Sevens Report’s Tom Essaye quoted in Barron’s on November 15, 2018.
Sevens Report’s Tom Essaye quoted in Barron’s on November 15, 2018. Read the full article here.
Technical Update
What’s in Today’s Report:
- Technical Update
- Economic Data Recap
- EIA Analysis and Oil Update
US futures are down roughly 0.5% this morning thanks to soft earnings after the close yesterday, most notably by NVDA (the company’s shares fell nearly 20% overnight). Otherwise it was a relatively quiet night of news.
Oil is up over 1% this morning on optimism surrounding a potential OPEC-cut, but serious technical damage has been done on the charts this week, and right now, the medium term outlook is neutral at best for energy.
Economically, the only data point released overnight was Eurozone HICP which matched estimates at 2.2% y/y and is not materially affecting the euro or longer term outlook for the ECB.
Today, there is one important economic report to watch: Industrial Production (E: 0.2%) and two Fed speakers: Clarida before the open (8:30 a.m. ET) and Evans just before lunch (11:30 a.m. ET).
Otherwise, focus will be on tech shares today as if the bad earnings from NVDA weigh on the sector more broadly, then stocks will have a hard time extending yesterday’s bounce.
On the charts, yesterday’s close of 2730 in the S&P is an important level to watch as a close above would be a positive development for the near term technical outlook.
Will Politics Add to the Volatility?
What’s in Today’s Report:
- Will Politics Add to the Volatility?
- Why Natural Gas is Surging
Futures are slightly higher as more positive U.S./China commentary was offset by Brexit upheaval.
The outlook for U.S./China trade continued to improve as it was confirmed “high level” talks are occurring. But, that positive was offset by Brexit turmoil as the British Brexit Minister resigned over the proposed deal. The Brexit upheaval isn’t a material macro headwind, but it can be filed in the “things this market didn’t need right now” category and it’ll add to volatility.
Fed Chair Powell’s comments after the close were a non-event (he acknowledged some mild softening of economic momentum but didn’t hint at any shift in the policy outlook).
Today there is a lot of important economic data to watch (in order of importance): Retail Sales (E: 0.5%), Empire State Manufacturing Index (E: 20.0), Philly Fed (E: 20.0) and Jobless Claims (E: 215K). There are also multiple Fed speakers today including Quarles (10:00 a.m. ET), Powell (11:00 a.m. ET), Bostic (1:00 p.m. ET), Kashkari (3:00 p.m. ET) but I don’t expect any of them, including Powell, to reveal anything new.
Finally, I’ll be joining Liz Claman on Countdown to the Closing Bell on Fox Business today between 3:00 – 4:00 pm ET to discuss the outlook for this market.
Inflation Peaking?
What’s in Today’s Report:
- Is Inflation Peaking Already?
Futures are flat while overseas markets were mostly lower o/n after yesterday’s huge drop in oil weighed on risk sentiment, global data was mixed, and EU political tensions continued.
Chinese FAI and Industrial Production figures for October were slightly ahead of expectations but Retail Sales notably missed which pressured Asian shares overnight.
In Europe, the German GDP flash missed which only added to ongoing angst over Brexit and the Italian budget drama in broader European markets.
Today is the busiest day of the week as far as catalysts go. First we will get the latest inflation release in the U.S. ahead of the open: CPI (E: 0.3%), then Quarles speaks shortly thereafter (9:00 a.m. ET).
There is nothing major scheduled during market hours today but focus this evening will be on CSCO earnings ($0.72) after the close and then Powell and Kaplan are speaking in Texas at 5:00 p.m. ET (with Q&A) where Powell is expected to take a more dovish tone.
Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 13, 2018
Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 13, 2018. Read the full article here.
Sevens Report’s Tom Essaye appeared on Yahoo Finance on November 12, 2018.
Sevens Report’s Tom Essaye appeared on Yahoo Finance on November 12, 2018. Go here to watch the clip.
A Disconcerting ERP Update
What’s in Today’s Report:
- Equity Risk Premium: A Disconcerting Statistic
Futures are bouncing modestly after yesterday’s steep equity selloff as Secretary Mnuchin reportedly resumed talks with Chinese officials regarding trade but the budget drama between Italy and the EU remains a headwind.
Economically, the German ZEW Survey missed (badly): 58.2 vs. (E) 65.0 while the NFIB Small Business Optimism Index was more inline: 107.4 vs. (E) 108.0, underscoring the ongoing divergence between US and overseas data right now.
Looking ahead to today’s Wall Street session, there are no other economic reports to watch and only one of the two Fed speakers is during market hours: Kashkari (10:00 a.m. ET), Daly (5:00 p.m. ET).
Most of the more notable catalysts this week will come tomorrow (U.S. CPI, Chinese economic data, Powell speaks, earnings, etc.) but that doesn’t mean that downward momentum that began yesterday can’t continue so support in the S&P between 2705 and 2720 will be important to watch today.
Four Keys to a Bottom Updated
What’s in Today’s Report:
- Four Keys to a Market Bottom Updated
- Weekly Market Preview
- Weekly Economic Cheat Sheet (All About Inflation)
Futures are slightly lower following a quiet weekend outside of the oil markets.
Saudi Arabia signaled it will cut oil output by 500k bbls in December in response to falling oil prices, and Russia hinted it will do the same. Oil rallied 2% on the news initially although it’s given back most of those gains as of this writing.
Away from oil it was a quiet weekend as there were no notable economic reports or changes in U.S./China trade, although the U.S. dollar is hitting new 2018 highs on the latest negative Brexit headlines.
Today should be a generally quiet day given 1) the Veteran’s Day holiday (banks and bond markets are closed), and 2) There are no notable economic reports or earnings today. There is one Fed speaker, Daly (2:30 p.m. ET) but her comments won’t move markets.
So, our focus today will be on the dollar, which is now at fresh 2018 highs. If it continues to grind higher that will likely pressure stocks today (a suddenly stronger dollar is not what this market needs right now).
Why the October Sell Off Was Different
What’s in Today’s Report:
- Why The October Sell Off Was Different
- Valuation Update (the market is fairly valued here)
Futures are moderately lower following more disappointing Chinese economic data.
Chinese auto sales plunged 12% yoy in November and annual car sales growth turned negative for the first time since the early 1990’s, further fanning fears of a Chinese economic slowdown.
Earnings results were mixed as DIS posted solid numbers while EU corporate earnings were disappointing.
Today focus will be on inflation via PPI (E: 0.2%) and it needs to remain “Goldilocks” so as to not put more downward pressure on stocks. We also have several Fed speakers (Williams (8:30 a.m. ET), Harker (8:50 a.m. ET), Quarles (9:00 a.m. ET)) although the next big Fed event will be Fed Chair Powell speaking on Tuesday.