An Important Chart (Valuation & Asset Inflation)

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What’s in Today’s Report:

  • What Buffet’s Favorite Measure of Valuation Can Tell Us About Asset Inflation
  • FOMC Minutes:  Why They Weren’t “Hawkish”
  • EIA:  Oil Market Outlook

Futures are marginally lower mostly on continued momentum from Wednesday’s late-day market decline.

It was a quiet night of news and “Fed disappointment” is the most used excuse for the decline in stocks, although the FOMC Minutes largely met expectations (more on that in the report).

Stimulus chatter about a “skinny” stimulus bill (worth $500/bln) continues to grow.  If that becomes reality, it will be a big disappointment (remember markets have priced in a $1.5T bill).

Today the key reports will be Jobless Claims (E: 963K) and Philadelphia Fed Survey (E: 21.5), and the point here is clear:  Markets will want to see continued improvement in the data in August, reflecting the fact that the loss of stimulus isn’t causing the economic recovery to slow or pause.   Finally, there’s one Fed speaker today, Daly (1:00 p.m. ET), but he shouldn’t move markets.

Earnings Season Takeaways in the COVID Era

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What’s in Today’s Report:

  • In the Era of COVID, How Can We Use Earnings to Generate Market Insights?

Stock futures are trading modestly higher this morning as investors digest yesterday’s new record highs in the S&P after a mostly quiet night of news.

Traders remain optimistic for a stimulus deal however there were no positive developments overnight while economic data was sparse and did not move markets.

Looking into today’s session, there are no economic reports to watch and the calendar is fairly quiet in the morning.

Potential market catalysts do pick up in the afternoon as the Treasury will hold a 20-Yr Bond auction at 1:00 p.m. ET which has the potential to move rates, the yield curve and ultimately impact equity markets.

Later in the afternoon, the minutes from the most recent Fed meeting will be released at 2:00 p.m. ET before Richmond Fed President Barkin speaks at 3:00 p.m. ET.

The market’s primary focus right now however remains the stimulus package and with rising chatter about potential concessions in the front half of the week, the prospects for a deal have improved. And any additional positive news regarding a stimulus deal should help the market continue to grind to new record levels.

Tom Essaye Quoted in KITV Island News on August 18, 2020

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“There are clearly a lot of similarities between the market dynamics in the late 90s and current market dynamics. And, for those of us that…” said Tom Essaye, editor of The Sevens Report investing newsletter. Click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on August 17, 2020

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Tom Essaye, Sevens Report Research Founder, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what’s moving the markets on Monday morning. Click here to watch the full interview.

Why the Post Office Drama Matters to Markets

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What’s in Today’s Report:

  • Why the Post Office Drama Matters to Markets
  • Empire State Manufacturing Survey Takeaways

S&P 500 futures are slightly higher, trading within 10 points of their record high this morning after a mostly quiet night of news.

U.S.-China tensions remain elevated following the Commerce Department’s new tighter restrictions on Chinese telecom giant, Huawei Technologies, but for now the impact on the broad markets has been limited.

There were no notable economic reports overnight and no material developments regarding the next coronavirus relief bill.

Today is lining up to be another relatively slow day in the markets as there is only one economic report: Housing Starts (E: 1.240M) and there are no Fed officials scheduled to speak. The quiet calendar will leave investors largely focused on the status of the stimulus bill negotiations in Congress which remain in a stalemate.

Tom Essaye Quoted in Unseen Opportunity on August 13, 2020

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“The market still wants, and very much expects, an actual stimulus bill to be signed. Looking forward, stimulus bill negotiations will continue, but [President Trump’s] executive orders (combined with recently solid data) likely reduce…” wrote Sevens Report editor Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Benzinga on August 14, 2020

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Tech Bubble 2.0? Unfortunately, Sevens Report Research founder Tom Essaye said Friday there are at least five similarities between today’s market and the dot-com bubble:

  1. Essaye said the sideways trend in the yield curve in the past year closely resembles the yield curve’s behavior in the late 1990s prior to the bursting of the tech bubble…Click here to read the full article.

Tom Essaye Quoted in Forbes on August 13, 2020

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Investors are still expecting another stimulus package will eventually get passed: “The market still wants, and very much expects, an actual stimulus bill to be signed…” according to Tom Essaye, editor of the Sevens Report. Click here to read the full article.

Why Doesn’t the Market Care There’s No Stimulus?

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What’s in Today’s Report:

  • Why Doesn’t This Market Care That There’s No Stimulus?
  • Weekly Market Preview:  Watching Washington and the Data
  • Weekly Economic Cheat Sheet:  August Flash PMIs on Friday – Can the Data Hold Up?

Futures are marginally higher following some potentially positive headlines from Washington over the weekend.

Speaker Pelosi is calling the House back into session to address Postal Service funding (this was a major sticking point in the larger stimulus bill).  The hope is that if there’s a compromise on that issue, the larger stimulus bill becomes much easier to pass.

There was no notable economic data overnight.

Today’s focus will be on Washington and specifically if there’s any hint that negotiations may re-open on the larger stimulus bill.  If that’s the case, then we’ll likely see new all-time highs today in the S&P 500.

Economically, the Empire Manufacturing Index (E: 17.0) is the key report today, and the market will want to see continued progress from July (especially because the stimulus payments have stopped).  We also get the  Housing Market Index (E: 72), although that shouldn’t move markets.

Tom Essaye Quoted in FinTech Zoom on August 13, 2020

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“The market nonetheless needs, and really a lot expects, a precise stimulus invoice to be signed…” wrote Tom Essaye, editor of the Sevens Report. Click here to read the full article.