Don’s Notebook July 31, 2018


Unexpected pressure in Tuesday’s key inflation readings — the core Personal Consumption Expenditure price index and the Employment Cost index – may have pressured for hawkish FOMC results on Wednesday. However, easing inflation pressure along with healthy consumer vital signs was signaled from the Personal Income & Outlays Report for June.

  • Both price indexes, the overall and the closely watched core rate which excludes food and energy, posted only marginal 0.1 percent gains in June with year-on-year rates favorable, at 2.2 percent overall and at 1.9 percent for the core, both unchanged from May.

Personal income rose a useful 0.4 percent with the wages & salaries component also at 0.4 percent.

  • The savings rate held unchanged in June at 6.8 percent.

Fed Notes:

  • Fed policymakers begin their latest two-day policy meeting today, with an interest rate decision due tomorrow afternoon at 2 p.m. ET.
  • No increase is expected at this meeting after hikes in March and June.

Economic Calendar Notes:

  • S&P/Case-Shiller releases May home prices at 10 a.m. ET.
  • The Conference Board’s July consumer confidence is released at 10 a.m. ET.

Overnight Trading Notes:

  • S. stock futures were higher this morning, with the Dow and S&P 500 on the last day of July up 4.27 percent and 3.1 percent, on track for their best monthly performances since January.
  • The MSCI Asia Pacific Index slipped 0.6 percent
  • Japan’s Topix index closed 0.8 percent lower following weak China data and the BOJ decision.
  • In Europe, the Stoxx 600 Index was broadly unchanged at 5:45 a.m. Eastern Time as investors digested earnings and economic data.
  • The Nasdaq was on its first three-session losing streak of more than 1 percent in nearly three years.
  • The recent tech stock retreat was led by Facebook’s nearly 22 percent three-session slide.

Earnings Notes:

Dow stock Apple was on a three-session decline of about 2.5 percent ahead of Tuesday’s after-the-bell earnings. Investors will be looking for hints as to how well the iPhone X has been selling.

  • Dow components Procter & Gamble and Pfizer reported earnings this morning. P&G beat on quarterly profit but missed on revenue. Pfizer beat on both the top and bottom lines.

Earnings Notables:

  • Honda Motor, Sony, BP, Unum Group, Sanofi, Shopify, Ralph Lauren, Pfizer, Taubman Centers, Vulcan Materials, Geox and Samsung
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Dr. Don Pratl is Director of Trader Development and Education for TradeStation. He joined TradeStation in 2016 after holding similar roles with other online brokerages. Don’s long career in the financial services industry reflects expertise in administering trading and investment strategy programs for retail investors as well as financial services professionals. Since the 1980s, he has held various positions in areas including CBOE trading floor order execution, marketing, sales, personnel management, training and customer service. Don holds series 3, 4, 7 and 63 FINRA licenses, earned his Ph.D. in Organization and Management, and his M.A. and B.A. in Political Science. He has been an occasional adjunct college instructor since 2004 at a range of institutions, teaching undergraduate, graduate and doctoral students using in-class and online formats.