Stocks rallied out of the gate only to close lower at the end of the day as news of EU and US sanctions against Russia became a bit clearer.....Obama declaring that "Russia's actions were setting back decades of progress"......
In early trading it looked like the mkt was taking it all in stride ahead of today's eco data - The FOMC mins, The ADP report and the GDP report. But then stocks weakened a bit only to rally back by mid day and then to succumb to the pressure when President Obama took to the mic to add his two cents. From that moment forward prices steadily weakened closing at the lows of the day.
Despite the negative reaction to the sanctions, the media was quick to announce to the world that the US has approved export on dual-use goods to Russia and also emphasize that the US hasn’t revoked Russian export licenses and that US/Russian goods affecting military applications are not part of any sanctions...
In addition - the EU media also revealed the softer side of their sanctions - (1) would apply to a limited number of Russian banks, (2) would not include syndicated loans, (3) would be regularly reviewed and assessed in light of impact on EU economy and (4) would be reviewed in three months – just before the cold weather sets in. - Remember that cold weather will make a big difference on how tough the EU will be. Vladimir can cut off gas exports to the EU in a flash – and the Europeans know it.
So that causes one to ask - Are the sanctions by the EU and US mostly for the TV cameras? Will they have a real impact on Russia and on restraining Russian support for eastern Ukrainian pro-Russian fighters? I guess we will see....but I am betting that Putin hasn't broken a sweat.....and in fact may thumb his nose at both the EU and the US.
Nonetheless the mkt is still trading around multi-year if not record highs and the tailwinds of an improving global economy, an improving US economy, very supportive central banks, a clearly strong earnings season, and the increasing M&A activity all point to better days ahead. It is also encouraging that the US consumer remains in a good mood. Yesterday we learned that the Conference Board’ reported that the consumer confidence index rose to its highest level since October 2007 coming in at 90.9 vs. expectations for 85.4.
Today we get ADP - exp of +230K jobs, The Fed to announce upcoming policy initiatives - I don’t think we will see any surprises. Expectations are for another $10 bil to come off the table with monthly bond purchases taking us to $25 billion/ month. In the end though - traders/investors will be paying attention to the rhetoric which accompanies the decision. Will she announce an increase in rates anytime soon after October? No, will she continue to play both sides and talk about what she could do if A, B or C happens? Yes... Will the mkt be surprised by that? Surely not.
We continue to push along in a slow and steady fashion, and the Fed is well aware of the risks that could present themselves if stimulus is withdrawn too quickly. (rule of unintended consequences).
At 8:30 we will bet both the ADP report and the GDP report - this will be the preliminary assessment (first go around) of 2Q GDP. Early (beginning of the year) estimates were in the 3-4% category, but they have been steadily revised downward over the last month or so. Current expectations are in the 2.7/3% range. Whatever number is released can expect to see that number to be revised downward over the next two months, much like 1Q GDP? (which ultimately showed a contraction!)
US futures are back in the plus column this morning - currently +5 pts trading at 1968....Remember - we have been in a sideways trading pattern of 1960/1980 for the past 7 weeks....and again - notice what happened yesterday - we traded to 1968 and bounced right back to 1975 to turn lower and end at 1963. (Still inside of the band). This morning we find that Asian mkt ended the day in solid green territory and European stocks are showing upward momentum.
After the bell last night Twitter - gave a 'stand out' performance and although reported a loss of some $144 mil - they blew the roof off of revenue growth - reporting revenues of $283 mil vs. $139 mil one year ago. And for a growth stock - no one cares about the loss - it's all about revenue growth and user growth..... It shot up 10 pts in after hours trading and continues to trade there in pre-mkt trading.
Amgen announces more job CUTS and plant CLOSINGS in the US and traders are taking that stock up 4 pts in early trade.... ...Humana beats on revenues and that stock is trading up 3 pts in early trade. Will these latest reports continue to push the mkt higher or will this early morning rally fade?
Yes the geo-politics continues to simmer on the back burner today - as all eyes and ears are on the FED....once they realize that there is nothing new....then it will be back to pontificating on the impact of the sanctions and the growing bloodshed in Gaza....... Friday is the next big day - as the mkt awaits the official govt report on July job creations - exp are for +235k with unemployment falling to 6%. And the plot thickens....
