10/11/2019
“Very, Very Good” Meeting
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Equities:
President Trump is set to meet with Vice Premier Liu He in the White House today in hopes of a final de-escalation of the 15-month trade war with China. An increase in tariffs still hangs in the balance with talks breaking down suddenly in the past. Trump told reporters late yesterday that talks were going “very, very good” which was a stark change from earlier in the week. Asian markets surged overnight with signs of progress being made after a change in foreign investment rules were abruptly changed in Shanghai as a potential sign of good faith. Progress on the Brexit front also eased investor concerns further with a deadline fast approaching at the end of October. British Prime Minister Johnson and Irish Prime Minister Varadkar reportedly “see a pathway to a possible deal.” The pound exploded to its best 2-day performance in over a decade as a result along with great strides seen in European equities. Yesterday saw the S&P 500 (SPX) inch closer to the 3K mark with a 19 point gain secured to end at 2938. The DOW Industrials ($DJI) tacked on 150 points during the same time-frame to see a strong finish at 26,496.
Credit Markets:
The yield on the 10 year has popped by two basis points overnight to see Treasuries near 1.69%. Cleveland Fed President Loretta Mester advocated against a future rate cut in a speech yesterday as the U.S. economy continues to show resiliency.
Commodities:
Crude Futures (/CL) have been on the move after news of yet another missile attack now on an Iranian tanker brought fresh recollection of last month’s Saudi attacks. Supply disruption appears inevitable in the region which provides a vital percentage of the globe’s oil supply. Energy Futures are up 1.25% currently near $54.25 a barrel. Gold Futures (/GC) are pulling back by double-digits as a possible trade deal dilutes the need for the precious metal to act as a backstop. At $1488 an ounce, the 1500 level has been compromised after a 3rd straight losing session appears to be developing.
Pre-Market:
U.S. Equity Futures (/ES) are currently trending 1% higher across all major sectors in hopes of a deal. Import prices climbed by 0.2% vs the expectation of 0.00% which is the first jump of this magnitude since March. Consumer Sentiment will be looking for a reading at or above 92 which would match the low since January’s abysmal performance. Share of Roku (ROKU) are popping by $8 after a sizeable 5% stake was revealed by a well-known investor. Walmart (WMT) may also be active today after their popular President, Greg Foran is stepping down to head Air New Zealand in his home country. Volatility continues to implode with the CBOE Volatility Index (VIX) coming in by 5% to crack below 17 in a general show of confidence.
Major Economic Reports:
Thursday:
7:30 am CT –Import/Export Prices
9:00 am CT – Consumer Sentiment
11:15 am CT – FOMC Member Rosengren Speaks
Notable Earnings:
Friday– 10/11:
A.M. – FAST,INFY
P.M. – N/A
Monday– 10/14:
A.M. – N/A
P.M. – N/A
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10/10/2019
Psssst…………I have something to tell you
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Equities:
U.S. equities closed higher for the first time in three days Wednesday after a report stated that China is open to a partial trade deal with the United States, while another asserted that an offer to buy more U.S. agricultural products was on the table to reach an agreement. The Federal Reserve released minutes from its September meeting, which showed the trade war remains a deep concern for Fed officials. However, they also showed central-bank officials think the market may be overly optimistic about the number of rate cuts moving forward. All 11 sectors of the S&P 500 ended higher, with four jumping more than 1%. Tech shares led the advancing sectors, rising 1.5%. Microsoft (MSFT) and Intel (INTC) added 1.9% and 1.5%, respectively. Apple (APPL) gained 1.3% after an analyst upgrade. Financials added 1%, led higher by the 1.4% gain by Visa (V) and American Express’ (AXP) 1.2% advance. The Dow Jones Industrial Average ($DJI) gained 0.7% to 26346.01. The S&P 500 (SPX) climbed 0.9% 2919.40, while the Nasdaq Composite (COMP) advanced 1.0% to 7903.74.
