Commodities Update and Powell Preview

/in /by

What’s in Today’s Report:

  • Powell Testimony Preview
  • Commodity Bears and a Gold Bull

Stock futures and most international equity markets are higher today as the spread of the coronavirus reportedly slowed to a two week low in China and investors looked ahead to Powell’s testimony before Congress today.

Economically, the NFIB Small Business Optimism Index rose 1.6 points to 104.3 vs. (E) 103.2 in January underscoring continued positive sentiment among U.S. business owners.

Today, there is just one economic report: JOLTS (E: 6.775M) which will leave investors primarily focused on Powell’s Testimony before the House Financial Services Committee at 10:00 a.m. ET and it will be important for the markets that he remains decidedly dovish with his commentary.

In addition to Powell, both Quarles (12:15 p.m. ET) and Bullard (1:30 p.m. ET) will speak in the early afternoon, Wall Street time.

Lastly, there is a 3-Yr Note Auction at 1:00 p.m. today and the results could affect the yield curve (specifically the 10s-2s) and as has been the case over the last 9 months, any significant moves in the curve could impact equity markets.

Tom Essaye Quoted in Unseen Opportunity on February 7, 2020

/in /by

But that hasn’t exactly been reflected in this morning’s trading activity. Some analysts, like The Sevens Report founder Tom Essaye, believe that the jobs gain was already priced-in by automated trading firms.

“I don’t think it was anything surprising because we had very good ADP number and good jobless…” Essaye said. Click here to read the full article.

Health Technician

Tom Essaye Quoted in CNBC on February 7, 2020

/in /by

Worried Healthcare Technician

“I don’t think it was anything surprising because we had very good ADP number and good jobless claims. So people were expecting a good number. Overall, what the jobs number is saying about the economy is what we already know…” said Tom Essaye. Click here to read the full article.

How Far Are Investors Willing to Stretch?

/in /by

What’s in Today’s Report:

  • How Far Are Investors Willing to Stretch?
  • Weekly Market Preview:  Wuhan virus updates, Fed testimony.
  • Weekly Economic Cheat Sheet:  An Important Look at Consumer Spending This Week

Futures are slightly higher following a quiet weekend of news.

Wuhan virus related fears receded further over the weekend as the virus continued to spread, but at a slower pace than before and experts think the transmission rate of the disease has peaked.  Additionally, factories in China will gradually reopen this week, potentially limiting any economic fallout.

Economic data was sparse overnight although Chinese CPI rose 5.4% vs. (E) 4.9%, which should reduce hopes of any additional, large scale stimulus from Chinese authorities.

Today there are no economic reports and no Fed speakers, so focus will remain on any Wuhan virus headlines.  The key right now is the factory re-openings in China.  As long as there isn’t any news that implies factory re-openings will be delayed beyond this week (and in doing so put more pressure on the economy) than Wuhan virus related fears should continue to decline.

Tyler Richey, Co-editor at Sevens Report Research Quoted in MarketWatch on February 6th, 2020

/in /by

“While stocks are hitting new all-time highs and bond yields are moving…investors remain wary of the broader macroeconomic backdrop for the financial markets, and gold is still a favorite safe haven destination…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Jobs Report Preview

/in /by

What’s in Today’s Report:

  • Jobs Report Preview
  • Why Have Stocks Rallied?

Global equities rallied overnight and stock futures are trading higher today after China reduced tariffs on $75B worth of U.S. goods, spurring optimism for a “phase two” trade deal and further easing concerns about the coronavirus outbreak’s impact on the global economy.

Outside of trade news, OPEC+ has agreed to cut their collective oil output target by 600K b/d to help support oil prices which crashed into a bear market this week on Wuhan coronavirus fears.

Today, there are two economic reports to watch: Jobless Claims (E: 215K) and Productivity and Costs (E: 1.5%, 1.2%) while two Fed officials will speak: Kaplan (9:15 a.m. ET) and Quarles (7:15 p.m. ET).

Additionally, there are a few earnings releases due out including: TWTR ($0.28), BMY ($0.88) and UBER (-$0.68), however given the latest trade-war news, the markets will remain largely focused on China’s decision to cut tariffs and any new developments regarding the coronavirus outbreak.

Market Multiple Update

/in /by

What’s in Today’s Report:

  • Market Multiple Update

U.S. stock futures and global equities are solidly higher this morning thanks to emerging reports of breakthrough treatments for the coronavirus outbreak however details on the potential “cure” are limited at this time.

Economic data was mixed overnight as global Composite PMI data modestly topped expectations but Eurozone Retail Sales disappointed in December (-1.6% vs. E: -0.4%).

Today, there are three economic reports to watch starting with the first release of “jobs week,” the ADP Employment Report (E: 154K) which will be followed by International Trade figures (E: -$48.1B) and the ISM Non-Manufacturing Index (E: 55.2).

There is also one Fed official scheduled to speak after the close: Brainard (4:10 p.m. ET) and a few key earnings releases to watch: MRK ($1.14), GM ($0.01), QCOM ($0.85), and MET ($1.40).

As long as there are no major surprises from those potential catalysts, the market is likely to remain focused on the coronavirus outbreak and any emerging details regarding the potential breakthroughs in treatment that were reported overnight. Given the lack of specifics and the near-term overbought status of stocks here, the risk of a “sell the news” reaction does exist today.

Tom Essaye Quoted in Yahoo Finance on February 3, 2020

/in /by

“Market sentiment towards Sanders has shifted lately. Two weeks ago, his surging popularity was interpreted as a negative, because many of his policies are not stock market friendly. However, now the market’s opinion on…” says Sevens Report Research founder Tom Essaye. Click here to read the full article.

Jerome Powell

Political Update

/in /by

What’s in Today’s Report:

  • Political Update
  • S&P 500: Market Multiples Price Chart

U.S. stock futures are up over 1% this morning, tracking solid gains in international markets after China’s central bank initiated another round of emergency stimulus overnight.

The PBOC has injected over $240B into the financial system this week to ease the economic impact of the coronavirus outbreak.

Politically, the official results for the Iowa caucuses have been delayed due to technical issues with voting apps but sources say that the results should be released later today.

Looking into today’s session, there are two lesser followed economic data points due out: Motor Vehicle Sales (E: 16.8MM) and Factory Orders (E: 1.2%) while no Fed officials are scheduled to speak.

That will leave focus on the delayed results from the Iowa caucuses as well as earnings from several big names including: DIS ($1.43), F ($0.17), STX ($2.72), ALL ($3.12), PRU ($2.01).

Lastly, the market remains sensitive to the coronavirus outbreak and any significantly negative headlines regarding the spread of the virus or a rising mortality rate could weigh on stocks again.

Tom Essaye Quoted in Yahoo Finance on January 31, 2020

/in /by

“I wouldn’t be surprised if [IBM] is looking at Microsoft and hoping the same thing happens here,” said Sevens Report Research founder Tom Essaye on Yahoo Finance’s The First Trade. Click here to read the full article.

Ginni Rometty, President and CEO of IBM