Today is Memorial Day and US stock markets are closed. DTG will resume posting tomorrow, Tuesday, May 28. Enjoy the long holiday weekend!
Hopes for short-term progress in US/China trade negotiations is fading after US Treasury Secretary Mnuchin said there are no scheduled talks, but Trump would meet Xi Jinping at June’s G-20 meeting. Meanwhile the Japanese companies Panasonic and Toshiba, plus the UK’s ARM Holdings have joined the blacklisting of China’s Huawei Technologies. Stock in US tech companies like Apple are declining in what’s being called the Tech Cold War is escalating.
Adding political fuel to the fire, the US sent 2 Navy destroyers into the Taiwan Strait as a commitment to a free and open Indo-Pacific. While the US recognizes Taiwan as independent, China considers the island a sacred part of Chinese territory and will make it a part of “one China” by military force if necessary. The Taiwan President tried to reassure everyone about the US ships that there was no cause for alarm. A Chinese spokesperson said Taiwan is the most sensitive issue in China-US relations.
Meanwhile Tyson Foods (TSN) is looking to build a beef-processing plant in Kazakhstan to avoid Chinese tariffs. The initial investment is $200B but it’s expected to be billions as Tyson looks to supply 5 million tons of beef to China a year.
L. Brands (LB) is up over 12% premarket after reporting their Bath & Body Works store sales increased 13%. Earnings include BBY, BJ, HPE, HPQ, HRL, ADSK, MDT, SPLK, and DECK. The economic calendar includes Claims @ 8:30am EST, Flash PMIs @ 9:45am EST, and New Home Sales @ 10:00am EST.
After shrinking for the last few days, volatility has ticked up over the US/China escalating tensions. Size bias is short into the US session open on lighter than recent Globex Size volume.
It’s a Fed day with FOMC meeting minutes released at 2:00pm EST. The White House continues their unpredictable moves to secure a US/China trade deal. After easing Huawei Technology restrictions, the NY Times reported the White House is looking to target and blacklist additional Chinese companies. The Commerce department may require US companies to get approval before supplying parts to world’s largest video surveillance company Hikvison Digital Technology.
Cui Tiankai, the Chinese ambassador in the US told Fox News, “It’s quite clear the US side that more than once changed its mind overnight and broke the tentative deal already reached… So we are still committed to whatever we agree to do, but it is the US side that changed its mind so often.”
Nordstorm (JWN) is down over 9% and Urban Outfitters (URBN) is down nearly 7% after both retailers missed estimates. Home Depot (HD) reported stronger than expected earnings although the stock barely moved. Earnings include LOW, TGT, VFC, NTAP, SNPS, LB, and ADI.
The economic calendar is light with Oil Inventories @ 10:30am EST. Volatility is beginning to shrink as markets continue to wait on US/China trade negotiation information and summer is starting to kick in. Volatility could dry up into the morning into the FOMC minutes release. Size bias is short into the US session open.