Heading into the Labor Day holiday, market participants were hoping the holiday weekend would be made more festive by a tweet from President Trump announcing a delay in the increased tariffs set for September 1. There was no such tweet. That realization, and some other developments, has set the tone for a negative start today.
Currently, the S&P futures are down 19 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 49 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down 217 points and are trading 0.8% below fair value.
The colorful gains registered last week have been diluted with shades of gray this morning.
- There are reports the U.S. and China are finding it challenging to schedule a face-to-face September trade meeting due to trust issues on both sides.
- China’s Vice Premier Liu He reiterated the view that he hopes China and the U.S. can pursue common ground and resolve the trade issue with mutual respect.
- UK Prime Minister Johnson is threatening to call for a snap election on October 14 if Members of Parliament succeed in advancing legislation this week that blocks a no-deal Brexit on October 31.The British pound continues to weaken against the dollar.
- Hong Kong experienced a weekend of violent protests, raising the level of nervousness about China’s military intervening to suppress the protest movement.
- Manufacturing PMI readings for August out of the eurozone, China, and Japan were mixed relative to expectations, but mostly below 50.0, signaling a contraction in manufacturing activity.
- South Korea’s CPI was unchanged yr/yr in August, which is reportedly the lowest on record.
- The newly-proposed PD-M5S coalition government in Italy is facing an online vote of confidence today from M5S supporters.
Beyond these headlines, a lot of people (not just market participants) are focused on the path of Hurricane Dorian, which sadly pummeled the Bahamas over the holiday weekend and is now stalking the Florida coast as a Category 3 hurricane.
Meteorologists think Dorian will ultimately skirt the Florida coast and move up the seaboard to Georgia and the Carolinas, yet they continue to caution that Dorian could still turn and make a direct strike on Florida. Typical business activity is being impeded by vacuation and hurricane-preparation efforts.
Dorian’s ultimate impact will be a focal point in this shortened trading week, and so will a host of economic data and Fed speeches.
Today’s economic calendar features the ISM Manufacturing Index for August (Briefing.com consensus 51.3; prior 51.2) and Construction Spending Report for July (Briefing.com consensus +0.3%; prior -1.3%) at 10:00 a.m. ET.
The Employment Situation Report for August will round out the economic calendar on Friday. Hurricane Dorian should be in its remnant stage by then, and hopefully, the employment data won’t produce more shades of gray for a market that is wrestling with mixed market signals and heightened uncertainty on a number of key fronts.
Originally Posted on September 3, 2019 – The Picture of Dorian Gray
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