing in virtually any chance of a Biden win in November, and we think that’s a risk going forward).

Today the calendar is quiet as there is only one economic report, Existing Home Sales (E: 4.29M).  So, incremental coronavirus headlines will likely move markets, and if we get any more headlines about companies closing stores/businesses in Florida/Arizona/Texas/California, that should weigh on markets.

What Comes Next? Three Catalysts to Watch

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What’s in Today’s Report:

  • What Comes Next?  Three Catalysts To Watch
  • Weekly Market Preview:  Fed Speak and Important Data This Week
  • Weekly Economic Cheat Sheet:  Empire and Philly Manufacturing Surveys This Week (Both June Data)

Futures are sharply lower on rising coronavirus concerns, as cases continued to rise in the U.S. over the weekend.

Certain states (CA/TX/FL/AZ) continue to see an acceleration in new coronavirus cases, although national new cases remain around 20k (where they’ve been for weeks).

Chinese economic data was slightly disappointing as Industrial Production (4.4% vs. (E) 5%), Retail Sales (-2.8% vs. (E) -2.33%) and Fixed Asset Investment all missed expectations.

Today focus will be on that 3,002 low in the S&P 500 from Thursday.  If that’s broken, a run down towards 2900 becomes much more likely.  Economically, the June Empire Manufacturing Survey (E: 30) is the key number today because it is the first look at June data, and the market will want to see continued improvement from May.  There’s also one Fed speaker today, Kaplan (11:00 am E.T.), but he’s unlikely to move markets given Powell is speaking tomorrow.

Was the Jobs Report an “All Clear” for Markets?

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What’s in Today’s Report:

  • Was the Jobs Report An “All Clear” for Markets?
  • Is a “V” Shaped Recovery Happening?
  • Weekly Market Preview:  Fed Meeting Wednesday
  • Weekly Economic Cheat Sheet:  Jobless Claims Remain the Key Report

Futures are modestly higher thanks to momentum as markets extend Friday’s rally following a quiet weekend.

Economic data was mixed overnight as Chinese exports were better than expected (-3.3% vs. (E) -6.5%) while German Industrial Production missed estimates (-17.9% vs. (E ) -16.2%).  But, neither number was bad enough to turn the bullish momentum.

Protests continued across the U.S. and were mostly peaceful, but this remains largely a non-issue for markets.

Today there are no economic reports and no Fed speakers so re-opening headlines and virus trends will drive trading, and as long as there isn’t any materially negative news on either front, the bulls will likely remain in charge.

Is the Easy Part of the Rally Behind Us?

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What’s in Today’s Report:

  • Is the “Easy” Part of the Rally Behind Us?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet:  Global PMIs Thursday will be very important.

Futures are sharply higher as economic reopening continued across the U.S. over the weekend, with more states announcing reopening and easing social restrictions.

The reopening headlines over the weekend were numerous, but there wasn’t any new news that implied the economic might return to normal sooner than expected, and beyond the short term, when the economy returns to normal remains the key unknown for this market.

Fed Chair Powell gave an interview on 60 Minutes that was cited as “positive” but he didn’t say anything new that wasn’t already communicated in his comments last week.

Economic data was sparse and isn’t moving markets.

Today there are no economic reports and no market moving Fed speakers, so headlines on economic reopening, U.S./China relations and the coronavirus should move markets.

Why Are Stocks So Resilient (And Can It Continue?)

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What’s in Today’s Report:

  • Why Are Stocks So Resilient (And Can It Continue?)
  • Weekly Market Preview:  More re-openings and stimulus this week?
  • Weekly Economic Cheat Sheet:  Claims still key, but Friday’s data is also important.

Futures are modestly lower following a quiet weekend as markets digest last week’s gains.

Economic data from China continued to come in better than feared, as New Yuan Loans grew 11.5% vs. (E) 10.3% while auto sales declined just –5.5% in April compared to –40% in March.

The Chinese data continues to sew hopes for a relatively quick, “V” shaped economic recovery in the U.S., and that expectation is helping to support stocks.

Today there are no notable economic reports and just one Fed speaker, Evans (3:30 p.m. ET), so headlines on economic re-openings and a potential additional stimulus bill should drive markets (if the re-opening headlines are good and prospects for another stimulus bill continue to rise, markets should be able to continue to digest the recent rally).

Current Market Catalysts (They Changed Last Week)

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What’s in Today’s Report:

  • Current Market Catalysts:  From Reopening and Remdesivir to Normalization and Nationalism
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Jobs Report This Friday)

Futures are moderately lower as U.S./China tensions rise while markets begin to shift their focus towards when the economy will return to normal.

