A Market in Transition

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What’s in Today’s Report:

  • Updated Market Outlook:  A Market in Transition
  • Weekly Economic Cheat Sheet:  Key Reports Thursday and Friday (And They’re Important)
  • Weekly Market Preview:   Can the Rise in Yields Become Orderly?

Futures are modestly lower following a generally quiet weekend as markets reverse Friday’s late day rally amidst concern about forced selling due to a hedge fund failure.

Archegos Capital was unable to make margin calls last week which resulted in losses and Nomura and Credit Suisse, and that’s causing some mild anxiety about more potentially forced selling looming in the equity markets.

There were no notable economic reports overnight.

Today there are no notable economic reports and just one Fed speaker, Waller (11:00 a.m. ET).  So, focus will be on any perceived fallout from the Archegos Capital failure and if there’s any forced selling appearing in certain stocks (if there is, it could weigh temporarily on the entire market).

Tom Essaye Quoted in Yahoo Finance on March 24, 2021

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Stock market news live updates: Stocks end lower as tech shares decline

“I think what we’ve seen over the past couple days is some end-of-quarter…” Tom Essaye, Sevens Report Research founder, told Yahoo Finance. Click here to read the full article.

Tom Essaye Quoted in PennyStocks.com on March 24, 2021

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Tom Essaye, an analyst at Sevens Report Research, stated that “I think what we’ve seen over the past couple days is some end-of-quarter positioning. The best performers quarter-to-date are getting sold right now…” Click here to read the full article.

Why the Suez Canal Blockage Isn’t Bullish for Oil

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What’s in Today’s Report:

  • Why the Suez Canal Blockage Isn’t Bullish for Oil
  • Another Bad Treasury Auction (Although Not as Bad as Last Time)

Futures are modestly higher following a quiet night, mostly on momentum from Thursday’s strong U.S. market close.

Economic data was mixed as UK Retail Sales missed estimates (2.1% vs. (E) 2.3%) while the German Ifo Business Expectations survey beat (100.4 vs. (E) 95.0).

Politically, Biden’s press conference revealed nothing new and market focus is now on the details of the looming infrastructure spending/tax hike plan (out this Wednesday).

Today focus will be on the Core PCE Price Index (E: 1.5%) which is the Fed’s preferred measure of inflation.  If that number runs “hot” and more towards 2.0% yoy, expect more upward pressure on the 10 year Treasury yield (which is up four basis points this morning to 1.67%).  If the 10 year yield breaks above 1.70%, that will likely be a headwind on stocks today.  The other notable number is Consumer Sentiment (E: 83.5), but unless inflation expectations spike, the number shouldn’t move markets.

Tom Essaye Quoted in CNBC on March 23, 2021

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“This is the first bull market that any of us have been through where it’s been essentially manufactured by the government and by the Fed,” said Tom Essaye, founder of Sevens Report. Click here to read the full article.

Four Pillars of the Rally Updated (More Cracks Appearing)

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What’s in Today’s Report:

  • Four Pillars of the Rally Updated (More Cracks Appearing)
  • EIA and Oil Market Update (All About Demand)

Futures are modestly higher following a generally quiet night of news.

Economic data from Europe again wasn’t as bad as feared (German GfK Consumer Climate was (-6.2 vs. (E) -11.9) and that’s alleviating some COVID related global growth fears.

Politically, the risks of corporate, personal and investment tax increases are rising and that will become an increasing headwind on the rally over the coming weeks.

Today focus will remain on Jobless Claims (E: 725K) and if that number can drop below 700k that will be a positive for markets.  The other notable event today is the seven year Treasury auction at 1:00 p.m. ET.  Last month’s disastrous seven year auction accelerated the spike higher in Treasury yields, so if there’s another poor auction, expect higher yields and lower stocks.

Finally, there are multiple Fed speakers today including Clarida (10:10 a.m. ET), Williams (10:30 a.m. ET), Bostic (12:00 p.m. ET) and Evans (1:00 p.m. ET) but it’s unlikely they’ll say anything new.

Why Did Stocks Drop Again?

