Owning Gold for the Right Reasons

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What’s in Today’s Report:

  • Owning Gold for the Right Reasons
  • What About Silver?
  • Fed Day

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.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview (What’s Expected/Dovish If/Hawkish If)

Futures are modestly lower following a quiet night of news as markets digest yesterday’s rally ahead of several days of critical earnings and tomorrow’s FOMC decision.

Economic data was sparse.  UK CBI Distributive Trades (it’s like retail sales) beat estimates rising to 4 vs. (E) -25 but the number isn’t moving markets.

Today there are only two notable economic reports,  Case-Shiller HPI (E: 4.2% yoy) and Consumer Confidence (E: 95.7) and neither should move markets.

Instead, focus will be on stimulus (negotiations will accelerate and the market expects a done deal in two weeks) and earnings.  Specifically, the volume of important earnings reports spikes between now and Friday, so we’ll be watching these results closely (especially the reports on Thursday).  Today, some notable earnings include:  MMM ($1.77), MCD ($0.76), PFE ($0.64), AMD ($0.16), SBUX ($-0.61), V ($1.02).

Is the Rally Starting to Stall?

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What’s in Today’s Report:

  • Is the Rally Starting to Stall?
  • Weekly Market Preview:  Important Earnings and Stimulus Negotiations
  • Weekly Economic Cheat Sheet:  Fed Decision on Wednesday.

Futures are moderately higher as the Republican version of the stimulus bill is largely in-line with expectations.

The Republican stimulus bill will be released today with weekly unemployment checks cut to $200-$300/week, but one time stimulus checks roughly equivalent to the last time (in both the amount and scope, i.e. the number of people eligible to receive checks).  The weekly payment amount is mildly disappointing, but the scope of the stimulus checks is larger than expected so they basically offset one another.

On balance this version of the bill isn’t a disappointment, especially considering the amount of stimulus will likely increase modestly during negotiations with Democrats.

Looking forward, the negotiation process on the bill will now begin in earnest,  and since Washington always has a flair for the dramatic, so expect a few “scares” over the next two weeks that imply a deal won’t get done.  But, as we all know, it will get done, and likely in the next two weeks (and the sooner the better because weekly unemployment checks ended Friday, until there’s a new bill passed).

Today stimulus chatter will dominate the news wires, and beyond that there’s one notable economic report, June Durable Goods (E: 6.5%).  But, it shouldn’t move markets as investors know June was a solid month for data, and instead the weekly jobless claims are the key report for this week (out Thursday).

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on July 23, 2020

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“Oil has shown resilience this week” with WTI prices just shy of multi-month highs thanks, in part, to “optimism that a COVID-19 vaccine will eventually help the global economy normalize…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Is Super Cap Tech Momentum Fading?

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What’s in Today’s Report:

  • Is Super Cap Tech Momentum Fading?

Futures are modestly lower on momentum from yesterday’s declines combined with a further uptick in U.S./China geo-political tension.

Secretary of State Pompeo gave a  harsh speech on China Thursday, while China closed the U.S. consulate in  Chengdu, in a further escalation of tensions.

Positively, July EU flash composite PMIs handily beat expectations, surging to 54.8 vs. (E) 51.1, implying that a global economic recovery is ongoing.

Today the focus will be on the July Flash PMI (E: 50.3), and if we get a disappointing number (showing a lack of improvement from June) then we’ll see concerns grow that the U.S. recovery is “pausing” and that could weigh on stocks further.

Stimulus Update (Progress Is Being Made)

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What’s in Today’s Report:

  • Stimulus Update
  • Weekly EIA/Oil Market Update (Can the Rally Continue?)

Futures are modestly higher thanks to stronger than expected earnings and progress on the stimulus front.

TSLA earnings beat lofty expectations and the stock rallied after hours, while the rest of the major earnings reports (MSFT/CMG) were generally in-line (i.e. no disasters).

Republicans apparently reached a consensus on their version of next stimulus bill, so progress continues and a new stimulus bill is expected in the next few weeks.

Today the key number will be weekly jobless claims.  There are rising fears that the U.S. economy is plateauing after the recovery in May/June, and if weekly claims move back towards, or through 1.5M, that will likely spook markets and imply that the recovery is stalling.  Regarding earnings, the two reports we’re watching are T ($0.78), AAL (-$6.40), but earnings shouldn’t move markets toda

Another Tailwind for European Stocks

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What’s in Today’s Report:

  • Another Positive for Europe (and European Stocks)
  • The Key Driver of the Precious Metals Rally

Stock futures are trading modestly lower this morning as rising U.S.-China tensions offset good economic data.

The U.S. directed China to close its consulate in Houston citing IP security risks, a move which China condemned as “an unprecedented escalation” of tensions.

Today, there are two economic reports to watch: FHFA House Price Index (E: 0.4%) and Existing Home Sales (E: 4.795M) while no Fed officials are scheduled to speak.

The Treasury will hold a 20-Yr Bond Auction at 1:00 p.m. ET and with yields near their lows for the year, a strong auction could act as a headwind for risk assets this afternoon.

Aside from those potential catalysts, investors will be watching the fluid situation between the U.S. and China for any signs of further deterioration in relations while earnings season remains in full swing with: BIIB ($7.99), and CP ($2.71) reporting before the open and TSLA (-$0.71), MSFT ($1.38), LVS (-$0.64), and CSX ($0.67) all due to release Q2 results after the close.

Tom Essaye Quoted in Yahoo Finance on July 17, 2020

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On Monday, Oxford University and AstraZeneca announced promising results from an early phase human trail of its vaccine candidate. In the face of growing hopes for a coronavirus vaccine, investors have been bidding up stocks aggressively, despite mounting bad news about new COVID-19 infections.

Yet Tom Essaye, founder of the Sevens Report, told Yahoo Finance on Monday that markets are downplaying key problems associated with vaccine development. Currently, drug giants Pfizer (PFE), Johnson & Johnson (JNJ), AstraZeneca…Click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on July 20, 2020

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Sevens Report Research Founder Tom Essaye speaks with Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Jared Blikre about the latest market moves. Click here to watch the full interview.

The New Stimulus Bill (Good, Bad, Ugly)

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What’s in Today’s Report:

  • Technical Take: Finally a Breakout
  • The New Stimulus Bill: Good/Bad/Ugly

Markets are risk-on this morning with U.S. stock futures tracking European shares higher after EU leaders finalized a $2T stimulus package overnight while Q2 earnings from IBM topped expectations after the close yesterday.

The EU spending package, which importantly incorporates EU bonds, still needs to be passed by the EU Parliament and may not begin to take effect until mid-2021.

Looking into today’s session, there are no economic reports to watch and no Fed officials are scheduled to speak however the earnings calendar picks up considerably.

Companies reporting Q2 results today include: KO ($0.40), LMT ($5.71), PM ($1.09), and SYF ($0.04) before the open and SNAP (-$0.09), UAL (-$9.13), TXN ($0.87), and COF (-$1.25) after the close.