Infrastructure Outlook: Good/Bad/Ugly

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What’s in Today’s Report:

  • Infrastructure Outlook:  Good/Bad/Ugly
  • Oil Update & EIA Analysis (Can the Rally Keep Going?)

Futures are little changed following a quiet night and ahead of the week’s two big events, the ECB decision and U.S. May CPI report.

Economic data was sparse although Japanese PPI rose more than expected at 4.9% vs. (E) 3.8% yoy.  But, investors expect high inflation readings this month so it’s not moving markets.

Today the two key events are the ECB Rate Decision (E: No Change) and U.S. CPI (E: 0.4% m/m, 4.6% y/y).  Generally speaking, if the ECB is specific on tapering and core CPI runs close to 4.0% yoy (expectations are for 3.4% yoy in Core CPI) then we should expect volatility as the data will imply less central bank accommodation and more inflation. Conversely, if the ECB is vague on tapering and inflation largely meets expectations, then stocks can extend the rally.

The other notable event this morning is Jobless Claims (E: 369K) but given the issues with the labor market are supply driven (people not wanting to work) the market isn’t as focused on jobless claims any longer.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on June 8, 2021

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Oil futures climb back to more than 2-year highs, with U.S. prices above $70 a barrel

The market just had a strong feel to it once things stabilized after an early session washout to the downside. It’s almost as if the overnight run to… said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 8, 2021

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Wendy’s Joins the Meme Stocks, Marvell Is Rising, and Tech Stocks Are Gaining

Stock futures are wavering between gains and losses this morning as traders digest mixed economic data and look ahead..writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in TheStar on June 7, 2021

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AMC drama exposes risks in index world

For index investing, the appeal is that human decision-making, human emotions are taken out of it. That works all well and good until a stock that is supposed to be…said Tom Essaye, a former Merrill Lynch trader who founded “the Sevens Report” newsletter. Click here to read the full article.

Tom Essaye Quoted in KITV News on June 7, 2021

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Dollar doldrums are back as inflation worries heat up

The market still views the Fed as the ‘most dovish’ global central bank, and as long as that’s the case, the dollar will have…said Tom Essaye, the founder and president of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 7, 2021

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Biogen Rises, Tellurian Gains, and the Stock Market Isn’t Doing Much

The major equity benchmarks weren’t moving much amid underwhelming economic data and as…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Why the JOLTS Report Matters to Markets

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What’s in Today’s Report:

  • Why the JOLTS Report Matters to Markets

Stock futures are little changed this morning while overseas markets were down modestly overnight as a sense of trader paralysis grips global markets ahead of key catalysts due in the back half of the week.

Economically, Chinese PPI hit 9.0% vs. (E) 8.3% in May, the hottest reading since 2008, however, May CPI was 1.3% vs. (E) 1.5%, keeping inflation fears relatively subdued.

There are no market moving economic reports on the calendar for today and no Fed officials are scheduled to speak however the Treasury will hold a 10-Yr Note auction at 1:00 p.m. ET.

The Treasury auction could move markets today but only if there is a big surprise in the results as markets are more likely to continue to churn into tomorrow’s CPI report and ECB Announcement.

Inflation Expectations Dashboard

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What’s in Today’s Report:

  • Sevens Report Inflation Expectations Dashboard
  • Chart: Gold Holds Key Trend Support

Stock futures are wavering between gains and losses this morning as traders digest mixed economic data and look ahead to a key inflation report due later in the week.

Economically, Japanese GDP was not as bad as feared in Q1 but German Industrial Production missed estimates as did the U.S. NFIB Small Business Optimism Index which is weighing modestly on sentiment this morning.

There are two economic reports to watch in the U.S. today: International Trade in Goods and Services (E: -$69.0B) and JOLTS (E: 8.045M). The latter will be the more important to watch as investors continue to look for clues regarding the state of the labor market recovery.

No Fed officials are scheduled to speak today however there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and a weak outcome could rekindle taper fears with Thursday’s CPI report coming into focus.

A Market Still In Search of a Catalyst

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What’s in Today’s Report:

  • Why This Market Still Needs A Positive Catalyst
  • Weekly Market Preview (Fed anticipation and Inflation)
  • Weekly Economic Cheat Sheet (Inflation Thursday and Employment Data Are Key)

Futures are slightly lower on underwhelming economic data and as markets digest last week’s rally.

Economic data was slightly disappointing as Chinese exports missed expectations (27.9% vs. (E) 32.1%) as did German Manufacturers’ Orders (-0.2% vs. (E) 1.0%).

The G-7 agreed in principle to a global minimum corporate tax and that is weighing slightly on global markets.  But, investors view implementation of the tax as taking a very, very long time (if it ever actually happens).

Today there are no notable economic reports and no Fed speakers so focus will be on any apparent infrastructure progress, although at this point any infrastructure deal likely won’t be big enough to provide material stimulus to the economy (and push markets higher).

Market Multiple Chart

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What’s in Today’s Report:

  • Market Multiple Chart
  • EIA Analysis and Oil Update
  • What Yesterday’s Jobs Numbers Mean for Today’s Report (and the Market Reaction)

Futures are little changed ahead of this morning’s jobs report and following a mostly quiet night of news.

Economic data was mixed overnight as the UK Construction PMI beat estimates while Euro Zone Retail Sales missed, but neither number is moving markets.

Infrastructure “chatter” about a potential $1 trillion compromise is getting louder, but markets remain skeptical about an infrastructure deal anytime soon.

Focus today will be on the Jobs Report and expectations are as follows: Job Adds 645K, UE Rate 5.9%, Wages 0.2% m/m).  Thursday’s strong employment data (ADP and claims) makes the market more sensitive to a “Too Hot” report (and potentially less dovish Fed) than it was on Wednesday, but the bottom line is that a number near either extreme (900k or 300k) will likely cause at least a temporary market headwind.

Also, Fed Chair Powell is speaking at a Bank of International Settlements Climate panel right now, but that shouldn’t move markets.