Credit Markets:
The 10-year Treasury note yield climbed 5.3 basis points to 1.585% Wednesday after the September Federal Open Market Committee (FOMC) meeting minutes showed officials were divided on the extent and path of easing. The minutes revealed divisions among FOMC members on the policy path with one call for no further cuts while others argued for 50-bps easing. The minutes followed a $24 billion 10-year Treasury note auction which priced in line with the when-issued level and the first 10-year sales since May where buyers did not require a higher yield.
Commodities:
Oil prices (/CL) closed little changed Wednesday at $52.59 a barrel, erasing an earlier rally as traders awaited U.S.-China trade talks and weighed a mixed inventory report. Crude had rallied more than 2% earlier in the day, but erased those gains late in the session. Data released earlier in the day revealed that inventories rose last week for the fourth consecutive week and showed U.S. supply jumped to a record of 12.6 million barrels a day.
Pre-Market:
U.S. stock futures are down slightly ahead of the bell this morning, after wild moves overnight amid conflicting reports on China trade. U.S. equity futures tumbled on reports that high-level China trade talks could end early. Futures slashed losses on a later report stating that the U.S. was mulling a partial China trade deal and currency pact. If there is no China trade deal reached, the U.S. is due to raise tariffs to 30% from 25% on $250 billion worth of Chinese goods as of October 15, following a two-week delay seen as goodwill gesture by President Trump. The administration is also scheduled to add a 15% levy on an additional $160 billion worth of Chinese imports on December 15. Initial jobless claims were down 10,000 to 210,000 in the week ending October 5, marking the first decline in four weeks. U.S. consumer prices (CPI) were flat in September, as a decline in energy and used vehicle prices held down broader inflationary pressures. Bed, Bath and Beyond (BBBY) is up over 20% this morning after snatching a top Target (TGT) executive as its new CEO. As of this writing, S&P 500 futures (/ES) are down 0.2% near 2915, while oil futures (/CL) are 0.8% higher near $53.00 a barrel.
Major Economic Reports:
Thursday:
7:30 am CT – CPI
7:30 am CT – Jobless Claims
9:30 am CT – EIA Natural Gas Report
10:00 am CT – 10-Yr Note & 30-Yr Bond Announcement
11:15 am CT – FOMC member Kashkari Speaks
12:00 pm CT – 30-Yr Bond Auction
1:00 pm CT – Treasury Budget
3:30 pm CT – Fed Balance Sheet
3:30 pm CT – Money Supply
4:30 pm CT – FOMC member Mester Speaks
Notable Earnings:
Thursday– 10/10:
A.M. – DAL
P.M. – N/A
Friday– 10/11:
A.M. – FAST, INFY
P.M. – N/A
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**BOLD above indicates important and potential market-moving news and information
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10/9/2019
Q.E. or not Q.E…. That is the question
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Equities:
Wall Street is looking brighter for the first time this week as anticipation begins to rise for some type of trade deal. High-level meetings commence again tomorrow despite recent developments that initially looked to create further distance. Beijing has also offered to purchase more U.S. agricultural products which has been a sticking point on negotiations thus far. Asian markets however remained mixed overnight with the Hong Kong and Nikkei exchanges surrendering nearly 1%. Yesterday ended badly domestically as well with the S&P 500 (SPX) slipping below a key 2900 level after a 1.6% route. The U.K. remains in turmoil after reports surfaced of a potential uprising within Boris Johnson’s cabinet off discontent with the idea of a disorderly break from the European Union which is set for the end of this month. The CBOE Volatility Index (VIX) pierced above the 20 handle again yesterday before a 5% pullback is setting up ahead of the open.
Credit Markets:
The likelihood of a 3rd rate cut has increased dramatically over the previous week after manufacturing data quickly set off recession alarms. Chairman Powell further hinted at the possibility yesterday in what he called taking “appropriate steps” which quickly turned markets stronger. Although the idea of another formal Q.E. was dismissed, talk of the potential of future bond purchases basically represent the same concept. The yield on the 10 year is ticking slightly higher at 1.553% ahead of today’s $24 billion note auction.
