What Are the Next Catalysts for the Market?

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What’s in Today’s Report:

  • What Are the Next Catalysts for the Market?
  • Weekly Economic Cheat Sheet:  Jobless Claims are The Key Report This Week
  • Weekly Market Preview:  With Stimulus Done, What’s the Next Positive Catalyst?

Futures are moderately higher after President Trump signed the $900 billion dollar stimulus package.

Late Sunday night Trump signed the stimulus package as-is, avoiding a government shutdown and delivering economic stimulus to U.S. citizens.  Despite threats not to sign the bill,  markets always expected Trump to ultimately sign the legislation, so while stocks are enjoying a bounce on the news, this was already mostly priced in (so don’t expect a big rally off the news).

Economically, there were no notable reports overnight and this will be a very quiet week for economic data.

Today, with stimulus behind us and this week traditionally devoid of any major economic reports or corporate news, markets will focus on 1) COVID-19 and economic lockdown trends (both still worsening) and 2) The pace of vaccine rollout (lagging behind expectations).  Improvement in both will help fuel a rally into the new year.

Stimulus Update (Why The Market Still Expects It to Pass)

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What’s in Today’s Report:

  • Stimulus Update (Why the Market Still Ultimately Expects It to Pass)
  • Economic Data – A Mixed Picture
  • EIA Analysis and Oil Market Update

Futures are marginally higher following a mostly quiet night, as the fate of the stimulus bill remains unresolved.

The stimulus bill remains up in the air as Trump has neither vetoed nor signed the bill, but while that could result in a temporary government shutdown on Monday, ultimately markets expect the bill to pass.

Regarding Brexit, the EU and UK are expected to formally announce a post Brexit trade deal later today, although as we and others have consistently said, this was always the expected outcome and as such it’s not generating much markets reaction.

There are no economic reports today and no Fed officials are scheduled to speak, so stimulus headlines will drive trading (anything that implies passage of the bill will be positive, while no news or negative news will obviously be a short term negative).

Finally, stock markets will close at 1:00 p.m. today.  Please have a safe and joyous holiday weekend.

Tom Essaye Quoted in CNBC on December 22, 2020

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“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term…” Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.

Tom Essaye Quoted in NBC Connecticut on December 22, 2020

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“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term…” Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.

Another Positive for Banks

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What’s in Today’s Report:

  • Another Positive for Financials
  • Nasdaq Hits Fresh Record (Chart)

Futures declined overnight after President Trump threatened to veto the recently passed stimulus bill but markets have since stabilized as hopes for fiscal aid remain strong and investors look ahead to a slew of economic data today.

Late Tuesday, Trump said he hoped Congress would increase the amount of direct payments to individual American from $600 to $2,000 and remove unnecessary spending in the package however the bill is still likely to become law given the overwhelming Congressional support which is easing market angst this morning.

Today, there is a long list of economic data due to be released including Durable Goods Orders (E: 0.6%), Jobless Claims (E: 875K), Core PCE Price Index (E: 1.5%), New Home Sales (E: 989K), and Consumer Sentiment (E:81.0).

If the data is better than expected, that could help lift equity markets after several days of heavy trading while the impact of disappointing data will be limited given the optimism of the new aid package in the works.

Beyond the data, investors will be continuing to watch coronavirus statistics and lockdown measures as the latest surge in cases and hospitalizations remains a risk to the economic recovery and any negative developments could weigh on risk assets in thinning holiday trade.

Tom Essaye Quoted in ETF Trends on December 22, 2020

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“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term positive for…” Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.

Could the New Strain Cause a Correction?

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What’s in Today’s Report:

  • Could the New Coronavirus Strain Cause a Correction
  • Gold Failure (Chart)

U.S. equity futures are little changed after a mixed night of overseas trading as investors digest the emergence of a new strain of the coronavirus in the U.K. against the passage of a fresh stimulus package overnight.

Congress passed a COVID-19 relief bill totaling $892B late Monday which is being generally well received by markets today despite the fact that it was somewhat disappointing vs. lofty market expectations.

An executive from BioNTech stated that their vaccine with Pfizer should work against the new strand of the coronavirus in the U.K., which helped ease some of the concerns linked to the new outbreak in the U.K.

Today, there are two notable economic reports to watch: Final Q3 GDP (E: 33.1%) and Consumer Confidence (E: 97.0).

The market will likely be more sensitive to the latter report as it is much more timely being a December release however focus will also remain on the latest COVID-19 headlines as an acceleration in the spread of the new strain in the U.K. or stricter lockdown measures could again weigh on risk assets in thinning holiday trade.

Tom Essaye Quoted in Unseen Opportunity on December 22, 2020

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“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term positive for cyclicals and…” explained Sevens Report founder Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Barron’s on December 18, 2020

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How Vaccines Are Tanking the Dollar, and What It Means for Stocks

Now, the dollar is testing a critical level. The index had the dollar at 89.95 by mid morning on Friday, while the nearest support level for the greenback is 89.13, according to analysis from The Sevens Report Research. A drop of 0.9% from the current level is all it would take to hit…Click here to read the full article.

Why the Long-Term Bullish Case Got Stronger Last Week

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What’s in Today’s Report:

  • Why the Long-Term Bull Case Got Stronger Last Week
  • Weekly Market Preview:  Will Lockdown Worries Cause a Near Term Pullback?
  • Weekly Economic Cheat Sheet:  Is the Economic Recovery Starting to Stall?

Futures are down nearly 2% this morning as concerns about a coronavirus mutation offset news of a stimulus deal being reached.

England went into lockdown again after a mutation of COVID-19 started to spread rapidly throughout the country, sparking fears of an extension of the pandemic.  Positively, scientists are confident that the vaccine will work for COVID mutations as well, but that’s not helping stocks this morning as concerns rise about wider/longer economic lockdowns.

On stimulus, Congress agreed to a $900 billion stimulus bill and a vote is expected today. However, this was already priced into stocks (that’s why it’s not causing a rally).

Today there are no economic reports and no Fed speakers, so focus will remain on stimulus and the coronavirus.

Regarding stimulus, the stimulus bill is expected to pass Congress today (so markets will expect that to happen).  Regarding coronavirus, any headlines that imply this mutated coronavirus is spreading across the globe will cause further downside in stocks (because it could lead to greater/longer economic lockdowns, which has been the focus of the market throughout the pandemic).