Tom Essaye Interviewed with Yahoo Finance on November 8, 2019
Tom Essaye joins Yahoo Finance’s Brian Sozzi, Alexis Christoforous and Jared Blikre to discuss the latest market action on The First Trade. Click here to watch the full interview.
What’s Priced Into Stocks Now?
What’s in Today’s Report:
- What’s Priced into Stocks At These Levels?
- Weekly Market Preview: More Trade Updates Coming
- Weekly Economic Cheat Sheet: Key Data on Friday
Futures are modestly lower this morning thanks to disappointing U.S./China trade news and underwhelming economic data.
President Trump threw more cold water on the idea of existing tariff reduction over the weekend saying that the tariff reduction story was “over-reported.”
Economically, Chinese New Yuan Loans rose 12.4% vs. (E) 12.5%, while British IP & Q3 GDP slightly missed estimates.
Today should be relatively quiet as there are no economic reports today and no Fed speakers due to the Veteran’s Day holiday. The bond market is also closed.
However, any trade news/commentary could cause larger than normal volatility given expected holiday trading volumes, so we’ll be watching the tape closely.
Tom Essaye Quoted in Stock Investor on November 6, 2019
Tom Essaye (TE): Buybacks have been a factor in the market over the past couple of years. Basically, buybacks occur when a company uses cash (either its own or borrowed money) to purchase shares of stock in the open market. A company then essentially “retires” that stock, thereby taking it out of circulation, which reduces or “floats” the total number of shares outstanding…
Click here to read the full article.
Tom Essaye Quoted in MarketWatch on November 7, 2019
“It’s a fair critique of corporate earnings to say that earnings “growth” in 2019 is a bit deceptive as the value is being financially engineered by corporate finance departments, not organic, core-business growth. Companies aren’t making any more money than…” wrote Tom Essaye, president of the Sevens Report, in a Wednesday note to clients. Click here to read the full article.
Tom Essaye Quoted in NBC News on November 7, 2019
“The market is already partially pricing in removal of the tariffs that were implemented on Sept. 1. That also means the risk is of disappointment is now real on an actual phase-one announcement, because if all we get is…” said Tom Essaye, founder of The Sevens Report, in a note to clients. Click here to read the full article.
Bond Yield Breakout
What’s in Today’s Report:
- Did Global Bond Yields Finally Breakout?
Futures are slightly lower following a quiet night as markets digest Thursday’s “tariff reduction” headlines while economic data continued to show mild improvement. There was no new trade news overnight.
Economically, Chinese and German exports slightly beat estimates (Chinese exports down –0.9% vs. (E) -3.9%), German exports up 1.5% vs. (E) 0.3%) in another sign that global growth may be stabilizing.
Today there is just one economic report, Consumer Sentiment (E 96.0) and three Fed speakers, Daly (11:45 a.m. ET), Williams (8:00 p.m. ET) and Brainard (8:45 p.m. ET) but none of that should move markets as U.S./China trade is totally dominating the market narrative right now.
Given that, any confirmation of immediate tariff reduction with a phase one agreement will extend the rally in stocks and yields, while any contradiction of yesterday’s tariff reduction headlines will weigh on markets.
Tom Essaye Quoted in MarketWatch on November 5, 2019
“Right now, markets are strong, and momentum is clearly higher, as the market is seizing on any positive trade utterance or economic data point…” wrote Tom Essaye, president of the Sevens Report, in a Monday note to clients. Click here to read the full article.
Tom Essaye Quoted in MarketWatch on November 6, 2019
Whether or not the performance of these cyclical stocks trading at cheap valuations can continue to lead the market depends on whether faith in an accelerating economy is correct. Tom Essaye, president of the Sevens Report, is not ready to endorse this view just yet. “In the last few days there have been hints of stabilization in the growth data, but just hints…” he wrote in a Tuesday note to clients. Click here to read the full article.
U.S./China Trade Update (What’s Priced In Now?)
What’s in Today’s Report:
- U.S./China Trade Update: What’s Priced in Now?
- One More Important Stat on Corporate Buybacks
Futures are modestly higher as the Chinese Ministry of Commerce said the U.S. and China have agreed to existing tariff reduction in “phases.”
There were no further details on the timing or conditions that would accompany tariff reduction, however, and that’s tempering the rally somewhat.
Economically, German Industrial Production declined but slightly beat estimates (-0.6% vs. (E) -0.7%).
Today the only notable economic reports are Jobless Claims (E: 220K) while we also have two Fed speakers: Kaplan (1:05 p.m. ET), Bostic (7:10 p.m. ET), but none of that should move markets.
Instead, the focus will remain on the U.S./China trade, and if the U.S. confirms this “tariff reduction in phases” statement by the Chinese, then we could see the S&P 500 make a run at 3100.
How Corporate Buybacks Are Skewing EPS Statistics
What’s in Today’s Report:
- How Share Buybacks Are Skewing EPS Statistics
S&P futures are flat after a quiet night of mixed trading overseas as investors digest mostly positive economic data.
The Japanese PMI Composite was the only report to miss overnight as German Manufacturers’ Orders jumped 1.3% vs. (E) 0.2% while the EU Composite PMI edged up to 50.6 vs. (E) 50.2 and EU Retail Sales rose 3.1% vs. (E) 2.7% year over year.
On balance, the data was slightly hawkish from a monetary policy standpoint but is importantly easing global growth concerns.
Today, there is one economic report to watch: Productivity and Costs (E: 1.1%, 2.2%) and three Fed officials are scheduled to speak: Evans (8:00 a.m. ET), Williams (9:30 a.m. and 6:30 p.m. ET), and Harker (3:15 p.m. ET).
With limited catalysts on the calendar, the market will likely remain focused on the trade war and any incremental developments, negative or positive, will move stocks today.