Dwindling Patience for a Deal
Stocks are poised to face pressure as analysts have warned the upcoming earnings season could be the first quarter of contracting corporate results in years.
Last week, U.S. equities advanced 0.9%.
This morning, U.S. equities are down 0.15%, currently trading at 2,891.75 as of 8:59am ET.
According to a White House statement, “The United States and China had productive meetings and made progress on numerous key issues" during trade talks from April 3 to April 5. “Significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues." Chinese reports also claimed progress; Chinese state media reported that the two sides had made "new progress" in the talks and future discussions will be conducted in "various ways." Still, “progress” has been slow to materialize after months of talks between the U.S. and China. Bypassing the originally scheduled March 1 date, many analysts are increasingly skeptical that a deal at this point – if reached – will have little meat to it.
Oil prices continued to push higher, with Brent and WTI hitting fresh 2019 highs overnight. Brent rose to $70.62 a barrel and WTI jumped to $63.45 a barrel. Prices have been rising since the beginning of the year amid rising tensions in Libya, ongoing production cuts from OPEC and U.S. sanctions against Iran and Venezuela.
Crude prices are up 39% since the start of the year. Crude is up 0.44%, currently trading at $63.36 a barrel as of 8:57am ET.
In international news, the Brexit debate appears to be getting desperate. According to British Prime Minister Theresa May, “The choice that lies ahead of us is either leaving the European Union with a deal, or not leaving at all.” According to reports, May is under pressure to present a new plan this week Wednesday when she meets with EU leaders in Brussels. Brexit is now formally scheduled for April 12, just four days from now.
The pound is up 0.16%, currently trading at $1.31 against the U.S. dollar as of 9:03am ET.
In other British news, the U.K. government is reportedly preparing to take a hard line when it comes to online safety, appointing what it claims to be the world's first independent internet safety regulator. Companies – including Facebook, YouTube, Twitter as well as online forums, meaning services and search engines – that fail to meet the new standard will reportedly face huge fines. Big Tech lobbyists, meanwhile, suggest the proposed laws are too vague, causing confusion for enforcement and may harm competition in the sector.
Today, durable goods orders are expected to be unrevised at the 1.6% decline reported in February, a four-month low.
Later this week, on Wednesday, the CPI is expected to rise 0.4% in March and 1.8% over the past 12 months, a three-month high. On Thursday, the PPI is expected to increase 0.3% in March and 1.9% year-over-year for the second consecutive month. On Friday, import prices are expected to rise 0.4% in March following a 0.6% gain in February, and the University of Michigan Consumer Sentiment Index is expected to decline from 98.4 to 98.1 in the preliminary April report.
-Lindsey Piegza, Ph.D., Chief Economist