What You Need to Know Today

 China is prepared to fight

  • Trump declares a national emergency threat against US Technology

  • Mkts yawn - Asia mixed, Europe slightly lower and US Futs slightly higher 

Stocks cautiously advanced for a second day - even in the face of some weaker macro data (retail sales and industrial production - think - accommodative FED) after Donny announced that he was delaying tariffs on European auto makers - so, investors/traders/ and algo’s continue to dissect and digest the latest rhetoric surrounding trade, tariffs and policy. The Dow added 117 pts or 0.45%, the S&P tacked on 15 pts or 0.58% the Russell 2000 added 5 pts or 0.34% and the Nasdaq surged by 85 pts or 1.13%! - and again that makes sense, right....TECH has been the leader - with the Nasdaq up over 20% ytd.....so when the tide turns - we can expect TECH to get punished harder when the mkt falls and rewarded more when the excitement builds.....

The message coming out of DC continues to be that ‘it’s all good’! (Helping stocks to rebound after the Monday beating). Stevey (Mnuchin) and Bobby (Lighthizer) have done an ‘amazing job’ (his words not mine), it’s the Chinese who ‘moved the cheese’.....causing the latest action by the administration to impose even more tariffs upon them.....Trump using any outlet he can to get this message out.....contrast that with the fact that the Chinese have been noticeably mute on the topic - refusing to engage in a Twitter Debate with the ‘leader of the free world’.....that was until this week - when bits and pieces began to surface -  

Commerce Ministry spokesman - Gao Feng - has begun a slow but methodical response to all of the hyperbole plastered across the globe - saying essentially that the Chinese are happy to negotiate but would respond with the ‘necessary countermeasures’ if forced against the wall. And then in a news broadcast last evening on state run TV - the announcer made this bold statement.....(see translation below)

“Regarding the trade war instigated by the U.S. side, China made its attitude clear early on: Unwilling to fight, but not afraid to fight; must fight when necessary, (If the U.S. wants to) talk, our door is wide open; (if the U.S. wants to fight), we will accompany to the end. Having experienced more than 5,000 years of disturbances, what kind of battle formation have the Chinese people not seen?"

- ‘Trade war instigated by the US, Unwilling to fight BUT not afraid to fight and must fight when necessary’ - hmmmm - And so it goes.....Can you see the cold open on SNL this weekend? 

Essentially - both sides are still at the table - no matter what the impression is - but both sides now need to save face - they need to convince the world that they each won (something) - without looking like they got bullied....and so it will be a delicate dance as we move into summer. Recall that these trade talks were supposed to have been resolved in January, then March and now some expect that they will go on for another 4 or 5 months...taking us to early fall.....so at the very least - we can all expect continued volatility as the headlines hit the tape day in and day out.  

My suspicion is that trade will at times be moved now to the back burner during this time - allowing analyts/strategists/investors and traders a chance to focus on the underlying macro data points around the world - to determine what exactly is going on....Is the global economy really slowing down? Is the US economy on the verge of a slowdown as well? And if so - how much of that is attributable to the trade war? And the questions pile up....

And if that isn’t enough - last night Donny declared a National Emergency over threats to American Technology - calling out Huawei - the Chinese Telecom giant (that does all the spying) - putting that company back in the spotlight and making it more difficult for them to do business in the US with US companies....(just turning up the heat a bit more....). Expect that this latest salvo could be highly disruptive to US-China trade talks (and to our longer term relationship). China is sure to view this as ‘poke in the eye’, as a ‘hostile act and a major provocation’. Expect some kind of response in the days ahead..... this latest move is not going to be helpful to the trade talks - but I also understand that under the circumstances - privacy, spying and cyber concerns are front and center and Huawei  has been under a cloud lately - so should we be supportive of Donny’s efforts to protect America or should we call him out for being a bully?  

This morning European stocks are under just a bit of pressure as the algo’s sift thru the headlines - looking for any word that would signal that ‘Hope is Alive’. 

