Global Economic Stimulus Playbook (Repeat of ’08-’14?)

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What’s in Today’s Report:

  • Is This Just a Big Replay of ’08-’14?

S&P futures are up well over 1% this morning as newly proposed economic stimulus plans in Europe and Japan, which total nearly $2T, are offsetting U.S.-China tensions.

The European Commission announced plans for another 750B euro economic recovery package overnight while Japan is planning $1.1T  in new stimulus to help stabilize growth.

Hong Kong protests due to China’s proposed national security laws weighed on Asian shares overnight and stoked concerns of rising tensions between the U.S. and China.

Today, there are no notable economic reports due to be released in the U.S. and just one Fed speaker to watch midday: Bullard (12:30 p.m. ET).

There is a 5-Yr Treasury Note Auction at 1:00 p.m. ET which could move rates, impact the curve and ultimately affect stocks but the market’s primary focus will remain on coronavirus treatment/vaccine development, economic reopening progress, and simmering U.S.-China trade tensions.

Are There New Tailwinds for Stocks?

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What’s in Today’s Report:

  • Are There New Tailwinds for Stocks?
  • Weekly Economic Cheat Sheet

U.S. equity futures are trading higher with global markets today amid investor optimism for reopenings and reports of further progress on COVID-19 treatments/vaccines.

Novavax was the latest company to begin human testing for its coronavirus vaccine over the weekend which is helping drive risk-on money flows this morning.

Today, there are several economic reports due to be released: S&P Corelogic Case-Shiller HPI (E: 0.3%), FHFA House Price Index (E: 0.6%), Consumer Confidence (E: 88.3), and New Home Sales (E: 495K).

Additionally, there is one Fed official scheduled to speak: Kashkari (1:00 p.m. ET) and the Treasury will hold a 2-Yr T-Note auction at 1:00 p.m. ET.

Beyond those potential catalysts, investor focus will remain on the economic reopening process around the globe and any additional information regarding potential COVID-19 vaccines or treatments.

Sevens Report Co-Editor Tyler Richey Quoted in Seeking Alpha on May 19, 2020

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Futures prices traded in contango last month, when the May contract settled negative ahead of its expiration, but the move into backwardation “shows that there is both strong demand for physical crude…” says Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil rig

Tom Essaye Quoted in Financial Post on May 19, 2020

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“A vaccine would be a bullish game changer, and stocks reacted accordingly,” Tom Essaye, author of “The Sevens Report” newsletter, wrote in a note. “But one day doesn’t make a sustainable…” Click here to read the full article.

Tom Essaye

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on May 19, 2020

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Futures prices traded in contango last month, when the May contract settled at a negative price on April 20, a day ahead of its expiration. “There was limited refinery demand and clearly…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on May 19, 2020

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“A vaccine would be a bullish game changer, and stocks reacted accordingly,” Tom Essaye, author of “The Sevens Report” newsletter, wrote in a note. “But one day doesn’t make a…” Click here to read the full article.

The Yield Curve and Recessions

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What’s in Today’s Report:

  • Yield Curve Update: Historically Speaking

U.S. equity futures are up more than 1% this morning, recovering the bulk of yesterday’s late afternoon declines amid continued hopes for a looming economic recovery.

Economically, Japanese Machine Orders for March declined -0.4% after rising 2.3% in February while inflation statistics in Europe were on the soft side, but none of the data materially moved markets overnight.

There are no notable economic reports today however the Treasury will hold a 20-Year Bond Auction at 1:00 p.m. ET, and as we have seen so far this year, any resulting move in yields (specifically the curve) could influence equity market trading.

There are also a few potential Fed catalysts today with two speakers on the schedule: Bostic (10:00 a.m. ET) and Bullard (12:00 p.m. ET), and the release of the FOMC meeting minutes at 2:00 p.m. ET.

The market remains primarily focused on the still very fluid coronavirus outbreak situation and economic reopening process, as well as any further developments about vaccines or treatments. Any positive headlines, specifically regarding the latter, could help power stocks to fresh multi-week highs today, while contrarily, negative news could see a repeat of yesterday’s late day selloff.

A Bullish Gamechanger?

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What’s in Today’s Report:

  • What Would Be a Bullish Gamechanger?

Futures are modestly lower this morning as yesterday’s sizeable stock market gains are digested amid simmering tensions between the U.S. and China after President Trump threatened to cut funding to the WHO late yesterday.

Economically, the German ZEW Survey’s Current Conditions Index fell to -93.5 vs. (E) -87.8 while Business Expectations firmed to 51.0 vs. (E) 33.5, underscoring both the economic fallout from the COVID-19 pandemic as well as the broad hopes for a swift recovery.

Today, there is one economic report due out: Housing Starts (E: 968K) but investor focus will be on Capitol Hill where Fed Chair Powell and Secretary Mnuchin are set to testify at 10:00 a.m. ET regarding the stimulus efforts to support the economy in the aftermath of the coronavirus pandemic.

Later in the afternoon, there is one other Fed speaker to watch: Rosengren (2:00 p.m. ET) but things should be relatively quiet following the Powell and Mnuchin’s testimony this morning.

Tom Essaye Quoted in Benzinga on May 15, 2020

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While that phrase may sound pretty scary to investors, Sevens Report’s Tom Essaye said Thursday stock prices may hold up much better in 2020 than during the previous two extended U.S. recessions.

“That’s $2.6 billion in two months, compared to $3.5 trillion in six years! And, the Fed isn’t done, either, as the balance sheet will certainly eclipse $7 trillion soon. Point being, this is very, very…” Essaye said. Click here to read the full article.

Benzinga_5.18.20

Is the Easy Part of the Rally Behind Us?

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What’s in Today’s Report:

  • Is the “Easy” Part of the Rally Behind Us?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet:  Global PMIs Thursday will be very important.

Futures are sharply higher as economic reopening continued across the U.S. over the weekend, with more states announcing reopening and easing social restrictions.

The reopening headlines over the weekend were numerous, but there wasn’t any new news that implied the economic might return to normal sooner than expected, and beyond the short term, when the economy returns to normal remains the key unknown for this market.

Fed Chair Powell gave an interview on 60 Minutes that was cited as “positive” but he didn’t say anything new that wasn’t already communicated in his comments last week.

Economic data was sparse and isn’t moving markets.

Today there are no economic reports and no market moving Fed speakers, so headlines on economic reopening, U.S./China relations and the coronavirus should move markets.