S&P is to open flat while NASDAQ is being brought up by AAPL but the question is will this hold or sell off as we have been seeing in past earnings; AAPL delivered a solid beat on all fronts, aside from iPhone sales which did miss but was brushed off with a higher ASP (we are well over $700 now)
Materials are being brought down globally, led by decreases in copper.
France and Germany both slightly beat on PMI while UK was slightly lower compared to estimates as we await US PMI today at 10:00 AM. The strong ADP number we have today suggests the economy will continue to grow as we await a strong jobs report on Friday.
We have a "dead" Fed meeting today at 10:00 AM as well with no press conference scheduled, though we are watching this more than we may have in other years for any indication of a possible rate rise or a pause in tightening; at this time roughly 80% of analysts are expecting 4 increases for the year.
As for trade talks or talks about trade talks, this seems to be nearly impossible for investors to hedge for. As we saw last week when Trump and Juncker announced a possible halting of auto tariffs and eradication of tariffs in totality in the future, the market responded well with a sharp jump in the 15 minutes into the close. This was followed by a drop the following day when GDP was released at 4.1 which economists do not see as sustainable into the next half of the year. Next we had news yesterday morning about the US and China possibly starting trade talks up again which gave markets a boost until futures were depressed after hours with the announcement of an increase in tariffs from 10% to 25%. A 10% tax would be something consumers could absorb much easier, while 25% will undoubtedly be hitting consumers domestically as well as in China; a 10% tariff on these $200B in proposed goods would expectedly cut .2% in China's GDP while a 25% tariff would impact a half percent. China has quickly hit back saying that the US blackmailing will not work and will result in a similar increase under the tit-for-tat response. This continues to move the markets as we did not see much buying activity or a large positive response stemming from great earnings as we've seen over 80% of companies in the S&P having reported at this point in time.
We learned of the new debt issuance today which has resulted in a falling dollar and a spike in yields as there is more pressure on supply with an increase of Today the dollar is dropping as we have a spike in yields with more pressure on supply. There is selling on the long side with the 30 year as there is some nervousness about whether the market will be able to absorb this new issuance which amounts to one of the biggest borrowing periods since 08-09.
As the Fed raises rates, interests rates are rising which means the government has to pay more on debt, amounting to 100 billion dollars extra in the past five years due to interest which will have an impact on the market with increasing borrowing costs reaching near and far.
The US and Mexico seem to be coming close to negotiating a deal for rules under cars to be sold under NAFTA with a meeting between US's trade advisor tomorrow with Mexico. Taking a quick look at markets prior to today's open we see that they are down across the board as the bond sell-off which stemmed in Japan is crossing over into European and domestic markets.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.