U.S.-China Trade Talks Continue, Earnings Season Marches On

Wednesday, May 8, 2019

No major economic data is expected before today’s opening bell, and tensions persist over the current stage in the U.S.-China trade war. As a result, we’re seeing pre-market futures down for a third straight session. Chinese officials arrive in Washington DC today to help salvage the months-long trade negotiations, but there is a tight deadline: midnight Friday a 25% tariff is expected to go into effect on $200 billion of Chinese imports.

Analyst predict a 25% tariff on these goods will negatively affect the U.S. consumer, and manifest in a 7% hit to the S&P 500. This, in turn, would bring volatility into expectations of growth, earnings and even interest rates — speculation now is that this new leg down in trade talks with China may force the Fed to cut rates, which President Trump has been calling for.

And this is before we consider Chinese retaliation to the proposed 25% tariff on Chinese goods. Earlier on, during this trade feud, the Chinese target farmers in the American heartland, adding tariffs to U.S. exports such as soybeans. Should new negotiations in the nation’s capital not affect change ahead of midnight Friday, expect Chinese policy to turn the screws tighter on domestic farmers.

But President Trump has just tweeted that Chinese officials are “coming to the U.S. to make a deal.” This has had a remarkable affect on pre-market trading, melting negative sentiment in the blink of an eye. Market participants will pay close attention to news reports from the White House for the rest of the day.

Earnings Season Continues

Real estate giant CBRE Group CBRE outperformed expectations on both top and bottom lines this morning: 79 cents per share zoomed past the Zacks consensus by 20 cents (+34%), while revenues in the quarter of $5.14 billion marginally surpassed estimates, and beyond the $4.67 billion reported in the year-ago quarter. The Zacks Rank #2 (Buy) company’s shares had gained 25% year to date. For more on CBRE’s earnings, click here.

Barrick Gold GOLD beat bottom line estimates by a penny to 11 cents per share, but revenues of $2.09 billion in the quarter missed expectations by 3.12%. Shares are down 6% year to date, but pre-market futures have the Zacks Rank #3 (Hold)-rated company is up 1% at this hour. For more on GOLD’s earnings, click here.

Marathon Petroleum MPC posted a worse-than-expected loss in its Q1 earnings report this morning, while revenues of $28.62 billion missed estimates by 1.6%. The downstream-focused oil company had recorded earnings beats in three of the last four quarters. For more on MPC’s earnings, click here.

Disney Reports This Afternoon

The Walt Disney Company DIS, currently a Zacks Rank #5 (Strong Sell) stock with a Value score of F, reports its fiscal Q2 earnings after today’s closing bell. Earnings of $1.59 per share represents a 13.6% loss from the year-ago quarter, while $14.64 billion in revenues would signify +0.66% growth year over year. Beneath the headlines, there are plenty of moving parts for the entertainment giant, including the soon-to-be-unveiled Disney+ streaming service.

Mark Vickery
Senior Editor

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