Market Multiple Levels: S&P 500

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What’s in Today’s Report:

  • Market Multiple Levels S&P 500 Chart

U.S. equity futures are tracking European shares higher this morning thanks to ongoing hopes that the global economy will reopen and normalize quickly amid coordinated efforts while economic data was not quite as bad as feared overnight

Economically, the EU Composite PMI was 13.6 vs. (E) 13.5 in April while March Retail Sales declined -11.2% vs. (E) -12.0%. Both figures were considerably better than some analysts had feared helping boost risk assets.

Looking into today’s session, focus will be on the first look at April payrolls data in the U.S. in the form of the ADP Employment Report, for which the consensus analyst estimate is for a staggering drop of 20 million in private payrolls. Later in the day, Atlanta Fed President, Bostic, will speak at 1:30 p.m. ET.

While investors are primarily concerned with the economy reopening, Q1 earnings continue to roll in with several notable releases that could move markets today: SHOP (-$0.19), CVS ($1.63), GM ($0.18), SQ ($0.13), PYPL ($0.76), LYFT (-$1.08), and WYNN (-$1.05).

Current Market Catalysts (They Changed Last Week)

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What’s in Today’s Report:

  • Current Market Catalysts:  From Reopening and Remdesivir to Normalization and Nationalism
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Jobs Report This Friday)

Futures are moderately lower as U.S./China tensions rise while markets begin to shift their focus towards when the economy will return to normal.

U.S./China tension over the origin of the coronavirus rose over the weekend as Secretary of State Pompeo said there was “enormous” evidence that suggests the virus was created in a lab.

Economically, the EU manufacturing PMI slightly missed expectations, coming in at 33.4 vs. (E) 33.6.

Today there are no notable economic reports nor any Fed speakers, so markets will trade off any U.S./China coronavirus tension headlines, along with any hints of when the economy might return to some semblance of “normal” as those two issues have now become the main drivers of stocks in the near term.

Tom Essaye Quoted in Channel 12 News Article on

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“You’re seeing companies adapt and that’s exactly what’s going to have to happen in this economy,” financial expert Tom Essaye said. “The state could open tomorrow, but that doesn’t necessarily mean people will flock to restaurants, the mall and bars…” Click here to read the full article.

Tom Essaye

 

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on April 30, 2020

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Traders moved to “square their books into the end of the month,” said Tyler Richey, co-editor at Sevens Report Research.

Gold “bulls will want to see stable interest rates and renewed recovery in inflation expectations” in order for a rally in gold to continue…” and gave some traders an excuse to book profits into month end. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Kitco on April 29, 2020

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According to Tyler Richie, co-editor at Sevens Report Research, “The report is weighing on optimism that the global economy would swiftly recover after being effectively closed for…” Click here to read the full article.

Graph

Gold Update: What It Needs to Keep Rallying

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What’s in Today’s Report:

  • ECB Meeting Takeaways:  Why We Still Prefer Broad U.S. Stock Exposure Over International Right Now
  • Gold Update:  What It Needs to Keep Rallying

Futures are sharply lower mostly on continuation from yesterday’s selling as markets digest the recent rally, although AAPL & AMZN earnings were mildly disappointing.

Economic data was soft again as the Japanese Manufacturing PMI (41.9 vs. (E) 44.8) and British manufacturing PMI (32.6 vs. (E) 32.9) both missed estimates.

On earnings, AAPL & AMZN numbers weren’t bad, but AAPL didn’t provide updated guidance while AMZN cited a significant coronavirus expense increase in Q2.

Today the key report will be the ISM Manufacturing Index (E: 39.0) and the key here is that it isn’t too much worse than estimates (if it is, that’ll increase concern about how deep the economic hole has become).  Additionally, today is “May Day” and many of the world’s markets (EU, Hong Kong, China) are closed, so there will be a lack of volume/liquidity and that could exacerbate today’s volatility and any declines.

Tom Essaye Interviewed with WPTV Channel 5 on April 28, 2020

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Tom Essaye interviewed with WPTV Channel 5 discussing entrepreneurial ventures see increase in demand amid COVID-19. Click here to watch the full interview.

What Yesterday’s Fed Decision Means for Markets

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What’s in Today’s Report:

  • FOMC Takeaways:  The Fed Put Is Alive And Well
  • How Bad Was Q1 GDP?
  • Oil Update & Inventory Analysis

Futures are little changed as strong tech earnings are helping markets digest yesterday’s big rally.

Economically, the Chinese manufacturing PMIs were “ok.”  The government number was again above 50 (50.4) while the research firm Ciaxin’s manufacturing PMI was a slight disappointment at 49.4 vs. (E) 50.1.  Bigger picture, while it would have been nice to see a stronger recovery this month, it is still encouraging to see activity returning to “normal” just a few months after the height of the outbreak.

Facebook and MSFT earnings were strong after hours and commentary was cautiously positive (activity is stabilizing in April after sharp declines in March).

Today the key report is again Jobless Claims (E: 3.5MM) and as has been the case, any significant decline from the previous week will a marginal positive despite the absolute numbers still being historically high.

Other events today include the Fed’s preferred measure of inflation, the Core PCE Price Index (E: -0.1%) and an ECB Rate Decision (7:45 a.m. ET).  The ECB may increase its QE program, but that is already expected at some point this year, so even if they do later today it shouldn’t move markets too much.

Seizing Long Term Opportunities in Energy

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What’s in Today’s Report:

  • Seizing Long Term Opportunities in Energy

Futures are higher this morning while international equity markets are mixed as strong tech earnings offset soft economic data ahead of the FOMC Announcement today.

GOOGL is up 8% in pre-market trade after reporting strong Q1 results after the close yesterday while the European Commission’s Economic Sentiment Index fell more than expected, down to 67.0 vs. (E) 75.0 as the fallout from the coronavirus pandemic has weighed heavily on business activity.

Today, there are two economic reports to watch: GDP (E: -3.8%) and Pending Home Sales Index (E: -5.4%) but the main focus during the primary session will be on the FOMC Meeting Announcement (2:00 p.m. ET) followed up by Fed Chair Powell’s Press Conference (2:30 p.m. ET).

Earnings season also remains in full swing with: BA (-$2.04), MA ($1.72), HUM ($4.84), NOC ($5.42), YUM $0.64), SHW ($4.01), and VLO (-$0.19) all reporting ahead of the bell while MSFT ($1.27), FB ($1.72), QCOM ($0.80), and TSLA (-$0.53) release their Q1 results after the close.

The main thing investors are looking for today is reassurance from the Fed, specifically that they remain committed to doing “whatever it takes” to support the economy through the COVID-19 pandemic and are focused on restoring the economy to its previous state as quickly as possible.

Sevens Report Co-editor Tyler Richey Quoted in Hellenic Shipping News on April 27, 2020

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Despite the drop in active rigs, the EIA on Wednesday showed domestic oil production “perfectly unchanged” at 12.2 million barrels per day, “relative to the corresponding…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tyler Richey