More Volatility Ahead But Not Necessarily a Correction

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What’s in Today’s Report:

  • Bottom Line: More Volatility Ahead (But Not Necessarily A Correction)
  • Weekly Market Preview:  All About Inflation (Still)
  • Weekly Economic Cheat Sheet:  Friday’s the Most Important Day This Week

Futures are moderately higher as markets ignore more Bitcoin volatility following a generally quiet weekend.

Bitcoin volatility remained elevated, with the cryptocurrency falling more than 10% over the weekend, and then bouncing back more than 5% this morning, but markets are ignoring the volatility so far today.

There were no notable economic reports over the weekend, nor any notable central bank speak.

Today there are multiple Fed speakers but we’ll be watching Brainard (9:00 a.m. ET) and Mester (11:00 a.m. ET) specifically to see if there’s any reference to thinking about tapering (if there is look for a small hawkish response from markets). Bostic (12:00 p.m. ET) and George (5:30 p.m. ET) also speak today but shouldn’t move markets.

Tom Essaye Interviewed with Yahoo Finance on May 19, 2021

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We’re lacking a positive catalyst in the market: Sevens Report Research President

Tom Essaye interviewed with Seana Smith and Adam Shapiro from Yahoo Finance to discuss the latest market actions. Click here to watch the full interview.

Why We Are So Wary of an Economic Overheat

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What’s in Today’s Report:

  • Why We Are So Wary of an Economic Overheat

Stock futures are tracking global equities lower this morning with tech shares leading to the downside as inflation fears continue to grip markets ahead of the Fed minutes.

Economically, the U.K. PPI report for April notably showed input prices jumped a staggering 9.9% y/y vs. (E) 4.4% which further stoked inflation fears overnight.

There are no notable economic reports today leaving investors to focus on the release of the Minutes to the April FOMC Meeting at 2:00 p.m. ET.

Additionally, there are two Fed officials speaking mid-morning: Bullard (10:00 a.m. ET) and Quarles (10:00 a.m. ET) however it is rather unlikely that either will say anything market moving given the looming release of the Fed minutes this afternoon.

Don’t get blindsided by market volatility.  We can help you learn more about markets and save time. To start your free two week trial of The Sevens Report, click here and enter your email address.

Economic Breaker Panel: May Update

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What’s in Today’s Report:

  • Economic Breaker Panel – May Update
  • Empire State Manufacturing Survey Takeaways (Price Index Charts)

Futures are trading modestly higher in sympathy with global shares which rallied on rising re-opening bets overnight while economic data came in largely as expected.

Economically, Japanese and Eurozone GDP data as well as the U.K. Labour Market Report all printed largely in-line with estimates o/n and did not materially move markets.

Today, there is one economic report: Housing Starts (E: 1.715M) but it should not have a major impact on markets while the Treasury will hold a 52-Week Treasury Bill auction at 11:30 a.m. ET (these shorter duration auctions will become increasingly important as investors gauge the market’s taper/tightening expectations).

Turning to Fed, there are two speakers to watch today: Bostic (11:00 a.m. & 12:30 p.m. ET) and Kaplan (11:05 a.m. ET).

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Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on May 14, 2021

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Oil prices finish the week higher as pipeline shutdown ‘short lived’

Oil futures climbed on Friday, erasing previous losses to finish higher for the week. “The Colonial Pipeline debacle got most of the attention from energy traders this week…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Updated Market Outlook (Volatility isn’t Automatically Bearish)

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What’s in Today’s Report:

  • Updated Market Outlook – Increased Volatility Isn’t Automatically Bearish
  • Weekly Market Preview:  Do We Get More Hints of Stagflation?
  • Weekly Economic Cheat Sheet:  Friday’s Flash PMIs are Key.

Futures are modestly lower following disappointing Chinese economic data.

Chinese economic data joined recent U.S. data in hinting at a possible plateauing recovery and building inflation pressures.  Industrial Production rose 9.8% vs. (E) 10.0% while Retail Sales gained 17.7% vs. (E) 25%.  Housing Prices, meanwhile, rose 0.48% vs. (E) 0.41%.

Today the Empire Manufacturing Survey (E: 25) is the key report and markets will want to see solid data and stable prices indices.  We also get the Housing Market Index (E: 83) but that shouldn’t move markets.

From a Fed standpoint, Clarida (10:05 am ET) is the headliner today while Bostic (10:00 a.m. ET) will also provide comments.

Tom Essaye Quoted in Barron’s on May 14, 2021

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“Futures are moderately higher on momentum from Thursday’s rebound combined with a drop in industrial metals’ prices…” writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Technical Update (Levels to Watch)

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What’s in Today’s Report:

  • Technical Update – Levels to Watch

Futures are moderately higher on momentum from Thursday’s rebound combined with a drop in industrial metals’ prices, which is helping to ease some anxiety on inflation.

Iron ore prices dropped sharply overnight as Chinese officials stated they would take measures to curb price increases in various industrial metals and that headline is pushing back on the “surging inflation” narrative (although it doesn’t change the inflation outlook).

There was no notable economic data overnight nor any important central bank speak (outside of the China metals news it was a quiet night).

Today we get several notable economic reports including Retail Sales (E: 1.0%), Industrial Production (E: 1.2%), and Consumer Sentiment (E: 90.3).  In general, the stronger the better for these reports but we’ll be watching the inflation expectations component of the Consumer Sentiment Index – if it runs “hot” expect a headwind on stocks.  There’s also one Fed speaker, Kaplan (1:00 p.m. ET), but he shouldn’t move markets.

Was the Strong CPI Report A Bearish Gamechanger?

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What’s in Today’s Report:

  • Was the Strong CPI Report a Bearish Gamechanger?
  • Inflation Hedge Part 2:  Natural Resource Stock ETFs
  • EIA and Oil Market Update

Futures are modestly lower mostly on momentum from Wednesday’s drop following a generally quiet night.

There was no new inflation news overnight, but investors are cautious ahead of the PPI report this morning, which should be similarly strong to yesterday’s CPI report.

Bitcoin and the entire crypto-currency space is getting hit hard after Tesla (TSLA) announced it would no longer accept Bitcoin as a form of payment and that’s weighing on some of the momentum parts of the market.

Looking forward to today, the key number will be PPI.  Expectations for PPI are 0.3% m/m and 5.9% y/y but if the numbers come in much stronger expect that to send yields higher and to hit stocks, at least temporarily.

The other notable number this morning is Jobless Claims (E: 475K) although that will start to fade a bit in importance as the market views the issues in the labor market as supply based (people not choosing to work) rather than demand based (people not being able to work).

There are also three Fed speakers today Barkin (10:00 a.m. ET), Waller (1:00 p.m. ET), Bullard (4:00 p.m. ET), and any commentary on inflation will be closely watched.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on May 11, 2021

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Gold pulls back from a 3-month high to mark first loss in 5 sessions

On the other hand, “the threat of stagflation continues to emerge as an underlying market theme, and that is supportive of gold for one main reason…” analysts at Sevens Report Research, wrote in Tuesday’s newsletter. Click here to read the full article.

Gold Bars