Meaningless Monday Market Movement – Time For Earnings

It’s Monday so we must be up in the Futures, right?

Monday mornings have market the high for the week in 3 of the past 4 weeks (last week being the exception but it was low-volume, holiday training), so we’re not taking today’s open too seriously, especially at the start of a data-heavy week that gives us Consumer Credit this afternoon, Small Business Confidence and Job Openings tomorrow morning, PPI on Wednesday along with a likely disappointing Petroleum Status Report, CPI on Thursday and Friday, not only do we have Import and Export Prices and the Michigan Sentiment Survey but we’ll have earnings from 5 big banks to kick off the season (C, FRC, JPM, PNC & WFC).

So far, the markets seem to be unconcerned about the opening round of the Trade Wars though shots have been fired with the US imposing $34Bn worth of 25% tariffs (taxes) on flat-screen TVs, aircraft parts, and medical devices and China has fired back with $34Bn worth of tariffs on US goods including soybeans, Autos, and lobsters. Another $16Bn from each side is expected to be announced Thursday, as Trump heads off to Europe to fight with NATO on the way to kissing Putin’s ring next week (read the excellent article from New York magazine titled: “Will Trump be Meeting with his Counterpart of his Handler?“).

Whether Trump is actually just a Putin puppet or whether he decides on his own to do things that destroy Democracy and benefit Putin, there sure is a lot of chaos and turmoil out in the World that is already disrupting global trade, global business and global economies – simply not the kind of environment in which you expect the market to be making new highs.  

Oil (/CL) is trading $30 (75%) higher than it was last July and you KNOW that’s going to impact the consumers by turning $40 fill-ups into $70 fill-ups and even once a week for 200M cars is $6Bn per week ($312Bn/yr) of after-tax income taken away from US consumers that they used to spend on something else. Even if 2M new jobs were created and those workers were all paid $1,000 per week, after tax they would only make up about 15% of that drop in overall consumer buying power.