Commodities:
Oil futures (/CL) are reacting positively to the sudden equity surge with a 1.25% lift of its own near $53.33 a barrel ahead of a weekly inventory report. Analysts are looking for a 1.8 million barrel build over the previous 7 days. Precious metals are all lifting higher in tandem with silver now up over 1% intra-day likely off the prospects of a trade deal.
Pre-Market:
U.S. Equity futures (/ES) are currently spiking by nearly 1% off hopes of an eventual cease-fire from the mounting trade war. JOLTS will be looking for 7.186 million jobs created in August to further validate the surprisingly strong monthly jobs report from last week. Fed Chair Powell maintains his busy schedule this week with yet another appearance slated for today just ahead of last month’s meeting minutes which will be released at 1:00CT. Investors are gearing up for yet another round of earnings unofficially kicking off next week with several key banks reporting Tuesday with the assumption of a 3% slowdown in growth collectively from the same time last year.
Major Economic Reports:
All Day- Motor Vehicle Sales
6:00 AM CT- MBA Mortgage Applications
9:00 AM CT- JOLTS ; Wholesale Trade
10:00 AM CT- FOMC Chairman Powell speaks
1:00 PM CT- FOMC Meeting Minutes
Notable Earnings:
Wednesday – 10/9:
A.M.– N/A
P.M. – SAR
Thursday– 10/10:
A.M. – DAL
P.M. – IDT, VOXX
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**BOLD above indicates important and potential market-moving news and information
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10/8/2019
We are just waiting on a friend
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Equities:
U.S. equities opened lower Monday, managed to cross back into positive territory mid-day, but retreated again in the afternoon as investors looked ahead to this week’s scheduled talks between U.S. and China. The Chinese government indicated on Sunday that they plan to only talk about a narrow number of topics when discussing trade this week as opposed to President Trump’s hopes for a broader deal. U.S. officials have been aiming to get commitments on reforming Chinese industrial policy on government subsidies with talks expected to resume on Thursday. All but one of the 11 sectors that comprise the Standard & Poor’s 500 ended lower, pushed down by consumers staples’ nearly 0.8% fall and energy’s 0.9% slide. Walmart (WMT) fell 0.8% as it looks to spin off its personal-shopping concierge, Jetblack. Communications service was the only sector to end higher, pulled higher by Discovery’s (DISCA) 1.4% rise. The Dow Jones Industrial Average ($DJI) declined 0.4% to 26478.02. The S&P 500 (SPX) fell 0.4% 2938.79, while the Nasdaq Composite (COMP) lost 0.3% to 7956.29.
Credit Markets:
U.S. government-bond yields climbed Monday, snapping a seven-session streak of declines. The yield on the benchmark 10-year Treasury note edged away from its 2019 low to settle at 1.5533%, compared with 1.515% Friday. Treasury Yields remained within 0.1 percentage point of their 2019 low of 1.456% reached last month, dragged lower last week after weaker-than-expected data led investors to raise bets that the Federal Reserve will cut interest rates this month.
Commodities:
Oil prices (/CL) edged lower by 0.1% to $52.75 a barrel Monday, erasing an earlier gain as the dollar rose and investors looked ahead to another round of trade talks between U.S. and China this week. Gold futures (/GC) slid 0.6% to $1504.40 a troy ounce and have fallen around 3.5% from a six-year high hit last month. The precious metal is pushing higher by $1510 early this morning as investors seek safety with weaker equity pricing.
Pre-Market:
U.S. stock futures are lower pre-bell Tuesday morning, as investor optimism around the U.S. and China talks faded. The U.S. Commerce Department also expanded its trade blacklist late Monday to 28 China tech companies in connection to ‘human rights violations’ of Muslims in western China. Producer price index (PPI) tumbled a seasonally adjusted 0.3% in September from the previous month, its weakest reading since January. Boeing (BA) is down 1.5% in premarket as heightened safety concerns from European regulators about portions of proposed fixes to the flight-control systems could delay the return of the Boeing jets to service. Pizza giant, Domino’s (DPZ) is down a painful 4% premarket as they posted weaker-than-expected earnings. As of this writing, S&P 500 futures (/ES) are down 0.7% near 2917, while oil futures (/CL) are 1.3% lower near $52.05 a barrel.
