A single Speech

What a difference a single speech can make during periods of political volatility.  In what seems to be a dramatic policy reversal of trade the Chinese leader appeared to agree to all the Fair Trade points that have been made by the President.  Let’s hope words actually translate into an enforceable agreement that finally levels the playing field.  Clearly, this will take time, and there will still be considerable political jockeying, but at least for the moment, the market seems able to breathe a big sigh of relief.

All eyes will likely focus on the testimony in Congress by Mark Zuckerberg and what it could mean for the future of FB as well as other data-heavy tech business.  I wouldn’t expect a quick resolution.  In fact, we could easily see a lot of regulation and government over site in the months and even years to come.  Needless to say, it could be a bit stressful for those holding FB as this process unfolds.

On the Calendar

The Tuesday Economic Calendar kicked off very early this morning with a Fed Speaker at 4:30 AM and the NFIB Small Business Optimism Index.  The most important report today, PPI, comes out at 8:30 AM Eastern where consensus expects a modest increase of 0.1 in March however the high estimate is at 0.4%.  Remove food and energy, and the expectation is for a gain of 0.2% with energy and trade services up 0.3%.  Other reports not expected to move the market today are Redbook, Wholesale Trade, two bond auctions and another Fed Speaker at 6:30 PM.

The off Calendar testimony of Mark Zuckerberg at two Congress session will likely dominate the news today and could easily move FB stock and could affect another tech prices as well today.

On the Earnings Calendar, I see only 15 companies reporting earnings today, none of which are likely to move the overall market.

Action Plan

Yesterday produced a nasty whipsaw with the bulls moving the Dow up as much as 400 points only have the Bears come back in with a vengeance late in the day.  Then after the close, China extended an olive branch essentially saying they plan to make huge concessions on trade which of course created yet another whipsaw in the overnight futures session.  As I write this, Dow Futures are indicated to open sharply higher by more than 250 points.  If the words actually translate into a fair trade deal with China, it could dramatically improve the overall economic outlook in the US.  Let’s keep our fingers crossed.

With the big morning gap on fading trade concerns, a short squeeze could easily trigger pushing the indexes sharply higher.  Keep in mind however that just one Tweet or poorly worded comment could send the indexes reeling so stay on your toes.  Expect fast moving prices and whippy price action this morning as the market reacts.

Trade Wisely,

Doug