It's all about the show....break out the popcorn and sit back and relax.
Enjoy.
In early trading it looked like the mkt was taking it all in stride ahead of today's eco data - The FOMC mins, The ADP report and the GDP report. But then stocks weakened a bit only to rally back by mid day and then to succumb to the pressure when President Obama took to the mic to add his two cents. From that moment forward prices steadily weakened closing at the lows of the day.
Despite the negative reaction to the sanctions, the media was quick to announce to the world that the US has approved export on dual-use goods to Russia and also emphasize that the US hasn’t revoked Russian export licenses and that US/Russian goods affecting military applications are not part of any sanctions...
In addition - the EU media also revealed the softer side of their sanctions - (1) would apply to a limited number of Russian banks, (2) would not include syndicated loans, (3) would be regularly reviewed and assessed in light of impact on EU economy and (4) would be reviewed in three months – just before the cold weather sets in. - Remember that cold weather will make a big difference on how tough the EU will be. Vladimir can cut off gas exports to the EU in a flash – and the Europeans know it.
So that causes one to ask - Are the sanctions by the EU and US mostly for the TV cameras? Will they have a real impact on Russia and on restraining Russian support for eastern Ukrainian pro-Russian fighters? I guess we will see....but I am betting that Putin hasn't broken a sweat.....and in fact may thumb his nose at both the EU and the US.
Nonetheless the mkt is still trading around multi-year if not record highs and the tailwinds of an improving global economy, an improving US economy, very supportive central banks, a clearly strong earnings season, and the increasing M&A activity all point to better days ahead. It is also encouraging that the US consumer remains in a good mood. Yesterday we learned that the Conference Board’ reported that the consumer confidence index rose to its highest level since October 2007 coming in at 90.9 vs. expectations for 85.4.
Today we get ADP - exp of +230K jobs, The Fed to announce upcoming policy initiatives - I don’t think we will see any surprises. Expectations are for another $10 bil to come off the table with monthly bond purchases taking us to $25 billion/ month. In the end though - traders/investors will be paying attention to the rhetoric which accompanies the decision. Will she announce an increase in rates anytime soon after October? No, will she continue to play both sides and talk about what she could do if A, B or C happens? Yes... Will the mkt be surprised by that? Surely not.
We continue to push along in a slow and steady fashion, and the Fed is well aware of the risks that could present themselves if stimulus is withdrawn too quickly. (rule of unintended consequences).
At 8:30 we will bet both the ADP report and the GDP report - this will be the preliminary assessment (first go around) of 2Q GDP. Early (beginning of the year) estimates were in the 3-4% category, but they have been steadily revised downward over the last month or so. Current expectations are in the 2.7/3% range. Whatever number is released can expect to see that number to be revised downward over the next two months, much like 1Q GDP? (which ultimately showed a contraction!)
US futures are back in the plus column this morning - currently +5 pts trading at 1968....Remember - we have been in a sideways trading pattern of 1960/1980 for the past 7 weeks....and again - notice what happened yesterday - we traded to 1968 and bounced right back to 1975 to turn lower and end at 1963. (Still inside of the band). This morning we find that Asian mkt ended the day in solid green territory and European stocks are showing upward momentum.
After the bell last night Twitter - gave a 'stand out' performance and although reported a loss of some $144 mil - they blew the roof off of revenue growth - reporting revenues of $283 mil vs. $139 mil one year ago. And for a growth stock - no one cares about the loss - it's all about revenue growth and user growth..... It shot up 10 pts in after hours trading and continues to trade there in pre-mkt trading.
Amgen announces more job CUTS and plant CLOSINGS in the US and traders are taking that stock up 4 pts in early trade.... ...Humana beats on revenues and that stock is trading up 3 pts in early trade. Will these latest reports continue to push the mkt higher or will this early morning rally fade?
Yes the geo-politics continues to simmer on the back burner today - as all eyes and ears are on the FED....once they realize that there is nothing new....then it will be back to pontificating on the impact of the sanctions and the growing bloodshed in Gaza....... Friday is the next big day - as the mkt awaits the official govt report on July job creations - exp are for +235k with unemployment falling to 6%. And the plot thickens....
Popcorn....
It's all about the show....break out the popcorn and sit back and relax. Enjoy.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.