Exceeding Expectations and Estimates

July 16, 2020 09:52 AM
The market often finds a silver lining given this ultra-liquid ZIRP world
A deluge of economic data from China broadly beat expectations
Abbott, BofA, J&J, and Morgan Stanley beat earnings estimates this morning
Equity Index futures

Equity Index futures

Last Week's Close

E-mini S&P 500 Futures (September): Settled at 3178.50, up 37.50 on Friday and up 49.50 on the week

E-mini Nasdaq-100 Futures (September): Settled at 10,837.25, up 109.75 on Friday and up 481.50 on the week

U.S. benchmarks settled-in after surging overnight upon positive Covid-19 vaccine news. That consolidation through the first half of U.S. hours held technical support (the gap from the prior session’s close) and found fresh buying amid President Trump’s infrastructure discussion coupled with rumors doen't not want to escalate tensions with China. Although these are all to be expected as he campaigns for reelection, the market often finds a silver lining to perform given this ultra-liquid zero interest rate policy world. The late session wave re-tested the early highs, for the S&P 500 index, the highest level since February 25th. But something odd happened last night. A deluge of economic data from China broadly beat expectations and stocks traded lower. In fact, with YoY Q2 GDP at +3.2% (versus +2.5% expected), China is the first major economy to return to growth since the onset of the pandemic. 

Bank of America and Morgan Stanley both beat earnings estimates this morning. Bank of America is trading lower by about 2.5% premarket though and it is important to note they set aside $5.8 billion for bad loans. We have said it before, the banks are clearly telling investors they are preparing for the defaults, preparing for the pockets of the economy to worsen. Abbott and Johnson & Johnson also both beat expectations this morning, however, their respective stocks are muted. Netflix reports after the bell. 

Today, the ECB left rates unchanged as expected and President Lagarde held a press conference at 7:30 am CT. At that time, we hadget a deluge of U.S. data, which has broadly been better than expected of late. Yesterday, both NY Empire State Manufacturing and Industrial Production came in stronger than anticipated. At 10:10 a.m. CT, New York Fed President John Williams speaks, and Chicago Fed President Charles Evans follows at 12:30 p.m

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