Market Multiple Chart

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What’s in Today’s Report:

  • Market Multiple Chart

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.

 

Sevens Report Quarterly Letter

Our Q4 ’21 Quarterly Letter was delivered to subscribers on Monday along with compliance backup and citations, and we’re already getting feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment! 

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The Single Reason the FOMC Minutes Were Hawkish

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What’s in Today’s Report:

  • Jobs Report Preview
  • The Single Reason the FOMC Minutes Were Hawkish

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.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on January 4, 2022

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Gold recoups half of its Monday loss on disappointing U.S. data, omicron uncertainty

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.

Market Multiple Table: January Update

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What’s in Today’s Report:

  • Market Multiple Table: January Update
  • OPEC+ Meeting Takeaways (Not So Bullish)

Stock futures are down modestly this morning, but off the overnight lows in sympathy with rising European shares while Asian markets declined on Chinese regulatory concerns and fresh COVID lockdowns in Hong Kong.

Final December Composite PMI’s were slightly disappointing but investors are already looking ahead to 2022.

Today, there are three economic reports to watch: Motor Vehicle Sales (E: 13.2M), ADP Employment Report (E: 414K), PMI Composite Final (E: 56.9). It will be important for the latter two to point to continued growth but not at a pace that would cause an additional hawkish shift by the Fed as that would likely send rates sharply higher and act as a headwind on broader equity markets.

There are no Fed speakers today but the minutes from the December FOMC meeting will be released at 2:00 p.m. ET.

Tom Essaye Quoted in Bloomberg Quint on January 4, 2022

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U.S. Stocks Start 2022 at Record; Treasuries Fall: Markets Wrap

Bottom line, the outlook is positive for stocks, but the removal of stimulus…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.

Bloomberg Quint_300x250

Why Did Treasury Yields Surge Yesterday?

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What’s in Today’s Report:

  • Why Did Treasury Yields Surge Yesterday?
  • Oil Update – OPEC+ Meeting Preview

Stock futures are trading at record highs as investors shrug off surging COVID cases and digest upbeat economic data.

New COVID cases topped 1 million in the U.S. Monday, nearly doubling the previous record, however, hospitalizations and deaths remain low, keeping economic lockdown odds minimal as the Omicron outbreak is increasingly expected to burn itself out in the coming weeks.

China’s Manufacturing PMI rose to 50.9 vs. (E) 50.0 in December further easing global growth concerns.

Today, there are two economic reports to watch: ISM Manufacturing Index (E: 60.5) and JOLTS (E: 11.060M). Investors will be looking for more good data, but not so good that rate hike expectations are brought forward.

There are no Fed speakers today. The January OPEC+ policy meeting will be underway soon (E: +400K b/d production hike in February) and if the group of oil producers disappoint the market, expect a potential spike in volatility that could spill over into both equity and bond markets.

Two Questions to Start 2022

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What’s in Today’s Report:

  • Two Key Questions To Start 2022
  • Weekly Market Preview:  Omicron, Build Back Better Progress?
  • Weekly Economic Cheat Sheet:  A Busy Start to the Year (Highlighted by the Jobs Report Friday)

Futures are starting the new year with moderate gains driven mostly by momentum/start of year positioning, following a quiet weekend of news.  Many major markets today (London, Japan, Australia, U.S. Bonds) are closed.

Tesla (TSLA) reported better than expected deliveries for the fourth quarter and the stock is up 7% pre-market, and that’s helping markets rally.

There was no new news on Omicron over the weekend as cases skyrocket but hospitalizations remain relatively low.

With so many major markets closed, today will be a mostly quiet day, and barring any surprises tomorrow will be the first “real” trading day of the year.  We do get one notable economic report today, the Markit December Manufacturing PMI (E: 57.8), and markets will want to see a “Goldilocks” number that shows Omicron isn’t a major economic headwind, but at the same time the data isn’t so strong it makes the Fed more aggressive.

 

Sevens Report Quarterly Letter Delivered Today

Our Q4 ’21 Quarterly Letter will be released today.

We use our strength (writing about the markets) to help you:

  • Save time (an average of 4-6 hours per quarterly letter)
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You can view our Q3 ’21 Quarterly Letter here

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Tom Essaye Quoted in Market Research Telecast on December 28, 2021

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Wall Street opens green and the Dow Jones rises 0.16%

Optimism about omicron continues to help drive risk assets higher as markets continue to believe…said the president of the firm Seven Reports, Tom Essaye, in a note. Click here to read the full article.

What Could Go Wrong in 2022

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What’s in Today’s Report:

  • What Could Go Wrong in 2022
  • Chart: Rate Hike Prospects Weigh on Nasdaq

Futures are modestly higher despite negative COVID headlines and a mixed outlook for China’s economy.

New COVID cases topped 1 million and set a record for a second day Tuesday as the highly contagious, but less severe Omicron variant continues to rip through hot spots around the globe. But for now, few nations have implemented new lockdowns allowing investors to look past the latest surge in cases.

According to Bloomberg Economics, China’s economy grew this month but property sector risks remain a key concern and that weighed on Asian shares overnight.

Today, there are two economic reports due out: International Trade in Goods (E: -$86.0B), and Pending Home Sales (E: 0.6%) but once again, neither should move markets as they should not shift the outlook for monetary policy.

There are no Fed speakers today but there is a 7-Year Treasury Note auction at 1:00 p.m. ET. If the auction is weak and yields rise materially, that could add pressure to higher valuation sectors of the market like tech/Nasdaq and drag the broader equity markets lower in thin holiday trading today. Otherwise, the Santa Claus rally remains in effect and the path of least resistance does still remain higher given the recent records in the S&P 500.

 

Sevens Report Q4 ’21 Quarterly Letter Coming January 3rd

The Q4 2021 Quarterly Letter will be delivered to advisor subscribers on Monday, January 3rd.

With several key macro issues coming to a head in the next few weeks, we believe the first quarter could be the most volatile of 2022.

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You can view our Q3’21 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

What Could Go Right in 2022

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What’s in Today’s Report:

  • What Could Go Right in 2022

S&P 500 futures are trading at a fresh record high as investors shrug off rising COVID cases while global markets rallied following fresh monetary stimulus from China.

The PBOC injected 200B yuan to help meet end-of-year demand for cash, the largest injection since October which is easing liquidity and adding to risk-on money flows.

Japanese Industrial Production surged 7.2% vs. (E) 1.8% in November, bolstering hopes that the economic recovery is regaining momentum.

This morning, there are two reports on the housing market due to be released: Case-Shiller Home Price Index (E: 1.0%), FHFA House Price Index (E: 0.7%) but neither should move markets.

There are no Fed speakers today but there is a 5-Year Treasury Note auction at 1:00 p.m. ET that could impact that bond markets and potentially equities but with the calendar otherwise pretty clear, a continued “Santa Claus rally” appears to be the path of least resistance for equities this week.