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Briefing.com Summary:
*There is a risk-off disposition in early trading after China sanctions five U.S. subsidiaries of Hanwha Ocean.
*JPM, WFC, GS, C, BLK, JNJ, ACI, and DPZ all posted better-than-expected earnings results.
*Fed Chair Powell speaking at 12:20 p.m. ET about the economic outlook and monetary policy.
Treasury yields are down, gold futures are up, the dollar has a bid, and the equity futures are negative. One can probably surmise from that categorical summation that something isn't sitting right with the capital markets.
That "something" is China's move to sanction five U.S. subsidiaries of South Korean shipping company Hanwha Ocean. That move in and of itself is not the biggest issue. The biggest issue is the timing of the announcement, which comes after President Trump countered China's move to tighten its export controls on rare earth minerals with a threat of an additional 100% tariff on imports from China and his weekend declaration that "it will all be fine" with China.
It may be, yet this latest move by China suggests it will be a potholed road to "fine."
Currently, the S&P 500 futures are down 63 points and are trading 1.0% below fair value, the Nasdaq 100 futures are down 300 points and are trading 1.2% below fair value, and the Dow Jones Industrial Average futures are down 396 points and are trading 0.8% below fair value.
This negative disposition has taken root despite better-than-expected earnings results from JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C), Johnson & Johnson (JNJ), Albertson's (ACI), and Domino's Pizza (DPZ). For good measure, Samsung Electronics announced preliminary Q3 results that were better than expected.
Earnings news, however, is taking a backseat to the trade tension, which also has upended many foreign markets in Tuesday's trading.
Perhaps Fed Chair Powell can redirect the market's mindset. He is giving a speech at the NABE meeting at 12:20 p.m. ET today on the Economic Outlook and Monetary Policy. Should he imply in that speech that the Fed is apt to cut rates again at its October FOMC meeting, market participants may just find reason to buy this morning's dip.
The caveat is that an inflammatory Truth Social post from President Trump, should he choose to deliver one acknowledging China's latest move, could be an overriding spoiler to such efforts.
Market participants, therefore, will have to be on guard (and probably are already) for such a development.
The 10-yr note yield skimmed 4.00% earlier today and is at 4.03% now; gold futures are up 0.4% to $4,147.90/ozt; and the U.S. Dollar Index is up 0.2% to 99.43. Collectively, that is a snapshot of risk-off action.
