Prospects of aggressive Fed tightening “are most negative for high-growth/high-PE names…said Tom Essaye of the Sevens Report in a note on Monday to clients, CNBC reported. Click here to read the full article.
The various conflicts and threats across eastern Europe and the Middle East will remain supportive for energy in the near term, but it already appears that some of the supply and production…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
supply concerns continue to linger after production and pipeline outages overseas buoyed prices last week…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
What’s in Today’s Report:
Markets are trading with a risk-on tone this morning as U.S. equity futures track global shares higher after Powell’s testimony helped stabilize bond markets yesterday while investors look ahead to today’s CPI report.
Chinese inflation data was cooler than feared o/n with CPI dipping to 1.5% vs. (E) 1.8% and PPI falling to 10.3% vs. (E) 11.3% Y/Y which is helping ease inflation concerns today.
Looking into today’s session, the December CPI report (E: 0.4%, 7.1%) will be the main focus of markets early with the annual figures expected to hit a fresh multi-decade high. But as long as the headline and core figures are not materially “hotter” than feared, this week’s relief rally, led by tech shares, should be able to continue amid further stabilization in bond markets.
Outside of the early inflation data, there is one Fed speaker to watch: Kashkari (1:00 p.m. ET) as well as a 10-Year Treasury Note auction at 1:00 p.m. ET. And as long as Kashkari does not contradict any of Powell’s comments from yesterday regarding the balance sheet runoff coming “later in the year,” and the auction doesn’t spark a new move higher in yields, then risk-on money flows should be able to continue.
What’s in Today’s Report:
Stock futures are extending yesterday’s afternoon rally in pre-market trade this morning as investors look ahead to Powell’s renomination hearings.
Overseas, Asian markets declined as new lockdown measures were imposed in parts of China due to rising Omicron cases while EU shares stabilized in sympathy with yesterday’s afternoon rally in U.S. markets.
Economically, the NFIB Small Business Optimism Index edged up to 98.9 vs. (E) 98.8 last month but the release is not materially impacting markets this morning.
There are no additional economic reports today but Esther George is scheduled to speak at 9:30 a.m. ET before Powell’s renomination hearings begin (10:00 a.m. ET). The market will be keenly focused on anything to do with balance sheet reduction plans and if the topic is “downplayed,” expect a further relief rally in equity markets.
Finally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and if the results are weak, sending shorter duration yields to new multi-year highs, that could become a headwind for high valuation tech names and weigh on the broader stock market again.
What’s in Today’s Report:
Futures are slightly lower following a generally quiet weekend as investors digest last week’s hawkish surprises ahead of Powell’s testimony tomorrow and CPI on Wednesday.
Economically, the only notable number was Eurozone Unemployment, which met expectations at 7.2%.
Chances of Build Back Better passing fell further over the weekend as according to the Washington Post, Manchin remains against the current framework for the plan.
Today there are no economic reports and just one Fed speaker, Bostic (12:00 p.m. ET), so we’d not be surprised to see markets churn ahead the three major catalysts coming later this week: Powell’s testimony on Tuesday, Wednesday’s CPI Report, and Brainard’s testimony on Thursday. Those three events will determine whether stocks rally of decline this week and any additional hawkish surprises will pressure stocks.
The Fed is already actively discussing shrinking the balance sheet showing they are serious about being hawkish, and stocks dropped…says Tom Essaye of The Sevens Report. Click here to watch the full interview.
What’s in Today’s Report:
Futures are slightly higher following mixed economic data as markets look ahead to today’s jobs report.
Markets are looking for any signs inflation has peaked but that was not the case in Europe today as EU HICP (their CPI) rose 5.0% vs. (E) 4.8%. Economic growth was also solid (EU Retail Sales beat estimates) so the high inflation number isn’t hitting stocks ahead of the jobs report.
Today focus will be on the Employment Situation Report and estimates are: Job Adds 400K, UE Rate 4.1%, Wages 0.3% m/m & 4.1% y/y. Markets will be especially sensitive to a “Too Hot” number as that will further stoke fears of a more hawkish Fed and a “Too Hot” report will hit stocks. There are also three Fed speakers today, Daly (10:00 a.m. ET), Bostic (12:15 p.m. ET) and Barkin (12:30 p.m. ET) and while they aren’t Fed leadership, if they are “hawkish” and talk about March rate hikes or balance sheet reduction, that will be a headwind on stocks.
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What’s in Today’s Report:
Futures are little changed following Wednesday’s sell-off, as solid economic data is helping sentiment.
The Chinese December Composite PMI beat estimates at 53.0 vs. (E) 51.2, the second straight better than expected data point from China. UK Composite PMI also beat estimates, imply a resilient economy in response to Omicron.
President Biden and Senator Manchin are set to resume negotiations on “Build Back Better” signaling the legislation isn’t dead (again passage of this in Q1 shouldn’t shock markets but it will not likely be a major market influence, either).
Today’s focus will be on economic data, specifically Jobless Claims (E: 205K) and the ISM Services PMI (E: 67.0). If the data is very strong, will that increase concerns the Fed will get even more hawkish, and that will pressure stocks again.
A sharp rise in Treasury yields which begins to drive real interest rates higher is a “major risk to the gold market…analysts at Sevens Report Research wrote. Click here to read the full article.
