Tom Essaye Interviewed with Reuters on April 4, 2019
Tom Essaye appeared on Reuters on April 4, 2019. Great interview with Fred Katayama discussing the “goldilocks number” for the March jobs report. Click here to watch the full interview.
Tom Essaye Quoted in Barron’s on April 3, 2019
The Dow Rose 39 Points After a Late Comeback
Economic data clearly remain soft on an absolute level, wrote Tom Essaye of Sevens Report on Wednesday. “There is now a laundry list of economic indicators that are flashing their worst readings since 2016…” Click here to read the full article.
The Right Sectors To Own If There’s A Rebound In Growth
Today’s Report is attached as a PDF.
What’s in Today’s Report:
- The Right Sectors To Own If There’s A Rebound In Growth
Futures are slightly higher following a generally quiet night as markets wait for this morning’s jobs report.
President Trump said he hoped the U.S./China trade deal would be done in the next four weeks, which again generally meets markets expectations.
Economic data was sparse but German Industrial Production rose 0.7% vs. (E) 0.5%, somewhat offsetting Thursday’s disappointing German Manufacturers’ Orders report.
Today the focus will be on the jobs report and the expectations are as follows: Jobs Adds 170K, UE Rate 3.8%, Wages 3.4% yoy.
The best outcome for stocks today would be a jobs number in the mid 100k range (not too strong, but not too weak), positive revisions to the February data and a wage number below 3.5% yoy. That outcome likely can spark a further rally. Conversely, any extremes on the job adds (very good or very bad) along with another hot wage number may lead to profit taking in stocks on fears of slowing growth or a more hawkish Fed.
Tom Essaye Interviewed on Yahoo Finance on April 4, 2019
Tom Essaye, Sevens Report Founder and President, says we shouldn’t expect a potential U.S.-China trade deal “to create a lasting rally” for the markets. Yahoo Finance’s Alexis Christoforous speaks to him, Brian Sozzi and Brian Cheung. Click here to watch the full interview.
New Highs From a Leading Indicator
What’s in Today’s Report:
- Jobs Report Preview
- New Highs From a Leading Indicator
- EIA Analysis & Oil Market Update
- Update on Global Growth (Better, But Not Good)
Futures are slightly lower despite more positive U.S./China headlines as markets digest this week’s rally.
The WSJ reported a U.S./China trade deal is now very close, with an announcement of a signing ceremony possibly coming as early as today. But, the reason this headline didn’t cause a rally is because it’s been expected for some time. The key going forward is how quickly tariffs are reduced, and the sooner, the better for stocks.
Economic data was sparse but German Factory Orders dropped –4.2% vs. (E) 0.3% but that number isn’t enough to offset the other good data this week.
Today is generally quiet on the data front as we only get Jobless Claims (E: 216K). There are three Fed speakers today: Williams (9:00 a.m. ET), Harker (1:00 p.m. ET), Mester (1:00 p.m. ET) but unless they say something surprising they shouldn’t move markets.
So, absent any other catalysts, China headlines will likely be the main influence on stocks today as an official headline about a signing ceremony could cause a very short term algo-led rally, but until we find out when tariffs will be rescinded, the U.S./China news likely won’t be enough to power the market materially higher from here.
Tom Essaye Quoted in Barron’s on April 2, 2019
“Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was…” Click here to read the full article.
Bigger Picture on Economic Data
What’s in Today’s Report:
- Bigger Picture on Economic Data
Futures are solidly higher this morning, tracking gains in international markets led by Chinese shares thanks to strong economic data and more progress on trade.
Several news outlets reported overnight that up to 90% of a trade deal is done as China’s vice premier Liu He travels to D.C. to continue mid-high level trade talks today.
Economically, the Caixin Chinese Service PMI beat expectations jumping to 54.4 in March, a 14 month high, while the EU Service PMI rose to 53.3 vs. (E) 52.7. Both releases helped ease concerns about recently underwhelming economic data.
Looking into today’s session, there are a few catalysts to watch for. First, the ADP Employment Report (E: 165K) will be releases ahead of the open, kicking off “jobs week” in the U.S. and then the ISM Non-Manufacturing Index (E: 58.0) will hit shortly after the bell. Investors will look for both of these numbers to track the encouraging releases overseas last night.
Additionally, there is one Fed speaker before the open: Bostic (8:30 a.m. ET) and Kashkari will speak after the close (5:00 p.m. ET). Lastly, with U.S.-China trade optimism driving a good portion of the pre-market gains, any news out of Washington will have the potential to materially move markets today.
Economic Data Takeaways
What’s in Today’s Report:
- Bottom Line – “Pump the Breaks”
- Retail Sales and ISM Manufacturing Takeaways
Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was digested amid a slight pullback in bond yields.
The Reserve Bank of Australia was the latest central bank to note downside risks in the global economy overnight.
Economically, Eurozone PPI was a mild miss: 0.1% vs. (E) 0.2% in February but inflation has been subdued and the report does not change the outlook for ECB policy.
Today, Motor Vehicle Sales (E: 16.8M) will begin to come in over the course of the morning while there is one notable economic report ahead of the open: Durable Goods Orders (E: -1.8%). There are no Fed speakers today.
With a lack of material catalysts between now and Friday’s jobs report, macro focus will be on U.S. – China trade negotiations and the bond market. If Treasury yields revisit last week’s lows, stocks will have a hard time holding the strong gains of the last few sessions, so watch bonds closely.
Tom Essaye Quoted in CNBC on March 29, 2019
“Looking forward, there’s been material progress in alleviating the earnings growth and Fed worries that caused the Q4 2018 correction. But it would be a…” Click here to read the full article.
Updated Equity Market Outlook
What’s in Today’s Report:
- Updated Equity Outlook: A Resilient Market vs. Two Building Headwinds
- Weekly Market Preview (All About Data)
- Weekly Economic Cheat Sheet
Futures are sharply higher following better than expected global PMIs as hope for a global economic rebound stays alive.
China’s “official” Manufacturing PMI rose to 50.5 vs. (E) 49.8 in March, Japan’s Manufacturing PMI rose to 49.2 vs. (E) 48.9, and the UK’s Manufacturing PMI surged to 55.1 vs. (E) 51.2.
The only disappointment in Europe, where the EU Manufacturing PMI slipped to 47.5 vs. (E) 47.6, and inflation also underwhelmed.
Today focus will remain on economic data and the key report today is the ISM Manufacturing Index (E: 54.2). If that number can beat expectations, it will further reinforce the idea of a growth rebound and bonds yields should rise, the dollar should fall, and this morning’s rally should be extended, although I think it’s hard to imagine the S&P 500 moving more than a percent or two ahead from here of earnings season (more on that in the issue). Other reports today include Retail Sales (E: 0.3%) and Construction Spending (E: -0.2%).
Finally, a “head’s up” that today is April Fool’s Day, just in case anyone (in my case most likely my children) tells you something preposterous!