By Laura Curtis
Trump’s all (mad) about the Fed.
Chairman Jerome Powell managed to give markets a thrill even though the quarter point cut he delivered was far from surprising. Powell discouraged investors from betting on a longer-term easing cycle, saying the modest cut was meant to protect the economy’s expansion in a time when uncertainty around trade policy has been “more elevated than we anticipated.” After wild swings as investors struggled to parse Powell’s message, markets ultimately gave it the thumbs down – and President Donald Trump was also not pleased. “As usual, Powell let us down,” Trump said in a tweet, having demanded a cut that is aggressive enough to fight the trade and currency battles he’s waging. Look for even more Trump-ire as the dollar flirts with an eight-month high and the European Central Bank leads others looking at their own paths to easing.
Trade wars – err, talks – to resume in September.
Speaking of the dragging trade war, Chinese and U.S. negotiators are set to meet again in early September, this time on American soil. The talks that ended earlier this week in Shanghai may not have produced much concrete progress but Chinese state media called it at least a “pragmatic” step forward. The White House said the meetings were “constructive” and both sides agreed they broached the subject of U.S. agricultural goods (even if there were no signs of new purchases). If that doesn’t inspire confidence for September meetings, consider the many other escalating disagreements between the world’s two biggest economies, over Hong Kong, the South China Sea, Taiwan and Huawei Technologies Co., to name a few.
Earnings today are kicking off with Bombardier Inc. cutting its revenue forecast for the full year and Cigna Corp. guidance beating estimates. The next big names to report include Archer-Daniels-Midland Co., Yum! Brands, Inc. and Kellogg Co. (8 a.m. Eastern time) And after trading hours, look for results from Herbalife Nutrition Ltd., Pinterest Inc., The Chemours Co. and United States Steel Corp. Earlier, upbeat results from the likes of Societe Generale SA and Barclays Plc helped lead the European benchmark index higher.
Overnight the MSCI Asia Pacific Index dropped 0.6% while Japan’s Topix index eked out a 0.1% gain. In Europe, the Stoxx 600 Index was 0.5% higher at 6:08 a.m. led by financial shares after those solid bank results. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 2.042% and gold retreated.
Now the Fed is out of the way the next big thing is the July jobs report due out tomorrow, which will set the tone for the pace of activity in the second half of the year. But today isn’t a total bust – we have the Bloomberg Consumer Comfort data (9:45 a.m.), as well as numbers on U.S. manufacturing and construction (10 a.m.).