“The bottom line is that if we do see real disappointment in stimulus or the vaccine, then a 10% correction is the likely best-case scenario, and it’ll come…” said Tom Essaye of The Sevens Report, in a note. Click here to read the full article.
Tom Essaye intereviewed with Oliver Renick from TD Ameritrade discussing ISM non-manufacturing, COVID-19 trends, stimulus and more…Click here to watch the full interview.
Yahoo Finance’s Brian Sozzi and Alexis Christoforous break down latest market action with The Sevens Report Founder, Tom Essaye. Click here to watch the full interview.
What’s in Today’s Report:
Futures are rallying on optimistic comments from Secretary Mnuchin about a new stimulus deal being reached by the end of the week as well as upbeat economic data.
Composite PMIs were mostly in line with expectations overnight but EU Retail Sales notably rose 1.3% vs. (E) 0.2% Y/Y in June, a recovery to pre-pandemic levels that is rekindling hopes for a V-shaped economic recovery.
This morning, investor focus will be on economic data early as we get the first look at July jobs data via the ADP Employment Report (E: 1.888M) ahead of the bell while International Trade (E: -$50.3B) and the ISM Non-Manufacturing Index (E: 55.0) will both be released after the open.
Earnings season is still in full swing as well with several companies due to report Q2 results today including: CVS ($1.93), MRNA (-$0.36), HUM ($10.34), ROKU (-$0.55), MET ($0.96), ADT ($0.27).
Beyond economic data and earnings, the market’s main focus is clearly the stimulus bill and any news of further progress will be a tailwind for stocks while any new “roadblocks” will likely trigger some risk-off money flows across asset classes.
What’s in Today’s Report:
U.S. equity futures are churning lower this morning after a mostly quiet night of news as investors digest yesterday’s strong start to the month of August and continue to wait for details regarding the next stimulus package.
Economically, eurozone PPI rose 0.7% vs. (E) 0.5% in June helping support a modest bounce in the euro vs. the dollar this morning.
Today, there are two economic data points due to be released: Motor Vehicle Sales (14.0M) and Factory Orders (E: 5.2%) while no Fed officials are scheduled to speak today.
On the earnings front, there are a few notable reports today including: BP (-$0.99), BYND (-$0.01), ALL ($1.41), and PRU ($1.72) but none of those should materially move markets as investors will remain focused on the stimulus talks on Capitol Hill while the July labor market statistics, which begin to hit tomorrow, are also coming into focus.
What’s in Today’s Report:
Futures are marginally higher following decent economic data combined with some mild progress on stimulus hopes.
Global manufacturing PMIs were generally better than expected as the Chinese PMI rose to 52.8 vs. (E) 51.1 while the EU number also beat expectations (51.8 vs. (E) 51.1).
On the stimulus front, both parties acknowledged some progress on negotiations, but they remained far apart.
Today focus will be on the ISM Manufacturing PMI (E: 53.5) and the market needs/wants a strong number here to help refute the growing list of indicators that imply the economic recovery is pausing/stalling.
Regarding stimulus, headlines will move the market this week but more broadly, investors are expecting some significant progress by the end of the week. If that progress doesn’t occur, that will become a headwind on stocks.
Finally, there are also two Fed speakers today, Bullard (12:30 p.m.ET) and Evans (2:00 p.m. ET), but neither should move markets.
Tom Essaye – Sevens Report Founder and President weighs on on current market moves with Adam Shapiro and Julie Hyman on Yahoo Finance’s On The Move. Click here to watch the full interview.
What’s in Today’s Report:
Futures are lower following disappointing headlines on U.S. stimulus progress, combined with profit taking ahead of multiple important market catalysts coming today.
U.S. stimulus bill talks were said to be at an “impasse” late Wednesday, and that’s weighing on sentiment (although this drama is to be expected, as we cautioned last week, and a deal is still very much expected by mid- August).
Economically, German Q2 GDP missed estimates (-10.1% vs. (E) -9.4%), which is a reminder just how much damage was inflicted on the global economy in Q2.
As mentioned, one of the reasons futures are weaker this morning is book squaring ahead of several important economic and earnings events today.
First, the most important economic report of the day is Jobless Claims (E: 1.38M). We address this more in the Report, but there are growing signs the U.S. economic recovery is pausing or stalling, and that’s not priced into stocks above 3200 in the S&P 500. If we see another notable increase in weekly claims (say through 1.5M) that will amplify fears the recovery is stalling and likely weigh on stocks.
Then, on the earnings front, we get four of the most important stocks in the market announcing results after the close: AMZN (E: $1.75), AAPL (E: $1.99), FB (E: $1.44), GOOGL (E: $8.43). The earnings results will be “fine” but these stocks have had huge runs, and if they disappoint vs. elevated expectations, just due to these stocks weights in the S&P 500, it could pressure markets after hours.
Finally, today we will get the initial look at Q2 GDP, and it will be historic as it’s estimated to be -35% seasonally adjusted annual rate (remember GDP is usually around 2% saar). I never in my life thought we’d see such a number, and I hope we don’t ever see it again. But, today history will be made as the worst GDP print ever.
“To be clear, from an actual policy standpoint, it’s universally expected that the Fed won’t make any changes to 1) Rates…” wrote Tom Essaye, editor of the Sevens Report. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally higher ahead of the Fed as markets bounce from Tuesday’s declines thanks to decent earnings.
Earnings after the bell were decent as AMD and SBUX both rallied, although Visa (V) made cautious comments on consumer spending late in Q2, which again implies we’re seeing a potential stall in the economic recovery.
Economically there were no notable reports overnight.
Today the key event is the FOMC Decision (E: No Change to Rates or QE) and Fed Chair Press Conference at 2:30 p.m. ET. Again, if there’s going to be a surprise from the Fed today (which is unlikely) it’s going to come from the press conference – so we’ll be watching.