“The geopolitical fear bid supporting the gains in the energy markets in the front half of the week vanished much quicker than most analysts anticipated…” says Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
For investors, the wage number will be the key point in this report, said Tom Essaye, a former Merrill Lynch trader who founded the “Sevens Report” newsletter. Assuming annual pay gains hold around 3.1% and hiring is strong, stocks should rally: “The market will love it because…” he said. Click here to read the full article.
What’s in Today’s Report:
Futures are solidly higher again following another quiet night as momentum continues to push the market to fresh highs, ahead of the jobs report.
There was no new geopolitical news overnight and international focus has now turned to whether the Ukrainian flight was hit by an Iranian missile. That shift in focus is helping tensions to recede further.
Economic data was sparse as Japanese Household Spending missed estimates while Aussie Retail Sales beat expectations, but neither number is moving markets.
Today the key number is the Jobs Report, and expectations are as follows: Jobs 158K, UE Rate 3.5%, Wages 0.3%/3.1%. The key number is the wage data, but unless we see wages spike close to, or above 3.5% y/y, then the jobs report shouldn’t derail the rally.
What’s in Today’s Report:
Futures are modestly higher as U.S./Iran tensions continue to recede.
There was no new geopolitical news overnight, and the rockets that hit the “Green Zone” in Iraq into the closing bell on Wednesday were a small, isolated event. As such, futures are essentially recouping that late-day dip.
Economic data was again mixed as German IP was better than expected, while German exports missed estimates.
Today there is one notable economic reports, Jobless Claims (E: 219K), and markets will want to see a continued decline that effectively reverses the Thanksgiving spike.
There are also numerous Fed speakers today including, in order of importance, Clarida (8:00 a.m. ET), Williams (11:30 a.m. ET), Kashkari (9:30 a.m. ET), Barkin (12:45 p.m. ET), Evans (1:20 p.m. ET). Broadly, markets expect a continued reiteration of the message that the Fed isn’t raising rates until inflation is sustainably higher.
Tom Essaye interviewed with WPTV Channel 5 to discuss getting rid of your credit card debt in 2020. Click here to watch the full video.
The U.S. military action that killed Iran’s Maj. Gen. Qassem Soleimani last week “served as a reminder that the Trump administration is both unconventional and unpredictable, and that helped reintroduce the geopolitical fear bid that carried the oil market to multi-month highs this week,” Tyler Richey, co-editor at Sevens Report Research told MarketWatch on Tuesday. Click here to read the full article.
What’s in Today’s Report:
Global stocks plunged overnight on reports of an Iranian missile strike against U.S. military bases in Iraq. Risk assets have since recovered however as there were no U.S. casualties reported and Iran said the attacks “concluded” Tehran’s retaliation for the assassination of General Soleimani.
In Europe, German Manufacturers’ Orders were –1.3% vs. (E) 0.2% but the easing geopolitical tensions between the U.S. and Iran are supporting modest gains in EU markets.
Looking into today’s session, geopolitics will likely dominate trading but as long as tensions continue to ease between the U.S. and Iran, stocks will likely be able to trade with an upside bias.
As far as other catalysts go, there is one economic report to watch: ADP Employment Report (E: 157K), one Fed official scheduled to speak: Brainard (10:00 a.m. ET) and a 10-Yr T-Note Auction at 1:00 p.m. ET.
Tom Essaye, president of the Sevens Report, said in a Monday note to clients that the near 10% rally the S&P 500 pulled off in the fourth quarter of last year was driven by the idea that “the U.S.-China trade truce combined with global central bank easing (and specifically the Fed being very dovish) will result in a rebound in global growth…” Click here to read the full article.
What’s in Today’s Report:
Futures are drifting cautiously higher this morning while international markets rallied overnight thanks to more upbeat economic data amid a static geopolitical backdrop.
There were no material developments regarding tensions between the U.S. and Iran overnight.
Economically, a Eurozone inflation reading (HICP) met expectations for the month of December while EU Retail Sales rose 1.0% in November, topping estimates of 0.6%.
Today, there are three economic reports to watch: International Trade (E: -$43.9B), Factory Orders (E: -0.7%), and the ISM Non-Manufacturing Index (E: 54.5). No Fed officials are scheduled to speak.
As far as other catalysts go, the Treasury will hold a 3-Yr. Note Auction at 1:00 p.m. ET and the results could move bond yields and have an impact on the yield curve. And if the curve compresses further (it has narrowed by more than 10 basis points over the last week), it could begin to pressure stocks.
Lastly, tensions between the U.S. and Iran remain a major market focus right now and further escalation could also weigh on risk assets, however, no news is good news regarding the situation right now, so if things continue to calm down in the Middle East, stocks could continue to drift back towards all-time highs.
Veteran trader and Sevens Report Research founder Tom Essaye recently told Yahoo Finance that this kind of “short-term volatility is something we all have to get more used to.” Traders will find that the herd mentality of algorithms, coupled with their wild swings, will price many out of participating in the market entirely. Click here to read the full article.
