After losing more than 800 points in the past two sessions, the Dow is poised to open lower by 60 points, but off its lowest level. Virtually every headline has focused on the "slow down", which is more responsible and honest, recognizing that political driven warnings of recession have been disingenuous and also very dangerous.  There is a certain responsibility in the financial media, which has been called out enough that hopefully they won't take it upon themselves to root for or try to trigger a recession, as the economy is cyclical, and slowdowns are bound to occur. 

Health issues impacting Bernie Sanders (he had two stents put in yesterday) probably helps Elizabeth Warren, who was already a juggernaut.  She has declared war on Wall Street and corporate profits, and this likely added to the pressure on the markets yesterday.

The WTO finally ruled that Airbus had unfairly been subsidized, and American is entitled to compensation and could also levy tariffs of $7.5 billion in goods.  It remains to be seen where this goes. I think we can't ignore it took 15 years for the WTO to rule on the obvious.  Wall Street would like to see a settlement.  The ball is in the EU’s court for the moment, but if there is hesitation, we could see another trade battle. 

I think Wall Street is taking a page on how it intimidates the Federal Reserve (see first two weeks of trading in 2016 after first rate hike in a decade in December 2015...Yellen held back until after the election of President Trump) and using it on the White House ahead of the trade meeting next week.

The Fed is out in force again today, as Chicago Fed President Charles Evans, Cleveland Fed President Loretta Mester,  Dallas Fed President Robert Kaplan, Fed Governor Randal Quarles,  and Fed Governor Richard Clarida will be speaking at various events. Speaking of the Fed, U.S. Treasury yields are down dramatically, which is worrisome, but the spread actually improved.

• 10 year 1.58
• 2 year 1.47

Today, we will get a look at how the services industry is doing when we get the ISM nonmanufacturing index at 10 ET.  Also, August factory orders will be released. 

All eyes will be on the employment numbers tomorrow.  This morning, initial claims for the week ending September 28, increased 4,000 to 215,000 and the prior week was revised up 2,000 to 213,000.  A better gauge, the 4-week moving average, was unchanged at 212,500 from the earlier week’s revised number (up by 500). 

• Continuing claims down 5,000 to 1,651,000 (prior week revised up 6,000)
• Continuing claims 4-week moving average down 5,750 to 1,661,500 (prior week revised up by 1,500)

Portfolio Approach

We made no changes yesterday.

On the earnings front, Bed Bath and Beyond reported after the close and is trading lower by 4% despite beating estimates as revenue and same store sales were lower, and severance cost were great than expected.  The company is restructuring its management team and is making “substantial progress toward identifying a permanent CEO.”

Constellation Brands (STZ) reported this morning and is also down about 3%, after reporting a Q2 loss of $525.2 million or $2.77, as it takes a $54.3 million loss on its cannabis investment in Canopy.  Excluding the Canopy write down, earnings were $2.91, which beat analyst’s estimates for $2.63.  The company also cut its full year guidance.

The session will begin lower, but there are signs of nibbling, which probably happens initially in Consumer Staples.