The trouble is that there is still plenty of froth around, says Bloomberg. The recent mini-crash wiped $2trn off stock valuations, but trading data shows that bullish retail investors, who often buy in through apps like Robinhood, remain “unbowed”. As Tom Essaye of The Sevens Report newsletter puts it, the recent pullback was “not even close to scary…” Click here to read the full article.
What’s in Today’s Report:
Stock futures are wavering between gains and losses this morning while international markets were mixed overnight amid a continued rise in COVID-19 cases clouding the outlook for the global economic recovery.
There were no market-moving economic reports overnight however new coronavirus cases topped 50,000 in the U.S. yesterday, a more than one-month high, suggesting the resurgence in the outbreak may not be limited to Europe.
Today, there is one economic report to watch: Existing Home Sales (E: 5.965M) and the Chicago Fed’s Evans will speak at 10:00 a.m. ET but the market’s main focus will be Chair Powell’s testimony before congress, alongside Treasury Secretary Mnuchin, beginning at 10:30 a.m. ET.
Powell and Mnuchin are expected to reiterate concerns about the fragile state of the economic recovery and as long as they remain extremely dovish/accommodative, it should help markets begin to stabilize following the recent, near-10% pullback in the S&P 500.
What’s in Today’s Report:
Futures are sharply lower as concerns mount that surging coronavirus cases in Europe will cause another economic lockdown.
Coronavirus cases in multiple European countries, including the UK, France, and Spain, are back near March highs, and concerns are rising those governments will re-implement economically crippling lockdown measures.
Politically, the death of Ruth Bader Ginsburg will make the election even more heated, but it should not have any direct impact on the markets.
Today there are no notable economic reports or market-moving Fed speakers, so focus will turn towards Europe as weakness in those markets drove U.S. futures lower. If Europe can bounce into their close (11:30 a.m.) than U.S. stocks could as well.
What’s in Today’s Report:
Futures are moderately lower on momentum from Wednesday’s post-Fed fade in stocks.
Economically, EU HICP (their CPI) was the only notable release, and it met expectations (core HICP rose 0.2% y/y).
On the stimulus front, “chatter” is turning a bit more positive as Trump and Pelosi both made slightly positive comments on the process yesterday, but a stimulus bill before the election remains very unlikely.
Today the key number is Jobless Claims (E: 850K) and markets will want to see a solid number near the expectation of 850k. If claims tick back towards 1MM, that should add downside pressure to stocks as worries will begin to rise about another “Pause” in the economic recovery. We also get Housing Starts (E: 1.486M) and Philadelphia Fed Manufacturing Index (E: 15.5), although they’d have to be big misses to move markets.
What’s in Today’s Report:
Stock futures are trading modestly higher this morning following a positive revision to this year’s global economic outlook by the OECD and largely dovish Fed expectations.
The Organization for Economic Cooperation and Development said the global economy will likely contract by -4.5% this year; improved from the -6.5% expectation in June. The more upbeat economic outlook paired with hopes for more monetary and fiscal accommodation are helping fuel risk-on money flows in early trade this morning.
Looking into today’s session, focus will be on economic data early as the Retail Sales report (E: 1.0%) will shed some light on the health of the U.S. consumer since the initial coronavirus relief measures began to run out in July, and a bad number could hit stocks in early trade. Additionally, there are two lesser followed reports due out shortly after the bell: Business Inventories (E: 0.1%) and Housing Market Index (E: 78) but neither should materially move markets.
After the economic data, focus will shift to the Fed and markets will likely settle in for a typical and choppy session into the FOMC Meeting Announcement (2:00 p.m. ET) and Fed Chair Powell’s Press Conference (2:30 p.m. ET) in the afternoon.
Market expectations for the Fed today remain rather dovish so if Powell and company can meet expectations, stocks should be able to hold the week-to-date gains or potentially extend them, but the risk is to the downside as a hawkish disappointment is far from priced in and could trigger a test of last week’s lows.
What’s in Today’s Report:
Futures are moderately higher again following better than expected economic data overnight.
Chinese economic data was solid as August Retail Sales (0.5% vs. (E) 0.1%) and Industrial Production (5.6% vs. (E) 5.1%) both beat estimates. In Europe, the German ZEW expectations index also beat estimates (77.4 vs. (E) 69.5). Bottom line, the data implies the global economic recovery is still on going.
On the vaccine front, headlines were more mixed as the resumption of the AZN trial in the U.S. isn’t expected until the middle of this week, at the earliest. But, markets still very much expect a vaccine to be approved by Election Day and distributed by year-end (and that remains a very optimistic assumption).
Today the looming Fed meeting (tomorrow) should keep the markets generally quiet, although we do get the September Empire Manufacturing Survey (E: 6.5), which is the first data point for September. If it’s stronger than expected, that will further confirm the U.S. economy remains resilient despite no more stimulus, and that will help support the early rally in futures.
What’s in Today’s Report:
Futures are sharply higher as markets enjoy an oversold bounce following a marginally positive weekend of news.
Astra-Zenica (AZN) announced their COVID-19 vaccine trial was back on in the U.K., although it remains paused on other countries.
There was about $60 bln on pharma M&A announced, and that is also generally helping sentiment.
Economic data was sparse although EU Industrial Production slightly beat estimates (4.1% vs. (E) 4.0%.
Today there is no notable economic data nor any Fed speakers, and like both Thursday and Friday, the actual news overnight is not as positive as the rally in futures implies. So, also like the past few days, the key will be whether stocks can hold the early gains and the Nasdaq should lead. If it turns negative by lunchtime (as it has the past two trading days) look out for another Thursday repeat.
“Some froth has come off the market which is a good thing, but keep in mind that we still remain well over levels…” Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter, wrote in a note. Click here to read the full article.
“Hopes for a stimulus deal before the election (Nov 3rd) are fading, and if that’s the case we should expect that to weigh on stocks in the coming weeks…” Tom Essaye, founder of The Sevens Report. Click here to read the full article.
What’s in Today’s Report:
Futures are moderately lower on digestion of Wednesday’s rally following a generally quiet night.
Economic data was sparse as Japanese Machine Orders was the only notable report, as it beat estimates (6.3% vs. (E) 2.0%).
On the stimulus front, Senate Republicans will pass a $500 bln stimulus bill today but it won’t pass the House, and hopes for a stimulus deal before the election (Nov 3rd) are fading, and if that’s the case we should expect that to weigh on stocks in the coming weeks, especially if economic data starts to roll over.
Today we get the ECB Decision at 7:45 a.m. ET and the expectation is for no change to rates or QE. But, ECB President Lagarde could be dovish in her comments starting at 8:30 ET, and if so that could boost the dollar and be a mild headwind on stocks today.
Away from the ECB, the key report today is Jobless Claims (E: 830K) and markets will want to no major back tracking on the recent drop in claims (so no numbers close to 1MM). Finally, we also get PPI (E: 0.3%), which was “hot” last month. But, with the Fed max dovish, it’s unlikely even a high PPI would cause much volatility in stocks.