Thursday, April 11, 2019

This Morning's Log Entry

Jobless claims took another incredible turn lower this week, other now-non-confirming related data (Challenger’s job-cut report, and JOLTs), however, suggest that this record trend of record low jobless claims may be nearing its end. This morning’s PPI report showed producer prices rising above consensus expectations. Futures sold off, but only momentarily, on the inflation data, as traders are sensitive to any data that might have the Fed rethinking their uber-dovish stance.

China’s equity market selloff overnight appears to be about disappointment over lack of further monetary stimulus.

U.S. equity futures are pointing to a modestly higher open this morning. Given the latest data, very bullish market breadth, strong technical readings, news of a multi-month Brexit delay, and a Fed that clearly has zero interest in upsetting the market, the price action this week has been notably underwhelming. It’s never a good near-term sign when the market doesn’t rise as conditions suggest it should on good news/developments. I’m certain that speaks to the fear that Trump and company will maintain their affection for using tariffs as a tool in trade negotiations going forward; that fear is more than justified!

That last point (underwhelming action this week) made, positive bank earnings reports tomorrow could spark a nice near-term rally. Looking at ETF flows, positive bank earnings are definitely what traders expect. If they disappoint, however, we'll likely feel it (negatively) in the broader market as well.

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