The Four Phases of Fiscal Stimulus Explained

/in /by

What’s in Today’s Report:

  • The Four Phases of Fiscal Stimulus Explained
  • Weekly EIA Data Analysis and Oil Update

Stock futures are slightly lower this morning following a risk-off night of trade thanks to ongoing concerns about rising COVID-19 infections in the U.S., Europe, and China.

There were no market moving economic reports overnight however the 7-day moving average of daily new cases of coronavirus in the U.S. reached a one-month high yesterday which is pressuring risk assets this morning.

It is lining up to be a busy morning as the BOE Meeting Announcement will hit at the top of the 7 o’clock hour (ET), before U.S. economic data kicks off at 8:30 a.m. ET with: Jobless Claims (E: 1.220M) and the Philadelphia Fed Business Outlook Survey (E: -22.7), and then after the bell, Leading Indicators (E: 1.7%) will be released.

There are also three Fed officials scheduled to speak today: Kashkari (E: 11:00 p.m. ET), Mester (12:15 p.m. ET), and Daly (7:00 p.m. ET) but investors have been largely focused on coronavirus headlines over the last 12-18 hours so any fresh developments on testing, new case trends, or treatments will likely move markets.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on June 15, 2020

/in /by

“Looking ahead, we expect some consolidation in oil prices here as economic data has been largely better than feared, while the future remains very uncertain regarding the prospects of a ‘second wave’ that could cripple the energy supply…” said Tyler Richey, co-editor at Sevens Report Research.

Oil Pipe line

Tom Essaye Quoted in Bloomberg on May 30, 2020

/in /by

Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, points to the years after the financial crisis, when a liquidity explosion led to surges in asset prices — from stocks to bonds, real estate and gold. “If past is prologue, the lesson is that we need to admit that this amount of liquidity means that asset inflation…” he wrote to clients. Click here to read the full article.

$100 bills

Is There a “Second Wave” Coming?

/in /by

What’s in Today’s Report:

  • Is There a Second Wave Coming? Let’s Look At the Data

Stock futures are rising with global equity markets amid positive developments on U.S.-China trade, rising hopes for a $1T infrastructure spending package in the U.S. and dovish details regarding the Fed’s bond-buying programs.

Economically, the German ZEW Survey for the month of June was better than expected helping lift EU shares.

Today, investors will be focused on economic data early with Retail Sales (E: 7.5%), Industrial Production (E: 2.9%), Business Inventories (E: -0.5%), and the Housing Market Index (E: 44.0) all due out before the open or shortly after the bell.

From there, attention will shift to Fed Chair Powell’s semiannual testimony before Congress which will begin at 10:00 a.m. ET as investors look for further clues regarding current stimulus programs and the Fed’s outlook for the economy in the coming quarters.

Tom Essaye Quoted in Forbes on June 11, 2020

/in /by

“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality,” Tom Essaye, founder of the Sevens Report, told CNBC. Click here to read the full article.

Tom Essaye Quoted in CNBC on June 11, 2020

/in /by
Tom Essaye, founder of the Sevens Report, on what triggered the sell-off

“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality. Just that reminder combined with a lot of the second wave…” Essaye told CNBC. —Li 

Click here to read the full article.

What Comes Next? Three Catalysts to Watch

/in /by

What’s in Today’s Report:

  • What Comes Next?  Three Catalysts To Watch
  • Weekly Market Preview:  Fed Speak and Important Data This Week
  • Weekly Economic Cheat Sheet:  Empire and Philly Manufacturing Surveys This Week (Both June Data)

Futures are sharply lower on rising coronavirus concerns, as cases continued to rise in the U.S. over the weekend.

Certain states (CA/TX/FL/AZ) continue to see an acceleration in new coronavirus cases, although national new cases remain around 20k (where they’ve been for weeks).

Chinese economic data was slightly disappointing as Industrial Production (4.4% vs. (E) 5%), Retail Sales (-2.8% vs. (E) -2.33%) and Fixed Asset Investment all missed expectations.

Today focus will be on that 3,002 low in the S&P 500 from Thursday.  If that’s broken, a run down towards 2900 becomes much more likely.  Economically, the June Empire Manufacturing Survey (E: 30) is the key number today because it is the first look at June data, and the market will want to see continued improvement from May.  There’s also one Fed speaker today, Kaplan (11:00 am E.T.), but he’s unlikely to move markets given Powell is speaking tomorrow.

What Does The Fed Decision Mean for the Rally?

/in /by

What’s in Today’s Report:

  • What Does the Fed Decision Mean for the Rally?
  • The Key Takeaway from Yesterday’s Fed Decision (It Wasn’t Positive)
  • EIA Analysis and Oil Update

Futures are sharply lower on follow through from the modest declines following yesterday’s FOMC decision.

If there’s a “reason” for the pullback it’s two-fold:  First, digestion of Powell’s depressing outlook on future growth and second, a potential rebound in coronavirus cases.

Regarding coronavirus, the number of new cases is not spiking, but it is accelerating, as it’s done for over a week.  Point being, there hasn’t been a recent spike in new cases over the past few days, the rise in cases has been occurring for over a week.  But, the news cycle is turning again and renewed media focus on the virus is weighing on sentiment.

Looking forward to today, the key number is Jobless Claims (E: 1.500M) and again we need to see this number 1) Continue to decline and 2) Beat expectations, especially in light of Powell’s caution on the economy.  Also, Continuing Claims needs to decline.  If jobless claims disappoint markets, the selling today will likely intensify.

Economic Breaker Panel: June Update

/in /by

What’s in Today’s Report:

  • Economic Breaker Panel: June Update
  • NFIB Small Business Optimism Index Takeaways

S&P futures wavered between gains and losses overnight amid mixed economic news and an uptick in new COVID-19 cases across parts of the U.S. while focus turns to the Fed.

In their latest update, the Paris-based OECD now expects a 6.0%-7.6% contraction in the global economy in 2020, the worst in 100 years.

Economically, both China’s CPI and PPI readings for May were well below estimates with the latter pointing to a concerning increase in deflationary pressures (-3.7% YoY) as a result of the coronavirus pandemic.

Looking into today’s session, there is one economic report due out ahead of the bell: CPI (E: 0.0%) before investors will look ahead to the FOMC Meeting Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) in the afternoon.

Specifically, the Fed’s new economic projections and any clarity on QE plans will be most closely watched items this afternoon and have the most potential to move markets into the close.

FOMC Preview

/in /by

What’s in Today’s Report:

  • FOMC Preview (Wildcard to Watch)
  • What Do Rising Treasury Yields Really Mean?

S&P 500 futures are down roughly 1% this morning tracking European shares lower after German trade data showed a much larger than anticipated drop in exports during the depths of the COVID-19 pandemic in April.

Eurozone GDP and the NFIB Small Business Optimism Index slightly beat expectations however German exports declined by the most on record in April, tumbling by -24.0% on the month which is weighing heavily on EU shares today.

Looking into today’s session, there are two lesser followed economic reports due to be released: April JOLTS (E: 5.750M) and Wholesale Trade (E: 0.4%) which are not likely to move markets while there are no Fed speakers as the June FOMC Meeting Begins today.

With tomorrow’s Fed announcement and Powell’s press conference coming into focus, it is possible we see a continued wave of profit taking today, especially given the disappointing economic data out of Europe, however a sense of “Fed paralysis” should keep the losses somewhat limited.