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Former FBI Director James Comey has likely picked the perfect week -- if he wished to maximize focus on his Thursday testimony before the Senate Intelligence Committee.
Literally, we see nothing else trader-worthy on tap.
There’s a month to go in the second quarter. Covering analyst estimates and their forward guidance don’t usually get re-set until the latest reports hit.
However, events pile up on Thursday. Comey’s blockbuster testimony competes with an ECB monetary policy meeting. Then, at 10 pm London time, look for exit poll results from the U.K. election.
The members of the Federal Open Market Committee (FOMC) entered their hush mode starting Saturday at midnight. This lasts until they meet June 14th.
In short, until Thursday, hit the snooze button.
However, don’t be lulled into a Rip Van Winkle state by this quiet tone.
Rip Van Winkle was a character in a Washington Irving short story. He went to sleep before the American War of Independence and woke up twenty years later in an independent USA.
Folks, there is a wall of worry building.
This is very easy to cast. The U.S. stock market trades on weakening growth fundamentals and high (too high?) overall share price valuations.
First off, after the soft-ish +138K non-farm payroll print last Friday, traders set a strong consensus for just a June rate hike this year.
Current probabilities on the CME FedWatch tool show a 92.1% chance of a 25 basis point rate hike at the June meeting. There is just a 27% chance of an added 25 basis points in September. An added December hike is set at 11.2%.
On top of that, on Monday June 5th, benchmark 10-yr. U.S. Treasury notes offered 2.18%. This roughly marks our YTD low. In late March, these same notes hit their YTD high around 2.60%. What’s up with that 42 basis point decline? Expected consumer inflation rates, underpinned by expected wage rates, ebbed.
Now, let’s address the state of the stock market...
After last week’s stock market rally, the S&P 500 forward 12-month Price to Earnings (P/E) ratio stands at 17.7. The 5-yr. average is 15.3. The 10-yr. average is 14.0.
???In light of this ‘frothy’ valuation, should traders and investors be concerned about a stock market top? YES. It is as simple as that. Without any negative catalysts to take down an upward trending market, the major indexes have floated higher and higher.
A glaring possibility of a sudden correction should not be tossed aside easily.
When the bond market is in ‘safe haven’ mode and the stock market is rallying anyway, traders should worry.
Complacency can be your biggest enemy.
Top Zacks #1 Rank (STRONG BUY) Stocks—
(1) American Tower Corp. (AMT - Free Report) : Individual shares price at $132. While a top Zacks rank stock, this $56 billion market cap company has a lousy Zacks VGM score of F.
(2) Regeneron (REGN - Free Report) : Individual shares trade at $480 at the moment. As a momentum-trading top biotech stock, this $51 billion market cap company now carries a lousy Zacks VGM score of D.
(3) Intuit (INTU - Free Report) : This computer software stock has a $142 share price. The $36 bilion market cap stock has a Zacks VGM score of B. That comes from blending a Zacks Growth score of A
...and a Zacks Value score of D.
Key Global/Macro—
On Tuesday, The Reserve Bank of Australia should leave its target rate at 1.5%.
On Wednesday, the Reserve Bank of India should stay on hold with its policy rate too.
On Thursday, the three biggest potential global market movers arrive. Two originate in Europe. • ECB monetary policy starts off the day. Draghi press conference is what matters, as no rate change is in the offing. • This will be followed by FBI Director Comey’s testimony. • Then, we get the U.K. general election exit poll results at 10 pm London time. Prime Minister Teresa May looks to prevail. But how many seats does she control in Parliament?
On Monday, the final Eurozone composite Purchasing Manager’s Index (PMI) will come out. The prior read was a high 56.8.
The CIPS/Markit Services PMI for the U.K. came out. It was 53.8 versus a prior 55.8.
The ISM non-manufacturing index for the U.S. comes out. The forecast is for 58.
On Tuesday, the Reserve Bank of Australia (RBA) should stay pat at 1.5% on the policy interest rate.
There is the issuance of the latest COPOM monetary policy meeting minutes in Brazil. Note: the central bank cut rates 100 basis points.
On Wednesday, the reverse repo rate for India (their policy rate) should stay at 6.0%.
On Thursday, the European Central Bank (ECB) President Draghi gives a press conference following an interest rate announcement. The Eurozone deposit rate is now at -0.4% and refi rate is 0.00%.
The unemployment rate in Greece is 23.2%. Let’s see where that goes!??? Housing starts in Canada come out. There is a housing bubble in parts of the country now.
U.S. initial claims should be low at 248K.
The bi-weekly CPI (consumer inflation rate) in Mexico is running at +6.15% y/y.
On Friday, the latest industrial production numbers for the U.K. come out. The forecast is for -0.4% y/y.
The IBGE inflation rate in Brazil (their consumer inflation rate) should be down to +3.79% from 4.08% y/y.
The unemployment rate in Canada is 6.5%.
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Don't Be Rip Van Winkle: Global Week Ahead
This looks to be a quiet Global Week Ahead.
