Days of Reckoning

Days of reckoning.    Stocks slipped yesterday as mixed earnings results, weak economic numbers, and trade fears gave traders reason for pause.  Earnings season is here, and it’s time for companies to show their stuff.

 

MY TWO CENTS

 

  1.  Is a deal happening with China or not?  With so much rhetoric in the form of insider sound bites, tweets, and photo ops, it is hard for investors to gauge the outcome of the so-called negotiations with China.  Just a month ago we were told that President Trump and President Xi had a productive meeting in Japan at the G-20 meeting.  The “product” of the meeting was an agreement to re-start failed trade talks.  The market seemed to like the outcome and quickly shifted attention to the Fed, not before the President crossed the Korean DMZ into North Korea for a photo op.  So we must be good on trade right?   Earlier this week the President spoke about his ability to foist more tariffs on China and said that a trade deal was far away.  The markets negative response was rather muted.  By yesterday’s session the reality began to set in compounded by more and more reports about the damaging effects of the trade war on US consumers.  Over night, WHILE YOU SLEPT it was reported that trade talks with China have stalled once again as China is demanding that the US drops all sanctions on Huawei.  Shanghai also wants the Administration to drop additional tariffs and set more realistic targets for American imports.  That doesn’t sound like progress.

 

  1.  The cogs of industry turn… we hope.  Yesterday’s release of the Fed’s beige book which offers a look into economic conditions across the US showed a mixed story, but one that investors are used to by now.  The report stated the economy continues to grow at a modest pace, but headwinds and uncertainty on trade are causing contraction in some areas.  In recent month’s economists have been growing increasingly concerned over manufacturing and production, which have been underperforming.  Next week we will get a fresh set of releases on the state of manufacturing, but earnings releases and guidance give us some insight on what might be around the corner.  Specifically, releases in the Industrial and Transportation sectors.  CSX, the railroad giant announced a big miss on both revenue and income two days ago and they cut their forward outlook.  They are not the only ones cutting guidance, trucking companies Knight Swift and Covenant Transportation have also warned investors of a slowdown.  The reason?  Weak volume.  Transportation is often used as a leading gauge on industrial health and if earnings in the sector continue to disappoint, investors should be concerned.

 

THE MARKETS

 

Stocks slipped yesterday as trade fears reemerged and concerns about earnings quality are settling in.  Weaker than expected housing numbers also put a damper on investor sentiment.  The S&P 500 slipped by -0.65%, the Dow Jones Industrial Average fell by -0.42%, the Russell 2000 traded off by -0.72%, and the NASDAQ 100 dropped by -0.48%.  Bonds advanced and 10-year yields came in by -6 basis points at 2.04%.  Crude continued its slip, trading off by -1.46%.

 

WHAT’S NXT

 

– This morning we will get the Philadelphia Fed Business outlook which is expected to have increased to 5 from last month’s reading of 0.3.

–  Later this morning we will get the Conference Board’s Leading Index for June which is expected to have advanced by +0.1% compared to last month’s flat growth.

– The G-7 meeting for global finance ministers continues in France.  Atlanta Fed President Raphael Bostic and New York Fed Head John Williams will both speak today.

– Honeywell, Blackstone, Snap-On, United Health Group, Philip Morris, and Morgan Stanley all announced beats this morning and we have yet to hear from Union Pacific before the bell.  After the close we will hear from Crowdstrike, Chewy, Microsoft, and E*TRADE, amongst others.

daily chartbook 2019-07-18

 

IMPORTANT DISCLOSURES.

Muriel Siebert & Co., LLC is an affiliated broker/dealer of the public holding company, Siebert Financial Corporation, which also owns Siebert AdvisorNXT, LLC. Siebert AdvisorNXT, LLC is a registered investments advisor (RIA) with the SEC and with state securities regulators. We may only transact business or render personal investment advice in states where we are registered, filed notice or otherwise excluded or exempted from registration requirements. Investment Advisor products are NOT insured by the FDIC, SIPC any federal government agency or Siebert’s parent company or affiliates.

You are being provided this Market Note for general informational purposes only. It is not intended to predict or guarantee the future performance of any security, market sector or the markets generally. This Market Note does not describe our investment services, recommendations or market timing nor does it constitute an offer to sell or any solicitation to buy. All investors are advised to conduct their own independent research before making a purchase decision. This Market Note is to provide general investment education and you are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate for you based on certain investment objectives and financial situation. Do not use the information contained in this email as a basis for investment decisions. You should always consult your investment advisor and tax professional regarding your investment situation before investing. The charts and graphs are obtained from sources believed to be reliable however Siebert AdvisorNXT does not warrant or guarantee the accuracy of the information. Any retransmission, dissemination or other use of this email is prohibited. If you are not the intended recipient, delete the email from your system and contact the sender. This is a market commentary, not research under FINRA Rule 2210 (b)(1)(D)(iii) and FINRA Rule 2210 (c)(7)(C).

© 2021 Siebert AdvisorNXT All rights reserved.