FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Chart: Nasdaq Composite Emerges from Correction

Stock futures are little changed this morning as yesterday’s record close is digested while investors look ahead to a very busy day of earnings and the start of the Fed meeting.

There are a slew of potential market catalysts today. Starting with economic data, there are two housing market reports: Case-Shiller Home Price Index (E: 1.1%), FHFA House Price Index (E: 0.9%), before Consumer Confidence (E: 112.0) will be released (the latter will be most important to watch).

Additionally, the April FOMC Meeting Begins however that will not impact markets until tomorrow’s announcement and Powell’s press conference in the afternoon.

There is also a 7-Yr Treasury Note Auction at 1:00 p.m. ET and while the March auction was generally orderly, the February 7-Yr auction caused double-digit basis-point swings across the curve so any bond market volatility in the wake of the auction could influence equity trading.

Finally, it is a very busy day on the earnings front with UPS ($1.63), GE ($0.01), MMM ($2.25), BP ($0.43), SHW ($1.65), and SYF ($1.50) reporting before the open and AMD ($0.44), MSFT ($1.76), GOOGL ($15.50), V ($1.27), and COF ($4.17) releasing quarterly results after the closing bell.

Tom Essaye Quoted in Barron’s on April 22, 2021

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Central Banks May Have Already Begun Lifting Bond Yields. What That Means for Stocks.

Some have speculated that while the Federal Reserve has reiterated it is sticking with current policy for now, fast-recovering inflation could force it to reduce support. “Yesterday is likely the day that central banks began the long trip back…” wrote Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.

Rising Headline Risk But Fundamentals Still Solid

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What’s in Today’s Report:

  • Market Outlook:  Rising Headline Risk But Fundamentals Remain Solid
  • Weekly Market Preview:  A Key Week for Earnings and the Fed Outlook
  • Weekly Economic Cheat Sheet:  Will the Fed Hint at Tapering on Wednesday?

Futures are slightly lower ahead of a busy week and following a generally quiet weekend.

On the vaccine front, the FDA re-approved use of the single-dose JNJ vaccine on Friday, but this was widely expected and as such isn’t an incremental positive.

On infrastructure spending, Dem. Senator Manchin said he doesn’t support passing infrastructure via a reconciliation, which further complicates getting a plan ultimately passed.  But, it’s still very early in the legislative process, and as such, the market will mostly ignore infrastructure headlines for the next several weeks.   If there’s no progress on a compromise by Memorial Day-ish (with actual passage expected around Labor Day-ish), then the market will begin to react to infrastructure headlines.

Today focus will be on Durable Goods (E: 2.0%) and also earnings after hours, with the two key reports being TSLA ($0.78) and NXPI ($2.21).

Tom Essaye Interviewed with TD Ameritrade Network on April 21, 2021

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Tom Essaye Talks Airline Stocks

Tom Essaye takes a look at some of the travel stocks as the market is getting a little bit of a dose of reality being too optimistic about the end of the pandemic. The cruise lines are weak due to CDC guidelines against sailing in 80% of pre pandemic regions. United airlines gave disappointing 2021 guidance after missing…Click here to watch the full video.

Are Higher Taxes a Risk to the Rally?

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What’s in Today’s Report:

  • What the Capital Gains Tax Headline Means for Markets

WatFutures are modestly higher thanks to better than expected global economic data.

Economic data was good overnight as global flash manufacturing PMIs beat estimates in Japan (53.3 vs. (E) 52.7), the EU (63.3 vs. (E) 62.3) and the UK (60.7 vs. (E) 59.1).  Additionally, UK Retail Sales also beat expectations (7.2% vs. (E) 4.2%), and in sum the data implies the global economic recovery is gaining momentum (which is a positive).

Today the key report will be the April Flash Composite PMI (E: 59.5), but markets will also be looking for more clarity on proposed tax increases from the Biden administration.  We also get New Home Sales (E: 887K) but that shouldn’t move markets.

On the earnings front, some reports we’re watching today include:  AXP ($1.68), SLB ($0.19), HON ($1.80).

Tom Essaye Quoted in CNBC on April 19, 2021

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Dow closes 250 points lower for back-to-back losses, reopening plays lead decline

“By now, we are all used to companies beating analyst estimates,” said Tom Essaye, founder of Sevens Report. “The key …” Click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on April 16, 2021

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Tom Essaye, Founder and President of Sevens Report Research, joins Yahoo Finance’s Kristin Myers and Alexis Christoforous to discuss market outlook, bank earnings, and the latest economic data and more…Click here to read the full article.

Why Do Indian COVID Cases Matter to Markets?

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What’s in Today’s Report:

  • Why Do Indian COVID Cases Matter to Markets?
  • S&P 500 Chart: A Long Way to the 200 DMA

Stock futures are wavering between gains and losses this morning as a spike in COVID-19 cases in several global “hot spots” is raising concerns about the future of the economic recovery while NFLX earnings disappointed yesterday.

A sharp rise in COVID cases in Japan and India caused Asian markets to decline overnight amid the threat of new lockdowns and ultimately a slower than expected economic normalization process.

There are no economic reports or Fed speakers today but there is a 20-Year T-Bond auction at 1:00 p.m. ET that could move Treasury markets.

Aside from coronavirus developments, market focus will remain on earnings today following yesterday’s disappointing results by NFLX. Notable companies releasing Q1 results today include: VZ ($1.29), NEE ($0.61), CMG ($4.88), DFS ($2.88), LVS (-$0.28), and CP ($3.46).

Earnings Season Update

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What’s in Today’s Report:

  • Earnings Season Update: Are Upside Risks Building?

U.S. stock futures are trading lower with most overseas markets as investors digest the recent run to fresh records amid rising COVID-19 cases and mostly upbeat earnings.

German PPI was hotter than expected o/n with a headline of 0.9% (E: 0.5%) but the report is not materially moving markets.

Looking into the U.S. session today, there are no economic reports and no Fed officials are scheduled to speak. There is a 52 Week T-Bill Auction at 11:30 a.m. ET, however, that could influence bond yields and ultimately stocks if the results are far from expectations.

Earnings season will continue to pick up today with JNJ ($2.31), LMT ($6.32), PG ($1.19), and TRV ($2.44) releasing Q1 results ahead of the bell while NFLX ($2.98), CSX ($0.95), and IBKR ($0.90) will report after the close.

Bottom line, markets have been trading with a risk-off tone so far this week amid a resurgence in COVID-19 cases in several global hotspots. And if the news flow regarding the latest regional outbreaks continues to deteriorate, stocks could continue to decline, potentially sharply, as the health of the recovery will come into question.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on April 19, 2021

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Oil prices gain as traders mull demand cues, supply prospects

There is some chatter about demand concerns “with new lockdown measures being imposed in India and other COVID-19 hotspots around the globe, however…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.