U.S./China tension over the origin of the coronavirus rose over the weekend as Secretary of State Pompeo said there was “enormous” evidence that suggests the virus was created in a lab.

Economically, the EU manufacturing PMI slightly missed expectations, coming in at 33.4 vs. (E) 33.6.

Today there are no notable economic reports nor any Fed speakers, so markets will trade off any U.S./China coronavirus tension headlines, along with any hints of when the economy might return to some semblance of “normal” as those two issues have now become the main drivers of stocks in the near term.

Have Things Improved This Much?

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What’s in Today’s Report:

  • Have Things Improved This Much?
  • Weekly Market Preview:  Focus Shifts to Earnings
  • Weekly Economic Cheat Sheet:  How Bad Is The Economy? (We Get Important Updates This Week)

Futures are modestly lower following a generally quiet weekend as markets digest last week’s big rally.

OPEC+ agreed to cut global oil output by 9.7 mln barrels/day, slightly below to 10 mln barrel/day estimate.  That will improve the supply/demand imbalance, but it won’t spark a big rally in oil (it’ll take a sooner than expected reopening of the global economy to do that).  For stocks, this is a mild positive as oil probably won’t make new lows going forward.

Coronavirus trends continued to improve over the weekend as it becomes more clear virus growth has peaked, although that’s already priced into stocks at these levels.

Today there are no economic reports or Fed speak, and most of Europe is closed, so any coronavirus updates will likely drive trading.

The Most Important Two Weeks Since ’08

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What’s in Today’s Report:

  • Why the Next Two Weeks Are the Most Important Since 2008
  • Weekly Market Preview:  Can the Coronavirus Peak?
  • Weekly Economic Cheat Sheet:  Jobless Claims and Consumer Sentiment Key This Week

Futures are sharply higher on new hopes the coronavirus growth rate may be peaking in some of the world’s hardest hit countries.

New York, and the U.S. more broadly, saw signs of progress  as coronavirus deaths in NY were down for the first time, as was total new coronavirus cases in the U.S.

Globally there was also progress, as Italy, Spain and Germany potentially have also seen their peak in the virus growth rate.

Today there are no economic reports so focus will remain on coronavirus headlines, and if we get another day of fewer deaths and fewer new cases, confidence will start to build that the worst is behind us.  Fingers crossed.

Where Do Markets Go From Here?

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What’s in Today’s Report:

  • Where Do Markets Go From Here?
  • Weekly Market Preview:  Coronavirus news first, but it’s an important week from a data standpoint too
  • Weekly Economic Cheat Sheet:  Why Wednesday is the Most Important Day of the Week

Markets are trying to stabilize and futures are down modestly, but they have been volatile as futures have been down 1% and up 1% before trading back closer to flat.

If there’s a “reason” for the attempted rebound, it’s the surging expectation for a globally coordinated central bank response sometime later this week (possibly a 50 bps cut).

Coronavirus news remained negative in aggregate as cases increased in the U.S., although the news is no worse than what the market’s priced in last week.

Economically, the Chinese Feb. Manufacturing PMI imploded to 35.7 vs. (E) 46.0, but that wasn’t a surprise.  The data from the EU and Britain was solid.

Today the market will be driven by the latest coronavirus headlines, but there is an important economic report, the ISM Manufacturing PMI (E: 50.4), and a better than expected number would give the market a needed confidence boost.

Pullback – Why Stocks Are Down 2%

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What’s in Today’s Report:

  • Pullback – Why Stocks Are Dropping and Is This the Start of a Correction?
  • Weekly Market Preview:  Focus on politics and growth.
  • Weekly Economic Cheat Sheet:  Durable Goods and inflation will be in focus this week.

Futures are down more than 2% as an increase in COVID 19 cases in new places (South Korea and Italy), combined with a big Sanders victory in the Nevada Caucus are adding to the growth concerns following Friday’s soft flash PMI.

Politically, Sanders won the Nevada Caucus with more than 40% of the vote, implying his base is bigger than thought, meaning he might be a more formidable opponent to Trump than what the market was previously thinking.

Economic data was sparse as the German Ifo Business Expectations survey beat estimates (93.4 vs. (E ) 92.1), but that number obviously isn’t moving markets.

Today there are no economic reports and just one Fed speaker,  Mester (3:00 p.m. ET), so focus will be on any COVID 19 updates (and anything that hints at a slowing of transmission will help stocks bounce).  From a fundamental support standpoint, 3,219 is 18.5X next year’s earnings so we’ll be interested to see if that can hold in the near term.