The Market Today

Weak Chinese, Eurozone, and U.S. Corporate Data to Start the Morning


by Craig Dismuke, Dudley Carter

THIS WEEK’S CALENDAR

Retail Sales Likely Delayed as Government Remains Shuttered: A fairly quiet economic calendar kicks off this morning with no reports.  Additionally, the government shutdown is likely to delay the potentially biggest report of the week, the December Retail Sales report scheduled for Wednesday.  After concerns emerged last week about some of the larger retailers’ December sales, this retail sales data is of particular importance now.

 

4Q Earnings Reports Stumble Out of the Gate: Citigroup kicked off a busy week of 4Q corporate earnings releases this morning with disappointing results. Later this week, we’ll see results from JPMorgan, Wells Fargo, Goldman, Bank of America, SNV, USB, PNC, BBT, Key, RF, and STI.  Additionally, releases from the tech sector will include Microsoft and Netflix.

 

TRADING ACTIVITY

Overnight – China’s String of Disappointing Data Carries into First Week of Corporate Earnings: Global investors turned away from risk overnight as another set of disappointing Chinese data soured appetites at the outset of what could be an important week for markets. Fears that China’s economy is slowing have been heightened by its trade dispute with the U.S. and a key catalyst for increased market volatility. Overnight, data showed that exports into China sank 7.6% in December, much worse than the 4.5% gain expected. More broadly, there are concerns the trade dispute is helping fuel a slowdown globally as well. The same dataset showed exports from China were off 4.4%, again, much worse than the 2.0% gain analysts had projected. The report comes on the heels of several important metrics that point to slower global activity and on the eve of corporate quarterly earnings season. Citigroup will report this morning and be followed by most other major U.S. banks throughout the week. Asian equity markets closed lower Monday and the Stoxx Europe 600 has been pushed down 0.7% by losses across the region. While not surprising considering previously announced national results, industrial production in the Eurozone as a whole slowed more than expected in November amid weakness globally. Sovereign yields across the continent were lower (except Italy) but being outpaced by the decline in UK yields. The UK’s House of Commons will vote on PM May’s Brexit deal on Tuesday, and expectations are the “yeas” will exceed the “neas”. U.S. futures are weaker and Treasury yields are flatter and lower by 2.5 and 3.5 bps.

 

NOTEWORTHY NEWS

ICYMI – January 11, 2018 Weekly Market Recap: Yields fluctuated but ended little changed last week amid a flurry of Fedspeak, hopes that trade discussions between the U.S. and China meant that tensions could be ratcheted back, and a couple of mixed economic reports. Vice ministers from the U.S. and China started a two-day meeting Monday aimed at setting the stage for a second meeting between more senior officials later in the month. Any new tariffs between the two countries have been tabled until at least March 1 to allow for broader negotiations. A third day was added unexpectedly and seen by markets as a signal of some positive progress being made. Stocks responded by climbing the first four days of the week which combined with the previous Friday’s rally to match the longest stretch of gains since February 2018. From an economic perspective, the ISM services survey fell more than expected, small business confidence eased but held up better-than-expected considering growing uncertainty, and core inflation matched estimates and was stable at 2.2% YoY. But the bigger focus was on the flood of Fedspeak that showed a growing call for monetary policy patience in 2019. Click here to view the full recap.

INTENDED FOR INSTITUTIONAL INVESTORS ONLY.
The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
Member FINRA/SIPC
This is a publication of Vining-Sparks IBG, LLC
775 Ridge Lake Blvd., Memphis, TN 38120