A Stimulus Driven Rebound for Brick and Mortar Retail?

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What’s in Today’s Report:

  • A Stimulus Driven Rebound for Brick and Mortar Retail?
  • EIA and Oil Update

Futures are moderately higher on general optimism for several upcoming events.  There was no notable news overnight to cause the rally in futures, however.

Politically, Biden is expected to sign the stimulus bill on Friday and now the focus is on infrastructure and trade.

On trade, Nasdaq futures are sharply higher on the potential for a U.S./China semiconductor trade group (which would potentially ease semiconductor supply issues) and on general optimism ahead of the U.S./China meetings in Alaska this weekend (relaxing of trade tensions is a potential additional tailwind on stocks, especially tech and industrials).

Today the focus will remain on rates and that makes the ECB Rate Decision (E: No Change) the most important event today.  Markets fully expect ECB President Lagarde to say something specific or actually do something to show the ECB will not allow rates to rise too quickly.  If that does happen look for the 10 year Treasury yield to fall further below 1.50% and for stocks to extend the rally.  But, if Lagarde disappoints markets, expect rates to rise in response, and stocks to decline.

Other notable events today include Jobless Claims (E: 725K), 30-Yr Treasury Bond Auction at 1:00 p.m. and if both are solid, they will help support the rally.

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart
  • Was Yesterday the End of Tech Underperformance?

Stock futures are little changed after a mostly quiet night of news as investors look ahead to a key U.S. inflation report and another benchmark Treasury Note Auction.

Economically, Chinese inflation data came in slightly ahead of estimates overnight while French Industrial Production handily topped expectations (3.3% vs. E: 0.5%) however neither release is having a significant impact on markets.

Looking into today’s session market focus will be on inflation data early with the CPI report (E: 0.4%) due out ahead of the opening bell. A “hot” report could spark a move higher in yields which would likely weigh on tech shares and markets broadly. 1.60% is a key level to watch in the 10 year yield as selling pressure on equities has risen significantly in recent sessions when the benchmark yield approaches that mark.

From there, focus will turn to this afternoon’s 10-Yr Treasury Note Auction at (1:00 p.m. ET) as another poor auction for mid-duration Treasuries could also influence a sharp move higher in rates that again would weigh on equity markets, specifically tech.

Bottom line, where stocks go today will largely depend on the price action in the bond markets. If bonds remain orderly, the rebound in equities can continue, however if yields retest recent highs, expect another wave of volatility, especially in high-multiple sectors like tech.

Tom Essaye Quoted in Fintech Zoom on March 5, 2021

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“While the S&P 500 may be facing structural head-winds due to tech weakness, much of the rest…” Tom Essaye, founder of Sevens Report, said according to CNBC. Click here to read the full article.

 

A Crack in One Pillar of the Rally

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What’s in Today’s Report:

  • A Crack in One Pillar of the Rally
  • Weekly Market Preview:  Will Inflation Data Push Yields Higher (And Stocks Lower?)
  • Weekly Economic Cheat Sheet:  CPI on Wednesday.

Futures are moderately lower despite stimulus progress over the weekend, as markets digest Friday’s big rally.

The Senate passed the $1.9 trillion stimulus bill and the House will debate it on Tuesday.  Biden could sign the bill by the end of the week, meeting market expectations and unleashing more stimulus into the economy as we begin the 2nd quarter.

Economically, Chinese trade numbers signaled an ongoing global recovery as exports exploded 60.6% y/y vs. (E) 40%.

The 10 year Treasury yield is up four basis points on the stimulus news and is again testing 1.60% (this is the main reason futures are lower this morning).

Today there are no economic reports and no Fed speakers, but yields will once again dictate trading in stocks.  Markets rallied on Friday because the 10 year Treasury yield failed to meaningfully breakthrough 1.60%.  But, if that happens today, look for stocks to drop in response, as rising yields remain the biggest headwind on stocks in the near term.

Tom Essaye Quoted in Cryptonews on March 4, 2021

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As for the reasons behind these drops, former Merrill Lynch trader Tom Essaye told Bloomberg that there was “a rollover in a lot of the momentum plays in the market — not just Bitcoin, but Tesla and tech stocks…” and the interest is coming out of these plays now. Click here to read the full article.

Tom Essaye Quoted in Courthouse News Service on March 5, 2021

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According to Tom Essaye of the Sevens Report, the core issue with bond yields has been economic growth. “Due to economic re-openings, stimulus, and vaccine optimism, global investors are pricing in a huge jump…” he wrote in a Thursday investor’s note. Click here to read the full article.

Tom Essaye Quoted in Axios on March 3, 2021

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“While the S&P 500 may be facing structural headwinds due to tech weakness, much of the rest of the market…” Tom Essaye, founder of Sevens Research, said in his daily Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Unseen Opportunity on March 3, 2021

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“While the S&P 500 may be facing structural head-winds due to tech weakness, much of the rest of the market…” explained Tom Essaye, Sevens Report founder, in a note. Click here to read the full article.

Tom Essaye Quoted in Bloomberg on March 3, 2021

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“We’ve seen a rollover in a lot of the momentum plays in the market — not just Bitcoin, but Tesla…” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, said by phone. Click here to read the full article.

Tom Essaye Quoted in CNBC on March 2, 2021

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“While the S&P 500 may be facing structural head-winds due to tech weakness, much of the rest of the market…” Tom Essaye, founder of Sevens Report, said in a note. Click here to read the full article.