This is one of the biggest weeks in economic data. Fed Announcement, Wednesday and the non-farm payroll on Friday. Uncertainty will breed volatility and our playbook says to sell options when the volatility is high. Be on the lookout for some trades from Mark.
Happy Monday. Good Luck out there this week.
Global Spotlight
The Shanghai Round. The weight of the global economy will be on the shoulders of U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin when they arrive in Shanghai on July 29 for the first high-level talks since the June G-20 sit-down between U.S. President Donald Trump and Chinese President Xi Jinping.
The WTO’s Existential Crisis. Ahead of the Shanghai talks, Trump broadcast one of his biggest gripes against the World Trade Organization via Twitter, calling the global trade governing body “BROKEN” due to its provisions that allow countries to classify themselves as “developing countries” to get “special and differential treatment.”
Hong Kong Is Moving Down a Violent Path. Police and protesters clashed on July 27 in the northern town of Yuen Long where recent mob attacks by pro-Beijing gangsters took place.
Dude, Is Brexit Happening? New British Prime Minister Boris Johnson’s Cabinet picks are meant to send a clear message that he is serious about making Brexit happening, but they will do little to calm already deep divisions within his Conservative Party over how to make Brexit happen.
Guatemala, a Cautionary Tale for Mexico? After the White House threatened tariffs and a travel ban, the Guatemalan government signed a so-called safe third country agreement with the United States on July 26. But there’s a big problem: Guatemala’s Constitutional Court had already blocked the agreement, and even as Guatemalan President Jimmy Morales, whose single four-year term ends in January, said this week he was appealing that decision, the case remains in legal limbo.
The Missile Test Telegraph. This was a big week for ballistic missile tests. Iran carried out a medium-range ballistic missile test after a nearly eight-month hiatus. While Iran has technical motivations to continue testing, the move also sent an important signal that the wider region — to include U.S. forces that are being deployed to Saudi Arabia — is within range of Iranian retaliation.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- Second quarter earnings are expected to increase 0.5% from 18Q2. Excluding the energy sector, the earnings growth estimate is 1.2%.
- Of the 218 companies in the S&P 500 that have reported earnings to date for 19Q2, 75.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 19Q2 revenue is expected to increase 3.6% from 18Q2. Excluding the energy sector, the growth estimate is 4.0%.
- 60.0% of companies have reported 19Q2 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 63%.
- For 19Q2, there have been 87 negative EPS preannouncements issued by S&P 500 corporations compared to 23 positive, which results in an N/P ratio of 3.8 for the S&P 500 Index.
- The forward four-quarter (19Q3 –20Q2) P/E ratio for the S&P 500 is 17.3.
- During the week of July. 29, 167 S&P 500 companies are expected to report quarterly earnings.
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