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Market Brief – Monday 9/23/19

U.S. equity futures wasted no time shrugging off Friday’s drop as the futures market rallied on trade war optimism. The overnight optimism was ruined on news out of South Korea, Germany, and Saudi Arabia.

Crude oil started the week trading higher after the Wall Street Journal report on Saudi Aramco that it may take eight months to bring production back online due to supply chain problems with getting the parts they need. By Monday morning, Reuters refuted this report by stating production should be back online within a matter of weeks.

South Korea’s economy continues to collapse as the first twenty days in September aren’t looking good for the global economy. Exports collapsed -21.8% on a year-over-year basis. Breaking South Korean exports down, to China -29.8%, to U.S. -20.7%, to E.U. -12.9%, and to Japan -13.5%. Semiconductor chip exports fell a whopping -39.8% over last year.

The German factory sector continues to contract as its September PMI fell from 44.7 to 41.4. The German Services PMI is still expanding, but its growth is slowing as it fell from 54.8 to 52.5. It is increasingly clear that the German factory sector is in a recession and that it will likely pull the rest of the Eurozone down with it.

The Fed’s dollar shortage problem seems to be alleviating itself as banks only took overnight loans worth $66 billion this morning. Tomorrow will be the first day the New York Fed offers a $30 billion, 14-day loan in addition to the standing $75 billion overnight loans.

The Markit U.S. Services September Manufacturing PMI came in at 51.0 ahead of expectations for a 50.3 print and Services PMI came in at 50.9 below expectations of a 51.4 print as both manufacturing and services sectors remain in a slight expansion. Services employment entered a contraction at 49.1 as surveyed companies are starting to report job cuts.

Stocks were very quiet today as both buyers and sellers seemed to disappear. Stocks and bonds barely budged on low volume. Agricultural commodities traded higher on reports that the early harvest is producing and yielding below estimates.