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What’s in Today’s Report:

  • Why Did Stocks Drop Again?
  • The VIX Has Approached a Tipping Point

U.S. equity futures are trading higher this morning as upbeat economic data is helping offset renewed fears about COVID-19 lockdowns and the global economic recovery.

PMI Composite Flash data was better than expected overnight, especially in the EU (52.5 vs. E: 49.1) where economic lockdown concerns have weighed heavily on stocks this week.

Looking into today’s session, there are two economic releases that will be in focus early: Durable Goods Orders (E: 0.9%) and the PMI Composite Flash (E: 59.0), and it is important that we see more positive trends in the data or concerns about a slowing recovery could become a stronger headwind on risk assets in the near term.

From there, focus will shift to this week’s busy Fed circuit with several more central bank officials speaking today: Barkin (8:50 a.m. ET), Powell (10:00 a.m. ET), Williams (1:35 p.m. ET), and Daly (3:00 p.m. ET). Powell and Yellen’s continued testimony before Congress today will be the most important for stocks as investors look for further reiteration of easy policy measures for the foreseeable future.

Finally, there is a 5-Yr Treasury Note Auction at 1:00 p.m. ET and as we saw last month, a surprise outcome can shake bond markets which ultimately tends to reverberate through to equities.

Bottom line, as long as there are no surprises in the auction or in the morning economic data, and policy makers stick to their accommodative message, volatility should begin to ease, but all of the possible catalysts listed above have the potential to weigh on stocks and other risk assets today.

Is Tech Bottoming?

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What’s in Today’s Report:

  • Is Tech Underperformance Ending?

Stock futures are tracking global shares lower this morning as a rebound in COVID-19 cases has prompted new lockdowns in Europe while vaccine news was negative o/n.

A WSJ article released earlier today suggested that AstraZeneca vaccine trial data may have been “incomplete.” AZN shares are down 2.5% in the pre-market as further reviews mean a likely delay in U.S. approval of the vaccine.

Looking into today’s session, there is just one economic report due to be released: New Home Sales (E: 875K) but as was the case with yesterday’s housing market data, it shouldn’t move broader equity markets.

That will leave markets focused on the very long list of Fed speakers today: Bullard (9:00 a.m. ET), Bostic (10:10 a.m. ET), Barkin (11:00 a.m. ET), Powell (12:00 p.m. ET), Brainard (1:25 p.m., 3:45 p.m. ET), and Williams (2:45 p.m. ET).

As long as there are no hawkish surprises from Fed officials, and 10-year yields continue to pull back as they are in early trading, the morning weakness in equities should not materially accelerate over the course of the day.

A Market Driven by the 10 Year Yield

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What’s in Today’s Report:

  • Why This Market is Still All About the 10 Year Treasury Yield
  • Weekly Market Preview:  Does the 10 Year Yield Hit 1.75% or Higher?
  • Weekly Economic Cheat Sheet:  Flash PMIs are the Big Report This Week

Futures are little changed following a generally quiet weekend as markets digest last week’s rise in global bond yields.

The 10 year Treasury yield is actually down five basis points this morning thanks to 10% drop in the Turkish Lira after the head of the central bank was surprisingly fired. That surprise news has put a mild (but likely temporary) safety bid into U.S. Treasuries.

Regarding COVID, fears of a 3rd wave in Europe are also weighing slightly on global bond yields as some lockdowns are being extended.

Today the key events are Fed commentary, and we have multiple Fed speakers today including Powell (9:00 a.m. ET), (Barkin (10:30 a.m. ET), Daly (1:00 p.m. ET) and Quarles (1:30 p.m. ET).  Bottom line, the markets want more acknowledgement of the threat of rising yields, and the hint of Operation Twist or maturity extensions in QE.  As was the case last week, if they markets don’t get that from the Fed commentary today, expect the 10 year yield to creep higher from current levels (and stocks to roll over).    There’s also one economic report today, Existing Home Sales (E: 6.50M), but it shouldn’t move markets.

Tom Essaye Quoted in Unseen Opportunity on March 17, 2021

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The Whole Market Is Watching The “Median 2023 Dot”

“It is no exaggeration to say that this FOMC meeting has the potential to be the most important one in years as the market is effectively…” said Tom Essaye, founder of the Sevens Report, in a note. Click here to read the full article.