Morning Minutes

Stocks Keep Sliding Despite Strong Earnings

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Equity markets around the world have continued their summer swoon overnight and into this morning. US index futures are flat to down 0.5% while overseas the Dax is down 1.0%, the FTSE is down 0.8% and the Nikkei dropped 1.1%. Commodity markets are mixed with WTI crude oil falling 1.6% but copper bouncing 0.6%.

Stocks have failed to respond positively to what previously or commonly has been seen as good news. For example, yesterday Fed Chair Powell continued his “inflation is transitory, we are keeping stimulus going” mantra but traders failed to be impressed. Whether it was because Powell also mentioned that Fed officials have discussed tapering asset purchases or if traders have deduced the liquidity party is nearing its end after the Bank of Canada and the Reserve Bank of New Zealand both actually did scale down their asset purchases, the impact of Powell’s supportive jawboning appears to be fading.

Investors also are continuing to seemingly take a jaded, ho-hum, attitude toward earnings reports. Headlined by Morgan Stanley (EPS $1.85 vs street $1.65), several US companies beat the street his morning including UnitedHealth, Bank of New York Mellon, and US Bancorp with little applause, suggesting that expectations of very strong results had already been baked into valuations.   

Economic news out of the US this morning has been mixed with the Philadelphia Fed Manufacturing Survey falling short of expectations (21.9 vs street 28.0 and previous 30.7), but the Empire State Manufacturing Survey beating expectations (43.0 vs street 18.0). Chinese economic numbers reported overnight were also mixed with Q2 GDP disappointing (7.9% vs street 8.1%), but retail sales (12.1% vs street 11.0%) and industrial production (8.3% vs street 7.8%) beating expectations. US industrial production (street 0.7%) is due at 9:15 am EDT, followed by US retail sales (street 0.4% vs previous -0.7%) at 8:30 am EDT tomorrow morning.

New Video: SIA Wealth July Webinar Replay

A replay of yesterday’s SIA Wealth webinar which included market insights from SIA Wealth Chief Market Strategist Colin Cieszynski is now available.

YouTube Version:  https://www.youtube.com/watch?v=y0NVcAW8AFM

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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