Former FBI Director James Comey has likely picked the perfect week -- if he wished to maximize focus on his Thursday testimony before the Senate Intelligence Committee.
Literally, we see nothing else trader-worthy on tap.
There’s a month to go in the second quarter. Covering analyst estimates and their forward guidance don’t usually get re-set until the latest reports hit.
However, events pile up on Thursday. Comey’s blockbuster testimony competes with an ECB monetary policy meeting. Then, at 10 pm London time, look for exit poll results from the U.K. election.
The members of the Federal Open Market Committee (FOMC) entered their hush mode starting Saturday at midnight. This lasts until they meet June 14th.
In short, until Thursday, hit the snooze button.
However, don’t be lulled into a Rip Van Winkle state by this quiet tone.
Rip Van Winkle was a character in a Washington Irving short story. He went to sleep before the American War of Independence and woke up twenty years later in an independent USA.
Folks, there is a wall of worry building.
This is very easy to cast. The U.S. stock market trades on weakening growth fundamentals and high (too high?) overall share price valuations.
First off, after the soft-ish +138K non-farm payroll print last Friday, traders set a strong consensus for just a June rate hike this year.
Current probabilities on the CME FedWatch tool show a 92.1% chance of a 25 basis point rate hike at the June meeting. There is just a 27% chance of an added 25 basis points in September. An added December hike is set at 11.2%.
On top of that, on Monday June 5th, benchmark 10-yr. U.S. Treasury notes offered 2.18%. This roughly marks our YTD low. In late March, these same notes hit their YTD high around 2.60%. What’s up with that 42 basis point decline? Expected consumer inflation rates, underpinned by expected wage rates, ebbed.
Now, let’s address the state of the stock market...
After last week’s stock market rally, the S&P 500 forward 12-month Price to Earnings (P/E) ratio stands at 17.7. The 5-yr. average is 15.3. The 10-yr. average is 14.0.
???In light of this ‘frothy’ valuation, should traders and investors be concerned about a stock market top? YES. It is as simple as that. Without any negative catalysts to take down an upward trending market, the major indexes have floated higher and higher.
A glaring possibility of a sudden correction should not be tossed aside easily.
When the bond market is in ‘safe haven’ mode and the stock market is rallying anyway, traders should worry.
Complacency can be your biggest enemy.
Top Zacks #1 Rank (STRONG BUY) Stocks—
(1) American Tower Corp. (AMT - Free Report) : Individual shares price at $132. While a top Zacks rank stock, this $56 billion market cap company has a lousy Zacks VGM score of F.
(2) Regeneron (REGN - Free Report) : Individual shares trade at $480 at the moment. As a momentum-trading top biotech stock, this $51 billion market cap company now carries a lousy Zacks VGM score of D.
(3) Intuit (INTU - Free Report) : This computer software stock has a $142 share price. The $36 bilion market cap stock has a Zacks VGM score of B. That comes from blending a Zacks Growth score of A
...and a Zacks Value score of D.
Key Global/Macro—
On Tuesday, The Reserve Bank of Australia should leave its target rate at 1.5%.
On Wednesday, the Reserve Bank of India should stay on hold with its policy rate too.
On Thursday, the three biggest potential global market movers arrive. Two originate in Europe.
• ECB monetary policy starts off the day. Draghi press conference is what matters, as no rate change is in the offing.
• This will be followed by FBI Director Comey’s testimony.
• Then, we get the U.K. general election exit poll results at 10 pm London time. Prime Minister Teresa May looks to prevail. But how many seats does she control in Parliament?
On Monday, the final Eurozone composite Purchasing Manager’s Index (PMI) will come out. The prior read was a high 56.8.
The CIPS/Markit Services PMI for the U.K. came out. It was 53.8 versus a prior 55.8.
The ISM non-manufacturing index for the U.S. comes out. The forecast is for 58.
On Tuesday, the Reserve Bank of Australia (RBA) should stay pat at 1.5% on the policy interest rate.
There is the issuance of the latest COPOM monetary policy meeting minutes in Brazil. Note: the central bank cut rates 100 basis points.
On Wednesday, the reverse repo rate for India (their policy rate) should stay at 6.0%.
On Thursday, the European Central Bank (ECB) President Draghi gives a press conference following an interest rate announcement. The Eurozone deposit rate is now at -0.4% and refi rate is 0.00%.
The unemployment rate in Greece is 23.2%. Let’s see where that goes!???
Housing starts in Canada come out. There is a housing bubble in parts of the country now.
U.S. initial claims should be low at 248K.
The bi-weekly CPI (consumer inflation rate) in Mexico is running at +6.15% y/y.
On Friday, the latest industrial production numbers for the U.K. come out. The forecast is for -0.4% y/y.
The IBGE inflation rate in Brazil (their consumer inflation rate) should be down to +3.79% from 4.08% y/y.
The unemployment rate in Canada is 6.5%.