It should surprise no one at this juncture that the market's attention this morning has turned to the G-20 meeting in Japan. Things are getting started, but the main event -- the meeting between President Trump and President Xi -- won't take place until Saturday. Michael Buffer will be doing the introductions.
We jest, yet it is unclear if those men are getting ready to rumble or getting ready to rumba to the tune of a trade truce. Some conflicting press reports are adding to the confusion.
The South China Morning Post carried a piece in which it was suggested both sides have already agreed to a truce in order to continue the negotiations. The Wall Street Journal later reported, however, that President Xi is going to present President Trump with a list of demands to be met before China agrees to any trade deal.
The futures market seesawed on the respective reports, rising on the former, which sounded good, and falling on the latter, which sounded bad as President Xi's reported demands are thought of as a potential non-starter for President Trump.
Chinese sources who spoke to The Wall Street Journal said Mr. Xi will require the U.S. end its ban on U.S. technology companies selling to Huawei, lift all punitive tariffs, and stop asking China to buy more from the U.S. than it had previously agreed to in December.
Overall, there isn't a lot of conviction in the futures market. That makes sense given the uncertainty, yet a slightly positive bias is apparent.
The S&P futures are up eight points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 39 points and are trading 0.5% above fair value. The Dow Jones Industrial Average futures are down eight points and are trading in-line with fair value.
The weakness in the Dow futures, though, isn't too pronounced knowing that Boeing (BA), which is down 12 points, or 3.3%, is the reason why the Dow futures are negative. Take Boeing out of the mix and it's a different picture.
Boeing has gotten hit on a report that the FAA has discovered another issue in the 737 MAX fix that has not been addressed by the planned software changes. This news has led to an expectation that the 737 MAX will be grounded even longer, raising some natural questions about Boeing's earnings prospects and those of related airlines flying (or that had been flying) the 737 MAX.
This morning's economic data hasn't made any real difference, partly because the third estimate for Q1 GDP was left unchanged at 3.1%, as expected, while there weren't any major changes to the underlying trend in initial jobless claims.
The Department of Labor reported initial jobless claims for the week ending June 22 increased by 10,000 to 227,000. That was higher than the Briefing.com consensus estimate of 219,000, yet the four-week moving average was up by just 250 to 219,000. Continuing claims for the week ending June 15 increased by 22,000 to 1.688 million, pushing the four-week moving average up by 6,500 to 1,686,750.
In other developments, there has been ample media attention on last night's debate among the initial batch of Democratic presidential candidates. There will be a second debate tonight among the other slate of Democratic candidates, which includes former Vice President Joe Biden.
The debate itself offered some interesting theater and talking points, yet one can dismiss the notion that it is having any impact on the market today.