US futures are UP this morning showing gains of +0.25% to + 0.50% across the 4 major indexes. Eco data today includes Initial Jobless Claims, Continuing Claims, Housing Starts and the Philly Fed Survey. Once the day gets started we can expect to hear more about the National Emergency declaration and what that might mean for the progress of trade talks.  

We are once again kissing up against resistance on the S&P - so it will be an interesting day - will we find resistance or not? Can the algos’ just dismiss the latest headlines? We are about to find out.

 

Grilled Cheese

Who doesn’t love a warm and gooey grilled cheese? Today’s has Turkey, Cheese and fried sweet Italian peppers on two slices of Pane Di Casa. 

Lay out the bread on the cutting board - smear with mayo and then add in layers the cheese of your choice, the turkey and then the sweet fried Italian peppers. - Next - warm up the frying pan and add a dollop of butter - once melted - place the sandwich in the pan cover with tin foil and then but another pan on top to act as a weight. Once browned - flip and repeat....allow time for the cheese to get all melty and gooey. Remove - slice in half on a diagonal and serve with a small side salad or chips.  

(Ok - I’m on a train to DC - so have to wing it....Enjoy)

General Disclosures

Information and commentary provided by ButcherJoseph Asset Management, LLC (“BJAM”), are opinions and should not be construed as facts. The market commentary is for informational purposes only and should not be deemed as a solicitation to invest or increase investments in BJAM products or the products of BJAM affiliates. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. There can be no guarantee that any of the described objectives can be achieved. BJAM does not undertake to advise you of any change in its opinions or the information contained in this report. Past performance is not a guarantee of future results. Information provided from third parties was obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness.

Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. The price of any investment may rise or fall due to changes in the broad markets or changes in a company’s financial condition and may do so unpredictably. BJAM does not make any representation that any strategy will or is likely to achieve returns similar to those shown in any performance results that may be illustrated in this presentation. There is no assurance that a portfolio will achieve its investment objective.

Definitions and Indices

The S&P 500 Index is a stock market index based on the market capitalization of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s.

UNLESS OTHERWISE NOTED, INDEX RETURNS REFLECT THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS, IF ANY, BUT DO NOT REFLECT FEES, BROKERAGE COMMISSIONS OR OTHER EXPENSES OF INVESTING. INVESTORS CAN NOT MAKE DIRECT INVESTMENTS INTO ANY INDEX.

BJAM is an investment advisor registered in North Carolina and Arizona. Such registration does not imply a certain level of skill or training. BJAM’s advisory fee and risks are fully detailed in Part 2 of its Form ADV, available upon request.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: Under pressure below 1.1245 while consolidating Dollar's resurgence

EUR/USD dropped from 1.1260 to just above 1.1200 overnight. The markets continued to price 31bp of easing at the 31st July meeting though Fed funds futures for 2020 rose about 3bp in implied yield.

EUR/USD News

GBP/USD stabilizes around 1.2400 after the slump to 27-month low

Having plummeted to a 27-month low, GBP/USD recovers to 1.2410 during early Wednesday. British inflation numbers, political plays should be followed by fresh impulse.

GBP/USD News

USD/JPY rejected at 200-hour MA amid losses in Asian equities

USD/JPY is currently trading near 108.15, having faced rejection at the 200-hour moving average of 108.33 earlier today. The JPY is bid, possibly due to losses in equities. Also, Fitch Ratings' affirmation of Japan's rating at 'A' buoys the Yen.

USD/JPY News

UK CPI Preview: Brexit above all else

The monthly change in the consumer price index is expected to be flat in June down from 0.3% in May. The annual rate is predicted to be unchanged at 2 %. The core CPI rate is forecast to be flat in June, after gaining 0.2% in April.

Read more

Gold: Bulls are in the safe-zone, but are barely holding on

The 1400 psychological level is holding up which is just as well for the bulls, as a couple of dollars, a break of the 23.6% Fibo of the latest swing lows and highs could open up an onslaught to the downside.

Gold News

Majors

Cryptocurrencies

Signatures