What's the Fuss? IMF Cut? EU Tariffs? Really? Markets Take a Breather

What You Need to Know Today

• Donny threatens EU with tariffs (yawn)

• IMF cuts global growth forecast (yawn)

• Mkts back off after kissing 2900 (yawn)

• It's all good....

So 2900 was resistance? Sellers not budging and buyers feeling a bit exhausted....as investors had to digest new news about Donny imposing tariffs ($11 bil vs. the $200 bil – seems like a drop in the bucket) on our friends in the EU...running the gamut from bikes to airplanes! – I mean how do you make the jump from bikes to airplanes? Guess it must be modes of transportation.....In either case – the news was enough to begin to rattle the cages and cause analysts and political talking heads to question the state of US/Sino talks (why?) ....and then we heard from the IMF (International Monetary Fund – think Christine Lagarde) – who threw in their 2 cts worth and cut global growth forecasts from 3.5% to 3.3% - noting that the latest cut was due to ‘trade tensions and tariff hikes between the US and China along with an overall deterioration in business confidence and tightening financial conditions'. And THAT was BEFORE the latest news that Donny is threatening to impose tariffs on the EU. I'm just sayin.....the tone of the news yesterday was a bit negative giving the trader types and the algo's a reason to hit the sell button as we approach the start of earnings season.... A season that is expected to be soft.....

And that was it..... wasn't any more complicated than that – but should not be seen as a complete negative – we discussed this....the S&P was up 6% in a month – on top of the 11% from the start of the year – we raced thru 4 century marks (2500, 2600, 2700 & 2800) and attempted to pierce a 5th – so why anyone is surprised that investors are taking a breather is actually a surprise in itself.......especially since all we hear is of a slowing global economy, a slowing US economy, trade and political tensions, confused central banks, negative rates in Germany and Japan and that inverted US yield curve.....yet the mkt marched higher thru it all – and then Donny announces ‘tariffs' on the EU and the bottom falls out? Come on.....right now it's more about exhaustion and caution ahead of earnings and traders ringing the cash register – putting dollars aside today for what they might think are lower prices tomorrow as earnings begin.......

Remember – in yesterday's note I commented about the ‘Wall of Worry' (which are all of those issues I just identified) and how the mkt was so resilient – trading its way up and thru those century marks....suggesting that investors ‘expect' those issues to be resolved – but I also pointed out that this is happening at the peak vs at the trough – causing me to ask – Can the advance continue or is the mkt ripe for profit taking? Never mind that we were at another big round number (2900)..... So before you get your panties in a bunch – nothing significant has really changed – other than the day.....All of the S&P sectors came under pressure except the Utes (utilities) and that makes sense – think part of a safety trade – with the industrials (XLI) in the lead – losing 1.36%....BA again took it on the chin – falling 5 pts or 1.43% after it was revealed that they didn't get any new orders for its Max 737 in March – marking the 1st month in 7 yrs that they didn't book a trade for their ‘bestselling aircraft' coupled with the fact that they only delivered 11 of these planes to customers in March – less than half the rate of the prior two months – and those customers can't even use them yet.....oh and btw – since BA has officially taken responsibility for the two crashes – citing the flawed software – they discovered a second unrelated ‘software glitch' that they need to fix....

By the end of the day – the Dow gave back 190 pts or 0.722%, the S&P lost 17 pts or 0.61%, the Nasdaq fell by 45 pts or 0.56%, the Russell 2000 gave up 19 pts or 1.22% and the Transports (think bikes and airplanes!) lost 99 pts or 0.93%. This morning the tone is not so negative – mkts in Asia ended the day mixed with Japan lower by 0.53% and China higher by 0.26% as investors there reacted more to the IMF cut than anything else.

In Europe mkts there are off to a good start.....with all centers in the green – apparently – no one is that concerned about the IMF comments or over Donny's latest tirade and they have more important things to worry about...... the ECB is due to make a policy announcement this morning at 7:45 est followed by a press conference hosted by ECB Pres – Uncle Mario (Draghi) where he is expected to shine some light on the latest TLTRO plan. (Targeted Long Term Refinancing Operations) – this is where the ECB opens the spigot again to ‘stimulate' the EU economy..... (Just wait until the Germans take over that seat...) Next up - The EU council President – Donald Tusk (of ‘House of Cards' fame) – suggested that the EU ‘consider offering the UK a flexible delay to BREXIT for up to one year' as another emergency meeting in Brussels takes place today.....where EU leaders will decide if they are going to give UK PM Theresa May some more breathing room. Remember that the UK is set to leave the EU on Friday at 11 pm London time (or 6 pm EST). My guess? No one is throwing the UK out of the EU on Friday....FTSE +0.12%, CAC 40 + 0.41%, DAX + 0.44%, EUROSTOXX + 0.41%, SPAIN +0.33% and ITALY +0.28%.

US Futs are up with the Dow gaining 40 pts, the S&P ahead by 5 pts, the Nasdaq tacking on 13 pts and the Russel 2000 ahead by 4 pts. Plenty of eco data today to consume – CPI (Consumer Price Index) exp of +0.4%, ex food and energy of +0.2% m/m while y/y expectations remain at +1.8%. This will be a KEY measure today – because this speaks directly to inflation concerns....a spike higher than the expectations will cause the y/y number to kiss 2% - which continues to be the magic number. Also – we get the weekly EIA data (Energy Info Admin) at 10:30 am – this is where they tell us about crude oil inventories....(increase or decrease) and then they opine on what that means for the price of oil....which is currently up 46 cts at $64.43/barrel. At 1 pm we get the 10 yr note auction and if yields move materially away from the 2.5% – expect stocks to follow – (Yields up/stocks up, yields down/stocks down) At 2 pm we will hear from the FED – about their March meeting and what the brain trust was thinking -do not expect any bombshells. And we get to hear from 2 Fed speakers....Vice Chair Randy Quarles at 11:50 am and Dallas's Bobby Kaplan at 7 pm tonight...Neither is expected to cause any unrest for the mkts....

The S&P remains in the 2850/2900 range for now.....as we await Friday's kickoff of earnings...