Morning 7-17

Weekend Watch;

 European stocks traded mixed on Friday as EU leaders gather for their first physical meeting in Brussels to discuss the €750 billion recovery plan to respond to the COVID-19 crisis. The deal will probably face opposition from Denmark, Sweden, Austria and the Netherlands, as well as the threat of a Hungarian veto, but investors still believe it might be reached. Policymakers will also debate a new seven-year EU budget, after talks collapsed in February. -Trading Economics

 Here in the US Senate back in Session, Stimulus talk to heat up things to Monitor an Extension of Special unemployment benefits in some nominal amount is paramount. No extension will not go over well with Citizens just getting by. A payroll tax cut favored by trump appears to be the bargaining tool he is bringing to the table saying it must be included in any new stimulus.. Markets appear to be pricing in more stimulus any delay or roadblock could result in a bit of short term selling in risk.

News and things:

  • US real nates move further into negative territory 5-year real rates stand at -1%
  • Netflix earnings disappointed with new subscribers missing forecast, stock down 8% at one point, currently trading off the lows
  • US 30 year Mortgage rates touched an all-time low yesterday 2.98%, Lumber at 16 month highs, Home depot +18% ytd Housing starts at 7:30 today expected to be strong
  • The latest thinking from Fed speakers is that Economy is slowing or at least hit a pause button. The low hanging fruit  has been picked the easy part of the rebound has been completed, Some workers have been called back others are starting to realize that jobs and business wont come back as the demand destruction due to Virus is too large. I am usually pretty bullish on things, but outlook is dire, Govt stimulus and Fed action only game in town now to weather the storm.
  • Feds Williams NY President yesterday “Time is not right to draw conclusions on Repo market reform; We are close to 2% infl tgt, however not; In terms of Fed programs not the time to focus on exit strategies; Dis-inflationary pressures are currently the dominant force  there just yet; this is going to be a longer drawn out period getting through the pandemic; fiscal stimulus, including grants and transfers, to households and businesses has been effective; a lot of employers don’t have demand for their services and are having to lay off workers despite PPP; this is going to be a longer drawn out period getting through the pandemic; (ITC Markets)

Markets looking for a theme today yesterday Felt like a Summer Friday lets hope  today is different  RTY/NDX ratio has been bouncing last  few days  causing all sorts of experts to say that  Small caps are the new leader  we have been here before lets see if  this is just an adjustment and not a change in leadership

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