Investors could be caught on the wrong side of the trade
Apple too optimistic about iPhone8 but NASDAQ is happy
Investors are completely immune to all the drama which is taking place over in Washington because if you look at the performance of the Dow, it appears everything is hunky dory. Although one can never underestimate the possibility of the president getting impeached, but again that could mean more favourable trade relations with other countries and things moving back to normal. Thus, the impeachment trade itself could be positive for the equity market after a knee jerk reaction as the Trump trade would unwind. For now, the only thing which matters the most is how far we are in touching the level of 22k for the Dow index.
In earnings, it is all about Apple. The firm comfortably topped its forecast and produced stellar numbers for its revenue and profit. The big news was about the production of the iPhone 8, the flagship product for the firm will hit the market on time with no issues around production. The Apple Store has improved its revenue as more and more people got hooked on the new products. The sale increased to 22% during the first quarter.
As for the currency market, the dollar weakness continues as the odds of the Fed increasing the rate this year have abated further. The economic data is consistently giving the signal that the core PCE number is not showing any urgency. The US consumer income has also dropped further to 0% in June from the previous reading of 0.3%. The odds are just not lining up for any support for the dollar.
The ADP number will set the tone for the US Non-Farm data due on Friday. The ADP for the last month was not encouraging at all and if we get a sign that the US Labour is slowing down, then we have a big problem.
The Sterling is getting its confidence from the economic numbers. The manufacturing PMI number released yesterday has shown a much more encouraging number for the Q3. The export numbers are showing growing signs of confidence as this number climbed to its best level in nearly seven years. Of course, the job market has also improved. Later today we will have the construction PMI and a positive number will reinforce that growth is picking up some momentum. However, labour shortage could prompt a decline in this number to 54.3 from 54.8.
