Just when you thought the days of markets opening down sharply in reaction to an overnight headline concerning trade negotiations with China were over, we get this morning.  There isn’t a whole lot of earnings data to contend with and the economic calendar is blank for today, so it looks like just three days after Kudlow decided to spike the ball in reaction to Friday’s NFP report, the President is shaking things up a bit with his tweet-storm last night.

US futures are set to open down over 1%, but the gains don’t look to be anywhere near as severe as what happened in China where the decline was more like 5%.  Also, ever since the initial gap down, things have been extremely steady.  Today’s decline is set to be the 9th gap down of 1% or more for the S&P 500 since the start of 2017, and in today’s Chart of the Day we looked at how the index performed following prior occurrences as well as what the catalyst for each decline was, so if you haven’t already seen it, check it out.

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Last night’s sell-off in Chinese equities put a big dent into this year’s gains for the Shanghai Composite.  With a drop of more than 5.5%, it was the largest one day decline for Chinese stocks since February 2016.  Year to date, the Shanghai Composite is now up 16.54% on the year and has nearly cut this year’s gains in half.  More noteworthy is the fact that with the S&P 500 up 17.5% YTD heading into today, the US is now outperforming Chinese stocks YTD.  Obviously, with futures down over 1%, the US lead may not last for long, so we’ll have to see how things shake out over the course of the trading day.

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