This week’s options expiration is likely amplifying the volatility…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher as markets bounce back from Thursday’s declines ahead of Powell’s speech.
There were no new developments in Afghanistan overnight as evacuations continued. The tragedy temporarily hit stocks but it won’t be an ongoing influence on markets.
Expectations for more stimulus from China rose overnight as chatter regarding a Reserve Ration cut grew louder and this, combined with some pre-Powell positioning, are the main reasons futures are higher.
Today the key event is obviously the Powell speech (10:00 a.m. ET) but as a reminder, he won’t announce anything specific regarding tapering (that will come at the Sept 22nd Fed meeting). Instead, the key will be how much Powell discusses the Delta variant as an economic headwind (the more he mentions it, the more dovish the speech will be taken) and if he reaffirms the Fed is getting close to being able to taper QE (which will mean before year-end).
Outside of Powell, the Core PCE Price Index (E: 0.3% m/m, 3.6% y/y) is the key economic report this morning but as long as it’s much higher than expectations, it won’t move markets.
What’s in Today’s Report:
Futures are slightly lower following a quiet night of news as markets digest this week’s rally.
Chinese shares saw profit taking (Hang Seng down –2%) and that’s weighing on global stocks slightly, but there was no materially negative news out of China overnight.
Economic data was sparse as the German Gfk Consumer Climate slightly missed expectations (-1.2 vs. –1.0) while the Euro Zone money supply met estimates (up 8.1%).
Today we do get two economic reports including Jobless Claims (E: 340K) and revised Q2 GDP (E: 6.6%) but neither number should move markets unless they are major surprises. Instead, pre-Powell speech positioning will likely dominate markets today (Powell’s speech is tomorrow) and given stocks hit new highs this week, don’t be surprised if there’s some mild profit taking ahead of Powell’s speech tomorrow. Finally, in the bond markets, there’s a seven year Treasury auction mid-day today, and if the results are soft look for a continued rally in the 10 year yield (and an improving technical outlook for that yield).
Thank You!
I wanted to say a heartfelt, “Thank you” to all of you who sent me condolences and well wishes over the past week.
While I wish I could respond to each individual email or call, there have literally been hundreds of them, and if I took on that endeavor I’d have no time to write the Report! I believe that continuing to stay focused on the
markets and helping us to navigate this unprecedented time successfully is the best way I can show you my thanks, and you can count on me to do just that.
Again, thank you all. You have made this time easier.
What’s in Today’s Report:
U.S. stock futures are slightly higher in very quiet trading this morning as investors assess the state of the pandemic against expectations about the Fed’s taper plans ahead of the Jackson Hole Economic Symposium later in the week.
Economically, the German Ifo Survey was slightly soft with the Business Climate headline falling to 99.4 vs. (E) 100.4 and Business Expectations declining to 97.5 vs. (E) 100.0.
Looking into today’s session, there is one economic report ahead of the bell: Durable Goods Orders (E: -0.2%, Core Capital Goods: +0.5%). As has been the case recently, the market will be looking for a report that is good enough to not suggest the recovery is losing momentum but not too strong that it would influence a sooner-than-later taper by the Fed.
As the day goes on, we will hear from one Fed official: Daly who is scheduled to speak at 1:00 p.m. ET however her comments should not move markets will focus already moving ahead to Powell’s speech on Friday.
Finally, there is a 5-Yr Treasury Note auction at 1:00 p.m. ET. If we see strong demand like we saw in yesterday’s 2-Year auction, then that could offer a modest, dovish tailwind to equities as it will suggest expectations for Powell’s speech are shifting more dovish.
Bottom line, there are a few potential market catalysts today, but the odds that the market makes a material move one way or another are low given the sense of Fed paralysis ahead of Powell’s speech on Friday.
What’s in Today’s Report:
U.S. stock futures are tracking most global equity markets higher this morning as Chinese tech shares recovered from recent declines and trader focus is shifting ahead to the Fed’s Economic Policy Symposium later in the week.
