Stimulus Winners and Losers

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What’s in Today’s Report:

  • Stimulus Winners and Losers
  • Empire State Manufacturing Survey Takeaways

Stock futures are higher with global shares today as investors look ahead to the Fed following upbeat economic data o/n while a stimulus deal has still not been reached.

Economically, EU Flash Composite PMIs came in better than expected with the German Manufacturing and the French Services components both handily beating expectations, pointing to still healthy and resilient recovery.

Today, there are a few economic reports to watch in the U.S. session. In order of importance they are: Retail Sales (E: -0.3%), PMI Composite Flash (E: 57.4), Business Inventories (E: 0.6%), and Housing Market Index (E: 88.0).

After the morning data, focus will turn to the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET, followed by Fed Chair Powell’s Press Conference at 2:30 p.m. ET.

With investors keenly watching the Fed for clues about the future or QE and ZIRP today, ongoing negotiations for a stimulus package on Capitol Hill will remain a key influence to watch as well, as a deal is largely priced in with the S&P trading just shy of record highs and any disappointment regarding the next round of coronavirus aid could result in a significant uptick in volatility.

Tom Essaye Quoted in Euro Exchange Rate News on December 14, 2020

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Tom Essaye, the founder of the Sevens Report, was more cautious, however, commenting:

‘At this point, markets have priced in and are expecting stimulus near term, so if that really does not happen…’ Click here to read the full article.

Sevens Report Research Quoted in FXEmpire.com on December 14, 2020

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“At this point, markets have priced in and are expecting stimulus near term, so if that really does not happen by the…” for risk assets, wrote Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Sevens Report Quoted in MarketWatch on December 14, 2020

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The bottom line is that the market does expect something more” from the central bank, analysts at Sevens Report Research wrote in Monday’s latest newsletter. That doesn’t mean more quantitative easing, but “it does mean some sort…” Click here to read the full article.

FOMC Wildcard to Watch

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What’s in Today’s Report:

  • FOMC Meeting Preview
  • VIX Chart: Yearend Volatility Remains a Distinct Possibility

U.S. futures are trading tentatively higher amid renewed stimulus optimism and mostly upbeat economic data while the COVID-19 pandemic continues to hit grim milestones.

Lawmakers continue to negotiate the $908B stimulus package but multiple sticking points remain (including the total size of the bill and lack of stimulus payments), preventing a deal for now.

Among other headlines, COVID-19 deaths have topped 300K in the U.S. but vaccine optimism is helping offset the grim statistics while Chinese economic data firmed in November, as expected.

Today, there are a few economic reports to watch: Empire State Manufacturing Index (E: 5.8), Import & Export Prices (E: 0.3%, 0.3%), and Industrial Production (E: 0.3%) which could move markets, especially depending on sentiment towards a stimulus deal.

Finally, the December FOMC meeting begins today but with the announcement and press conference coming tomorrow, market focus will largely remain on the ongoing stimulus negotiations.

Are Investors Too Complacent?

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What’s in Today’s Report:

  • Are Investors Too Complacent Right Now?
  • Weekly Market Preview:  Stimulus and an Important Fed Meeting
  • Weekly Economic Cheat Sheet:  Is the Recovery Slowing?

Futures are modestly higher following reports that the stimulus bill might be broken up into two parts (with the larger part passing before year-end).

Congress is going to try and pass two stimulus bills, the first a $750 billion-ish relief bill, and after that, a 200 billion-ish bill that deals with stickier issues of state funding and COVID liability.  The market is rallying on this news because it increases the chances of near-term stimulus (although even if this happens, and it’s not a done deal, it’s already priced into stocks).

Economic data was sparse as EU Industrial Production was in-line with estimates at 2.1% vs. (E) 2.0%.

Today there are no economic reports and no Fed speakers so stimulus headlines will drive trading.  The key will be Pelosi as she’s not been in favor of a two-part bill before, so her support (or not) will be critical to the chances of stimulus actually happening.  Bottom line, if she’s for it, expect a further rally.  If she’s not, expect stocks to turn negative on the news.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on December 11, 2020

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Overall, the fundamental backdrop for the oil market is “mixed with ominous coronavirus trends being offset by vaccine optimism, while faltering economic growth…” said analysts in the latest Sevens Report Research newsletter. Click here to read the full article.

Tom Essaye Quoted in CNBC on December 11, 2020

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“At this point, markets have priced in and are expecting stimulus near term, so if that really does not…” for risk assets, wrote Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on December 8, 2020

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Semiconductor giant Micron’s (MU) upbeat guidance last week for its most recent quarter was a buy signal on tech stocks, Sevens Report Research founder Tom Essaye says.

“Semiconductors have been on fire and not just from momentum…” Essaye explained. Click here to read to read the full article.

Tom Essaye Interviewed with Yahoo Finance on December 7, 2020

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Stocks regressed from record highs Monday as traders took a pause from an end-of-year rally. The Dow fell more than 100 points, or 0.5%, but was still held above the 30,000 level the index first exceeded in late November. Sevens Report Research Founder Tom Essaye joined Adam Shapiro and Seana Smith on Yahoo Finance Live to discuss. Click here to watch the the full interview.