Tyler Richey, co-editor of the Sevens Report Quoted in MarketWatch

Gold erases weekly gain as prices drop after ECB decision

“A firming dollar and sharply rising bond yields” were also reasons why gold saw such a big drop Thursday. Gold rallied too far too fast on the dovish shift in the…” said Tyler Richey, co-editor of the Sevens Report. To read the full article click here.

Why QT Matters to This Market

What’s in Today’s Report:

  • Why QT Matters To This Market

Futures are flat as more reports of an impending U.S./China trade deal offset disappointing economic data.

Japanese & EU flash manufacturing PMIs both fell below 50 in February.  The Japanese PMI dropped to 48.5 while the EU reading fell to 49.2 (vs. (E) 50.4).

Multiple media outlets reported a U.S./China trade deal is almost done, but we don’t know if tariffs will be reduced.

Today focus will be on economic data as we get several potentially important reports.  They are, in order of importance:  Flash Composite PMI (E: 54.4), Philly Fed Mfg Index (E: 14.0), Durable Goods (E: 1.0%), Jobless Claims (E: 225k),  Existing Home Sales (E: 5.04M).

If the data is good, that will fuel a further rally towards 2800 in the S&P 500, although I don’t think good data today will be enough to get us through that level (it’ll take more dovish Fed commentary on the balance sheet to do that in the near term).

Technical Tipping Point

What’s in Today’s Report:

  • Technical Update – We’ve Reached the Tipping Point
  • Why Copper Really Rallied Yesterday

Futures are slightly lower and international markets were mixed overnight as investor focus is shifting to today’s release of the January FOMC Meeting Minutes.

Japanese Exports in January were worse than feared (-8.4% vs. E: -6.1%) while the British CBI Industrial Trends Survey was 6 vs. (E) -5 but neither release moved markets o/n.

There are no economic reports in the U.S. today however the European Commission releases Flash Consumer Confidence data for February (10:00 a.m. ET) and given the recent string of underwhelming EU data points, another bad number could weigh on EU (and to a lesser extend U.S.) stocks into the European close.

The big event today will be the release of the January FOMC Meeting Minutes at 2:00 p.m. ET. Investors will be looking for any further clues as to the Fed’s plans for the balance sheet as a dovish adjustment is one of the few potentially bullish catalysts left for this stock rally right now.

Other than the Fed, U.S.-China trade negotiations continue in Washington however a deal is largely priced in and the talks are now a risk to the market as any “bad news” regarding the trade war would likely hit stocks hard.

Valuation Update

What’s in Today’s Report:

  • Valuation Update – What Will Cause a Further Rally?
  • Weekly Market Preview
  • Updated Economic Outlook

Futures are modestly lower this morning as last week’s gains are digested following a quiet holiday weekend.

There were no US-China trade developments since Friday however negotiations are set to resume in Washington this week.

Economically, the British Labour Market Report largely met expectations while the headline to the German ZEW Survey for February fell to a more than 4-year low, underscoring analysts concerns about German growth expectations.

Looking ahead to the U.S. session today, there is one Fed speaker ahead of the open: Mester (8:50 a.m. ET) and one economic report due out in the first hour of trade: Housing Market Index (E: 59.0).

The market’s main focus will continue to be U.S. – China trade negotiations as a successful deal or at the very least extension to the next tariff deadline (March 1st) has largely been priced into stocks at current levels, so any renewed tensions could hit stocks, potentially hard, in the coming sessions.

Tom Essaye quoted in CNBC

Sevens Report’s Tom Essaye quoted in CNBC on February 13, 2019.

“Markets always assumed the March 1 trade deadline was flexible, but this just confirmed it. Bottom line, the fundamentals are roughly balanced right now as there is…” Click here to read the full article.

Time to Chase Stocks? Not So Fast

What’s in Today’s Report:

  • Time to Chase Stocks? Not So Fast.

