Page One
Briefing.com Summary:
*President Trump threatened to bomb Iran again if he doesn't like the final terms of the memorandum of understanding.
*Retail sales for May were stronger than expected.
*The semiconductor stocks are enjoying some buy-the-dip interest.
It was a tough day yesterday for the semiconductor stocks, so it naturally follows that there is buy-the-dip interest in that space this morning. That has helped put a bid in the Nasdaq 100 futures, along with SpaceX's (SPCX) rocket thrust following last Friday's debut.
It is all nervous energy, though, ahead of today's FOMC decision that will feature a new policy directive and updated summary of economic projections at 2:00 p.m. ET and a press conference conducted by new Fed Chair Kevin Warsh at 2:30 p.m. ET.
Currently, the S&P 500 futures are up eight points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 169 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are down 12 points and are roughly in line with fair value.
The market isn't expecting anything out of the Fed today in terms of changing the target range for the fed funds rate. However, it is gearing up for some possible changes in the Fed's communication style.
By and large, we expect some more wait-and-see messaging. The critical difference now, however, is that the wait-and-see view is apt to have a more positive hue, given the recent decline in oil prices. In other words, the market has been on guard for a wait-and-see mentality leading to a possible rate hike, but now the wait-and-see mentality will presumably be geared toward not needing to raise rates.
That would be a dovish pause if that turns out to be the case.
In the meantime, the market is digesting some pleasing retail sales data and President Trump's threat that the U.S. would go back to bombing Iran if he doesn't like the final terms of the memorandum of understanding or if Iran does not behave itself.
WTI crude futures are up a bit (+0.8% to $76.66/bbl) in what can be called some nervous energy on that threat, but to be clear, they aren't up in a way that would suggest there is a real fear in the market that this memorandum of understanding is going to fall apart.
The consumer isn't falling apart. That was clear in the retail sales report for May.
Total retail sales increased 0.9% month-over-month in May (Briefing.com consensus: 0.5%) following a downwardly revised 0.4% increase (from 0.5%) in April. Excluding autos, retail sales jumped 0.8% (Briefing.com consensus: 0.5%) on the heels of an unrevised 0.7% increase in April.
The key takeaway from the report is that it shows real demand. The data are not adjusted for price changes, and retail sales activity in May outpaced the rate of inflation (+0.5%) in May. Moreover, excluding gasoline station sales (+3.4%), retail sales were still up 0.7%.
This is good economic news that helped put a little more pep in the equity futures market's step. Overall, though, participants are stepping lightly, waiting on Fed Chair Warsh.
