The Most Important Week of the Year

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What’s in Today’s Report:

  • Fed Week – Why This is the Most Important Fed Decision of the Year
  • Weekly Market Preview – Will the Fed Meet Incredibly Dovish Expectations?
  • Weekly Economic Cheat Sheet – One of the Busiest Weeks of the Year (Jobs Report, Inflation Data, Global PMIs)

Futures are little changed following a quiet weekend as all eyes now turn to the Fed decision on Wednesday.

Former Fed Chair Yellen endorsed a rate cut over the weekend, but did not advocate for sustained easing.   And, this gets right to the heart of this market.  We know the Fed will cut 25 bps this week, but we don’t know if they’ll signal the start of a sustained easing campaign (i.e. 75-100 bps of cuts by year-end) and that’s something the market has already aggressively priced in at these levels.

Economic data was sparse over the weekend although Japanese Retail Sales (0.3% vs. (E) 0.1%) beat estimates.

There was no notable U.S.-China trade news over the weekend and expectations are low for any actual progress at the talks this week.

Today there are no notable economic reports nor any important central bank speak, so focus will remain on earnings (this is the last important week of earnings) and on any U.S.-China trade headlines (although none are expected).

What the ECB Decision Means for Markets (Slightly Disappointing)

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What’s in Today’s Report:

  • What the Slightly Disappointing ECB Decision Means for Markets

Futures are modestly higher thanks to better than expected earnings.

Earnings after Thursday’s close were solid as GOOGL, INTC and SBUX all beat estimates and rallied after hours.  The results are offsetting Wednesday’s underwhelming results.

There were no notable economic reports overnight and no new U.S./China trade news, so markets are continuing to digest a slightly disappointing ECB meeting and focus has now turned to the Fed meting this coming Wednesday.

Today there is only one economic report, Initial Q2 GDP (E: 1.9%), which might have more of an impact on markets than usual given Wednesday’s Fed meeting, especially if it’s a big surprise in either direction (very strong or very weak).  If it’s a strong number, that will weaken the case for sustained Fed easing (which the market has priced in) and if it’s a weak number, it’ll strengthen the case for sustained Fed easing (so stocks will likely rally on a “bad is good” reaction).

Tyler Richey Quoted in MarketWatch on July 24, 2019

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The six-week stretch of falling crude supplies is the longest since the 10-week decline from the week ended Nov. 17, 2017 to Jan. 19, 2018, according to an analysis of EIA data provided by Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil Tanks

Tom Essaye Quoted in The Bulletin on July 22, 2019

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Investors look ahead to earnings

“We will start to get results from some of the big multi-national industrials and tech firms, which should shed more light on the effects of the trade war…” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote in a note to clients. Click here to read the full article.

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What Falling RV Sales Mean for the Economy

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What’s in Today’s Report:

  • What Falling RV Sales Mean for the Economy (Not Necessarily What You Think)
  • Oil/Energy Market Update

Futures are flat following a busy night of earnings as investors look ahead to the ECB decision later this morning.

Economic data again disappointed as the German IFO Business Expectations missed estimates (92.2 vs. (E) 94.0).

There was an earnings deluge overnight and results, on balance, were slightly negative although the Q2 earnings season remains better than feared.

Today the most important event is the ECB Decision and we get the announcement at 7:45 a.m. and the press conference at 8:30 a.m.  The key for this meeting is how definitive the ECB will be on more rate cuts and QE.

If they cut rates and announce the start of a new QE plan, that’ll be a dovish surprise (good for stocks), if they effectively promise a rate cut and more QE at the September meeting, that will meet expectations (not a big market reaction) and if they merely state both moves are possibilities if growth slows further, that will be a hawkish disappointment (stocks likely will fall).

Outside of the ECB we get two notable economic reports via Durable Goods Orders (E: 0.7%) and Jobless Claims (E: 210K).

Tom Essaye Quoted in SwissInfo.ch on July 22, 2019

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Tech Shares Lead Gains Before Earnings; Oil Rises: Markets Wrap

“We will start to get results from some of the big multi-national industrials and tech firms, which should shed more light on the effects of…” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote in a note to clients. Click here to read the full article.

subway station

ECB Preview (The Most Important Catalyst of the Week)

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What’s in Today’s Report:

  • ECB Preview
  • The Threat to Oil Prices and the Potential Effect on Bonds

S&P futures are down 10 points this morning after the U.S. DOJ announced an antitrust probe into big tech firms late yesterday while EU economic data badly missed estimates.

The EU PMI Composite Flash for July was 51.5 vs. (E) 52.1 but the German Manufacturing component was especially weak at 43.1 vs. (E) 45.2 rekindling fears of a further, and potentially accelerating, slowdown in the global economy.

In today’s U.S. session, there are two economic reports to watch: The PMI Composite Flash (E: 51.2) and New Home Sales (E: 655K) while no Fed officials are scheduled to speak ahead of next week’s FOMC Meeting.

There is a 5-Yr Note Auction by the Treasury at 1:00 p.m. ET today and the results could have an impact on the yield curve which could ultimately move stocks (like we saw with yesterday’s 2-Yr Auction).

Earnings season is continuing to pick up and today will be a very busy day of releases with BA (-$0.56), T ($0.89), CAT ($3.12), UPS ($1.93), NOC ($4.64), GD ($2.68), FCX (-$0.05), and NSC ($2.77) due to report before the open, and FB ($1.90), TSLA (-$0.52), PYPL ($0.73), and F ($0.30) will hit after the bell.

Tyler Richey Quoted in MarketWatch on July 18, 2019

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Over in Russia, news of higher output also pressured prices. Russian oil minister Alexander Novak said that “production has been restored” after the nation’s oil output dropped to a multi-year…said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full article.

Oil Pipeline

Tom Essaye Quoted in Yahoo Finance on July 23, 2019

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“I like emerging markets and EM debt mainly because I think the Fed will be dovish and that’ll send the dollar lower…” Tom Essaye, founder of The Sevens Report, tells Yahoo Finance’s “The First Trade.” Read the full article here.

Stock Exchange

Tom Essaye Interviewed with Yahoo Finance on July 23, 2019

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Yahoo Finance’s Brian Sozzi and Alexis Christoforous sat down with Tom Essaye from the Sevens Report and First National Bank of Omaha’s Kurt Spieler around Tuesday’s opening bell. The panel discusses big tech & regulation, what to look for in emerging markets, the effect of elections on the market, and more. Click here to watch the full interview.

Yahoo Finance Interview Clip