Money flows were risk-on overnight thanks to continued trade-war optimism but stock futures are off the highs following more soft economic data overseas.

Trump said he would push back the March 1st tariff deadline, which was previously considered a “hard date,” if there is “good progress” towards a trade deal at that time while President Xi is now expected to attend talks on Friday. Both are incremental positives for the prospects of a successful deal.

Economic data out overnight was less optimistic however. EU Industrial Production fell –4.2% vs. (E) -3.2% Y/Y in December which is just the latest release fueling concerns about a global economic slowdown.

Today, the January CPI Report (E: 0.1%) will be watched closely ahead of the open while there are several Fed speakers before lunch: Bostic (7:15 a.m. ET), Mester (8:50 a.m. ET), Harker (12:00 p.m. ET).

The major focus of the market right now however remains the trade negotiations in Beijing and stocks will be most sensitive to any material headlines regarding the ongoing talks.

Is a Fed “Pause” Actually Good for Stocks?

What’s in Today’s Report:

  • Is a Fed “Pause” Actually Good for Stocks?

Futures are decidedly higher after Congress reached a deal to avert another government shutdown late yesterday and investors remain optimistic about trade talks between the US and China as negotiations in Beijing continue this week.

The NFIB Small Business Optimism Index fell to 101.2 vs. (E) 103 in January underscoring business owners’ uncertain outlook on the economy.

Today, there is one economic report: December JOLTS (E: 6.950M) and several Fed speakers to watch: Powell (12:45 p.m. ET), George (5:30 p.m. ET), and Mester (6:30 p.m. ET).

As long as Powell does not change his recent narrative when he speaks over the lunch hour, investors will likely remain focused on additional updates regarding the new funding deal lawmakers agreed to late Monday and more importantly, the ongoing trade talks in Beijing.

Sevens Report’s Tom Essaye quoted in MarketWatch on February 11, 2019

A lot of the good news out there is already priced into stocks at these levels,” wrote Tom Essaye, president of the Sevens Report, in a Monday note to clients. “At 2,700 or higher, the S&P 500 isn’t priced for perfection, but…”  Read the full article here.

Weekly Market Preview

What’s in Today’s Report:

  • What Stocks Fell Late Last Week (It Wasn’t China)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Important Reports This Week)

Futures and global markets are moderately higher following positive reports on U.S./China trade and the potential for economic stimulus in the EU.

Reuters and Axios both had positive U.S./China trade articles this morning, with Axios reporting Trump & Chinese President Xi may meet in mid-March in Florida.  That’s particularly notable because it’s assumed the two leader’s won’t meet until a trade deal is effectively done.  So, if the report proves to be true, there’s an end in sight which is an incremental positive.

There were also numerous reports that the ECB is considering re-introducing TLTROs (a type of cheap loan to spur economic activity) to combat slowing EU growth.

Today there are no economic reports or Fed speakers so I’d expect a generally quiet trading day unless we get surprise political (possible government shutdown Friday) or geo-political (more U.S./China trade) headlines.

Why The Reserve Bank of India Matters to You

What’s in Today’s Report:

  • U.S./China Trade Update – Nothing Has Changed (And That’s Good)
  • Why the Reserve Bank of India Matters to You (And Your Clients)

Futures are modestly lower on momentum from Thursday’s declines following mixed economic data overnight.

German exports beat estimates and rose 1.5% vs (E) -0.3%, finally giving the EU a good economic data point.  But, Japanese Household Spending rose 0.1% vs. (E) 1.0% so the economic news wasn’t all good.

There was no notable geo-political or trade related news overnight and given there are no economic reports today, and only one Fed speaker (Daly at 1:15 p.m. ET), focus will remain on any new U.S./China trade headlines.  That could lead to some more volatility, but as long as Mnuchin and Lighthizer are going to China next week (which it appears they still are) then we’re still getting progress on a U.S./China trade deal.