Major Economic Reports:
Tuesday:
5:00 am CT – NFIB Small Business Optimism Index
7:30 am CT – PPI-FD
7:55 am CT – Redbook
12:35 pm CT – FOMC member Evans Speaks
12:50 pm CT – FOMC Chairman Powell Speaks
4:00 pm CT – FOMC member Kashkari Speaks
Notable Earnings:
Tuesday– 10/8:
A.M. – AZZ, DPZ
P.M. – LEVI
Wednesday– 10/9:
A.M. – N/A
P.M. – SAR
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**BOLD above indicates important and potential market-moving news and information
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October 7, 2019
The Week Ahead
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After multiple downbeat economic reports earlier in the week, the S&P 500 (SPX) managed to dig itself out of its hole to finish the week down only 0.3%. Poor numbers out of the manufacturing and services sectors, pushed the SPX down more than 1% for consecutive sessions for the first time this year, but the equity market is hanging its hat on jobs growth. Thursday’s ISM Services number initially sent stocks sharply lower, but stocks quickly rebounded to finish higher on the day. Some felt that the recent data was bad enough to induce the Fed to lower rates twice by the end of the year, making the case that sometimes things are bad enough to be good. Friday’s jobs report showed that the U.S. economy added 136,000 jobs in September which was slightly below expectations, and the jobless rate dropped from 3.7% to 3.5%. This marked a 50 year low in the figure. The yield on the 10yr. Treasury note (TNX) fell for the seventh consecutive session and settled at 1.515% from1.531% on Thursday. For the week, the S&P 500 (SPX) and the Dow Jones Industrials ($DJI) notched their third consecutive week of losses, while Nasdaq Composite (COMP) managed to post a weekly gain.
The markets will be will be patiently awaiting the results of the U.S./ China trade negotiations on Thursday and Friday. China has come forward saying they want to reduce the scope of the upcoming negotiations. On the earnings front, things should be relatively quiet, with the highlight being Delta Airlines’ (DAL) release on Thursday morning before the market open. Fed Chairman Powell is scheduled to speak during market hours on Monday, Tuesday and Wednesday, which always has the potential to move markets. As of this writing, U.S. crude oil futures (/CL) are up over 1.3% near $53.50 a barrel and S&P 500 futures (/ES) are 0.2% lower near 2943.
Major Earnings for the Upcoming Week (10/7-10/11):
Monday:
A.M. – N/A
P.M. – N/A
Tuesday:
A.M.– AZZ, DPZ
P.M. – HELE, LEVI
Wednesday:
A.M. – N/A
P.M. – SAR
Thursday:
A.M. – DAL
P.M.– IDT, VOXX
Friday:
A.M. – FAST, INFY
P.M. – N/A
Economic Releases (10/7-10/11):
Monday:
10:30 AM CT 3-MONTH AND 6-MONTH BILL AUCTION
11:30 AM CT TD AMERITRADE IMX
12:00 PM CT JEROME POWELL SPEAKS
2:00 PM CT CONSUMER CREDIT
Tuesday:
5:00 AM CT NFIB SMALL BUSINESS OPTIMISM INDEX
7:30 AM CT PPI-FD
7:55 AM CT REDBOOK
12:50 PM CT JEROME POWELL SPEAKS
Wednesday:
MOTOR VEHICLE SALES
6:00 AM CT MBA MORTGAGE APPLICATIONS
9:00 AM CT JOLTS ; WHOLESALE TRADE
10:00 AM CT JEROME POWELL SPEAKS
1:00 PM CT FOMC MINUTES
Thursday:
7:30 AM CT CPI ; JOBLESS CLAIMS
9:30 AM CT EIA NATURAL GAS REPORT
1:00 PM CT TREASURY BUDGET
3:30 PM CT FED BALANCE SHEET ; MONEY SUPPLY
Friday:
7:30 AM CT IMPORT AND EXPORT PRICES
9:00 AM CT CONSUMER SENTIMENT
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**BOLD above indicates important and potential market-moving news and information
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