Economically, German GDP rose 1.6% vs. (E) 1.5% in the second quarter, easing some concerns that the global economic recovery is losing momentum.
Today, there is one economic report due out: New Home Sales (E: 700K) but it shouldn’t materially move markets and no Fed officials are scheduled to speak.
There is a 2-Yr Treasury Note auction at 1:00 p.m. ET, and given the increased sensitivity towards taper plans and interest rates right now, the outcome could move markets in the afternoon.
What’s in Today’s Report:
Futures are modestly higher on momentum from Friday’s rally and following mixed (but not bad) global PMIs.
Economic data was mixed as the EU August flash composite PMI was solid (59.5 vs. (E ) 59.7) although the UK PMI (55.3 vs. (E ) 58.4) missed expectations, as did the Japanese and Australian readings. But, in aggregate, the numbers were good enough to show the global economic recovery is still on going (and that helped stocks rally this morning).
There was improvement on the COVID front as new cases in China continued to plunge with daily new cases falling to zero in many local precincts and that’s raising hopes the current COVID wave in China is subsiding.
Today focus will be on the August Flash Composite PMI (E: 59.5) and markets will want to see solid data (so close to last month’s reading and close to expectations). If it’s a bad miss, that will likely weigh on stocks. We also get Existing Home Sales (E: 5.83M) but that shouldn’t move markets.
What’s in Today’s Report:
There are risk-off money flows across asset classes this morning as investors fear that central banks are poised to tighten policy into a global economic slowdown this fall.
This week’s options expiration is likely amplifying the volatility this morning.
There were no market-moving economic reports or material news developments overnight.
Today, there are two economic reports to watch: Jobless Claims (E: 360K) and the Philadelphia Fed Manufacturing Index (E: 25.0).
No Fed officials are scheduled to speak today but there is a 30-Year TIPS auction at 1:00 p.m. ET that could move bond yields.
Volatility is likely to remain elevated today as we get closer to tomorrow’s options expiration while trader conviction is low given Jackson Hole looming next week as well as the fact that investor sentiment has deteriorated this week.
Editor’s Note: No Report Tomorrow
There will be no Report tomorrow, as I will be attending a funeral. Last week, my father, Tim Essaye, Sr., unexpectedly passed away. His funeral and memorial will be held today.
My dad helped get me on Wall Street when I got out of college and without his support and encouragement, I wouldn’t have had the courage, with my wife Alison pregnant with our first child, to leave a good job and start a new, daily market report.
He was the first subscriber to the Sevens Report.
So, for the first time in the nearly 10 years since I started the Sevens Report, there will be no issue on a trading day, as I will be focused today on celebrating his life with our family and friends.
I apologize for this inconvenience and thank you for your understanding.
If support holds, which it likely will as long as the news flow regarding COVID does not continue to…Tom Essaye of the Sevens Report has told MarketWatch. Click here to read the full article.
A political negative for Biden which could hurt the chances any infrastructure bill is passed…wrote The Seven Report’s Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Stock futures are slightly lower as investors digest dovish central bank developments, mixed inflation data out of Europe and look ahead to the release of the Fed minutes.
The Reserve Bank of New Zealand unexpectedly left rates unchanged at 0.25% (E: 0.50%) citing COVID-19 uncertainties which crashed the kiwi to a fresh 9-month low overnight.
Economically, Eurozone HICP met estimates however U.K. PPI ran slightly hot versus expectations while revisions were to the upside which is keeping inflation concerns elevated for now.
Looking into today’s session, it should be a fairly slow morning as far as news flow goes with just one economic report to watch: Housing Starts (E: 1.61M) and no Fed officials scheduled to speak.
Then in the afternoon investors will be watching a 20 Year T-Note auction at 1:00 p.m. ET before the FOMC Meeting Minutes are released at 2:00 p.m. ET. Yesterday, there was a reversal higher in yields from overnight lows in the wake of the not-as-bad-as-feared Retail Sales report so the risk appears to be to the upside for yields which could weigh on big-cap growth names and drag major indexes lower if a rise in yields gains momentum.