Market Commentary

» Posted by on Jul 22, 2019 in Announcements, Shop Talk, Uncategorized | 0 comments

Stock bulls continue to pause. Last week both the S&P 500 and Nasdaq dropped -1.2%, the steepest weekly decline for the major indexes since the end of May.

Fed officials are now in their “blackout period” until after their meeting next week and the market seems to have priced in at least a -25 basis point reduction in interest rates, with the trade giving about a 40% chance of a -50 basis point reduction in rates.

But before we get to next weeks Fed rate decision, we have a massive wave of Q2 corporate earnings to chew on, including big names like Amazon, Boeing, Facebook and Google, as well as the highly anticipated U.S. GDP forecast on Friday.

Most inside the trade seem to be thinking U.S. growth could have slowed to sub-2%. Keep in mind, China’s GDP growth during the first half of 2019 was the lowest since 1992.

In other words, the worlds two top economies are being heavily monitored and watched for deeper cracks in the surface. I should also note, there’s more talk the ECB might go ahead and ease monetary policy this week at their scheduled meeting on Thursday July 25th.

Bottom-line, just a lot of global economic uncertainty,

Here at home, the good news is consumer spending remains strong and U.S. corporate earnings are coming in mostly better than forecast. Forward looking guidance form top executives will be extremely important in the days ahead, so pay close attention. 

Earnings scheduled for release this week include: Halliburton and Whirlpool today; followed tomorrow by Coca-Cola, Chipotle, Harley Davidson, Sherwin Williams, Snap, United Technologies and Visa;

Wednesday traders will digest earnings from AT&T, Boeing, Caterpillar, Cerner, Facebook, Ford, Hilton, PayPal, Tesla and Xilinx; Thursday we will hear from 3M, Aflac, Amazon, Alphabet, Bristol-Myers, Comcast, Intel, Raytheon, Southwest Airlines, Starbucks and Tractor Supply; Friday we have AbbVie, Phillips 66, McDonald’s and Twitter.

In addition to earnings and economic data, the trade is also paying close attention to headlines out of the Middle East, ongoing Chinese trade talks, and political debate inside Washington.

Don’t forget, Congress is scheduled to leave for their summer recess stating Friday July 26th and there’s still some unanswered questions about the debt ceiling.

I should also note, Mueller is scheduled to testify before the House on Wednesday which could draw some heavy media attention. There’s a lot of different headlines in play this week. 

U.S. Military Returns to Saudi Arabia in Response to Iran: Pentagon is sending hundreds of troops to Saudi Arabia as part of a buildup to counter potential threats from Iran and its allies, U.S. officials said, marking a U.S. return to the kingdom after its 2003 withdrawal. U.S. forces will again be stationed at the Prince Sultan Air Base, which had been closed to the American military since the fall of Baghdad following the U.S. invasion of Iraq. (Source: The Wall Street Journal) 

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