Tom Essaye Quoted in CNBC on September 2, 2020

“Let me be clear: The only reason we do not have a stimulus bill passed yet is because the economy and the markets are performing…” said Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Jobs Day

What’s in Today’s Report:

  • Why Did Stocks Drop Yesterday?
  • How the VIX and Stocks Rose Together in August

Futures are seeing a marginal oversold bounce after Thursday’s big sell off, as newswires were quiet overnight.

Economic data again disappointed, as German Manufacturers’ Orders rose 2.8% vs. (E) 6.2%, while the UK Construction PMI fell to 54.6 vs. (E) 58.5.

Both reports, combined with other lack luster data this week, are limiting the size of the bounce this morning.

Today the focus will be on the Employment Situation Report and the expectations are as follows:  Jobs Adds: 1.413M, UE Rate: 9.9%.  As mentioned, the “best” outcome for this report is a strong number towards 2 MM job adds, but not so strong that it relieves pressure on Congress to pass a stimulus bill.  A very soft number (less than 1MM job adds) likely adds to yesterday’s downside.

Jobs Report Preview

What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Data and Oil Update

Futures are moderately lower on digestion of Wednesday’s rally and some disappointing economic data.

EU Retail Sales badly missed estimates (-1.3% vs. (E) 1.5%) which is slightly increasing concern about the EU economic recovery.

Global August service and composite PMIs (China/EU) were generally in-line with expectations while the British service PMI slightly missed estimates (58.8 vs. (E) 60.1).  Bottom line, the numbers weren’t great, but they weren’t awful either and generally speaking they won’t change the current market outlook.

Today there are two important economic reports, Jobless Claims (E: 977K) and the ISM Non-Manufacturing PMI (E: 56.8), and the market will want to see the actual data close to or better than both numbers to reinforce the economic recovery is ongoing.  There’s also one Fed speaker today, Evans at 1:00 p.m. ET.

Finally, it’s important to note that vaccine “chatter” is getting louder and the chance we get a vaccine announcement before the election (November 3rd) is rising.  Yesterday the CDC formally notified all 50 states to be ready to distribute a vaccine by late October/early November, so I want everyone to be aware of that, as a vaccine announcement would be another positive for stocks.

Tom Essaye Quoted in Yahoo Finance on September 1, 2020

“Once different industry participants start sending people out to the field again and visiting customers, everyone else will follow. Zoom is a…” said Sevens Report Research founder Tom Essaye. Click here to read the full article.

Is the S&P 500 “The Market” Anymore?

What’s in Today’s Report:

  • Is the S&P 500 “The Market” Anymore?

Stock futures are trading at record highs this morning amid renewed stimulus hopes and soft economic data overseas.

Late yesterday, Treasury Secretary Mnuchin urged Congress to pass new stimulus funding and expressed willingness to sit down with Congressional Democrats to work towards a deal.

German Retail Sales were -0.9% vs. (E) +0.5% in July bolstering the case that more stimulus is needed globally.

Today, we will get an initial look at labor market data for the month of August via the ADP Employment Report (E: 850K) which could move markets if there is a material surprise (either way) in the headline. Data on Factory Orders for July (E: 5.8%) will also be released this morning.

There are multiple Fed speakers today including: Williams (10:00 a.m. ET), Mester (12:00 p.m. ET), Kashkari (3:00 p.m. ET), and Daly (6:00 p.m. ET), from which the market will look for additional signals that the FOMC will remain very accommodative for the foreseeable future.

Finally, the next stimulus package has jumped back into the forefront of the market’s focus so any developments regarding progress towards a deal will be well-received by risk assets including stocks while concerns of an ongoing stalemate will be a headwind.

Why Can’t the Fed Generate Inflation?

What’s in Today’s Report:

  • Why Can’t the Fed Generate Inflation

U.S. stock futures have a mild bid this morning while international shares were split between gains and losses overnight amid mixed economic data.

Global manufacturing PMI data largely met expectations overnight and did not materially move markets.

The August Eurozone HICP Flash (our equivalent of CPI) missed with a headline of -0.2% vs. (E) +0.2% but a resulting rise in stimulus hopes is helping EU equities outperform today.

Looking into today’s session, there are two economic reports: ISM Manufacturing Index (E: 54.5) and Construction Spending (E: 1.1%) however the former will be the more important release to watch regarding the health of the economic rebound.

Additionally, there is one Fed speaker today: Brainard (1:00 p.m. ET), and markets will simply be looking for further confirmation that the FOMC plans to be very accommodative for quarters to come.

Tyler Richey Co-editor at Sevens Report Quoted in MarketWatch on August 31, 2020

“The uptrend has clearly lost momentum since the early stages of the Q2 rebound.” However, “the path of least resistance is still higher right…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tyler Richey

Tom Essaye Quoted in Barron’s on August 28, 2020

“Now, over the medium and long term, the Fed’s average inflation target means that when cyclicals start to outperform, and when yields begin to rise, both those rallies will last longer…” writes Tom Essaye of The Sevens Report newsletter. Click here to read the full article.

Tyler Richey Co-editor at Sevens Report Quoted in MarketWatch on August 26, 2020

“Historically, good economic data is negative for gold but in this case, real interest rates declined in the wake of the release, as rising…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Gold

Are Things Really This Good?

What’s in Today’s Report:

  • Stocks Go Up Seemingly Every Day – Are Things Really This Good?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet:  Is the Recovery Losing Strength? (Jobs Report & Global PMIs)

Futures are modestly higher following a generally quiet weekend on the economic and political fronts.

Economic data was mixed but generally “fine” as China’s manufacturing PMI slightly missed estimates (51 vs. (E) 51.2) while the service PMI beat (55.2 vs. (E) 54.2).

On stimulus, the Republicans have upped their offer to $1.3T, so the two sides are getting closer to the likely $1.5T compromise, but a deal is still not expected until mid to late September.

There are no notable economic reports today or impactful earnings, so the key event will be a speech by Fed Vice Chair Clarida (9:00 a.m. ET) to see if he echoes the dovish sentiment we got from Powell last week (and he should).  If Clarida is dovish in tone that should help markets continue the rally as otherwise, it should be a quiet day.