The Current Tug of War in this Market

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What’s in Today’s Report:

  • The Current Tug Of War in this Market
  • Weekly Market Preview:  Do Rising Coronavirus Cases Matter?
  • Weekly Economic Cheat Sheet:  Tomorrow’s Global Flash PMIs Are The Key Report This Week

Futures are moderately higher despite generally negative news over the weekend (the news wasn’t terrible, but it wasn’t good either, and certainly not worth a 75 bps rally in futures).

Coronavirus cases continue to move higher, as new cases rose above 30k in the U.S. for the first time since early May.

Politically, President Trump’s Tulsa rally undershot expectations, highlighting a still challenging path to re-election (the market still views the Trump administration is more business friendly than a Biden administration, yet despite the polls, markets are not pricing in virtually any chance of a Biden win in November, and we think that’s a risk going forward).

Today the calendar is quiet as there is only one economic report, Existing Home Sales (E: 4.29M).  So, incremental coronavirus headlines will likely move markets, and if we get any more headlines about companies closing stores/businesses in Florida/Arizona/Texas/California, that should weigh on markets.

Tom Essaye Intereviewed with Yahoo Finance on June 18, 2020

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“I’m getting concerned that the market is under-appreciating the risk that Trump loses,” said veteran trader and founder of Sevens Report Research Tom Essaye on Yahoo Finance’s The First Trade. Click here to watch the full interview.

Yahoo Finance Interview with Tom

New S&P 500 Measured Move Targets

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What’s in Today’s Report:

  • New S&P 500 Measured Move Targets

Futures are solidly higher following a generally quiet night as markets again try to extend this week’s rally.

Economically, British Retail Sales were much stronger than expected, rising 12% vs (E) 6.5% and adding to the better than expected data this week.

New daily coronavirus cases continued to increase in the U.S., but markets for now continue to look past the recent uptick.

Today there are no notable economic reports, although there are multiple Fed speakers including: Powell (1:00 p.m. ET), Rosengren (10:15 a.m. ET), Quarles (12:00 p.m. ET), Mester (1:00 p.m. ET).  But, given Powell’s testimony earlier this week, it’s unlikely any of the Fed officials say anything to materially move markets.

Finally, today is a “quad witch” quarterly options expiration, so we should expect big volumes and an uptick in volatility into the close.

Tom Essaye Quoted in Yahoo Finance on June 15, 2020

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“More broadly, market fundamentals have improved a lot since March, so we think fears of Thursday’s selloff igniting a March-like decline are not…” said Sevens Report Research founder Tom Essaye. Click here to read the full article.

The Four Phases of Fiscal Stimulus Explained

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What’s in Today’s Report:

  • The Four Phases of Fiscal Stimulus Explained
  • Weekly EIA Data Analysis and Oil Update

Stock futures are slightly lower this morning following a risk-off night of trade thanks to ongoing concerns about rising COVID-19 infections in the U.S., Europe, and China.

There were no market moving economic reports overnight however the 7-day moving average of daily new cases of coronavirus in the U.S. reached a one-month high yesterday which is pressuring risk assets this morning.

It is lining up to be a busy morning as the BOE Meeting Announcement will hit at the top of the 7 o’clock hour (ET), before U.S. economic data kicks off at 8:30 a.m. ET with: Jobless Claims (E: 1.220M) and the Philadelphia Fed Business Outlook Survey (E: -22.7), and then after the bell, Leading Indicators (E: 1.7%) will be released.

There are also three Fed officials scheduled to speak today: Kashkari (E: 11:00 p.m. ET), Mester (12:15 p.m. ET), and Daly (7:00 p.m. ET) but investors have been largely focused on coronavirus headlines over the last 12-18 hours so any fresh developments on testing, new case trends, or treatments will likely move markets.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on June 15, 2020

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“Looking ahead, we expect some consolidation in oil prices here as economic data has been largely better than feared, while the future remains very uncertain regarding the prospects of a ‘second wave’ that could cripple the energy supply…” said Tyler Richey, co-editor at Sevens Report Research.

Oil Pipe line

Tom Essaye Quoted in Bloomberg on May 30, 2020

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Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, points to the years after the financial crisis, when a liquidity explosion led to surges in asset prices — from stocks to bonds, real estate and gold. “If past is prologue, the lesson is that we need to admit that this amount of liquidity means that asset inflation…” he wrote to clients. Click here to read the full article.

$100 bills

Is There a “Second Wave” Coming?

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What’s in Today’s Report:

  • Is There a Second Wave Coming? Let’s Look At the Data

Stock futures are rising with global equity markets amid positive developments on U.S.-China trade, rising hopes for a $1T infrastructure spending package in the U.S. and dovish details regarding the Fed’s bond-buying programs.

Economically, the German ZEW Survey for the month of June was better than expected helping lift EU shares.

Today, investors will be focused on economic data early with Retail Sales (E: 7.5%), Industrial Production (E: 2.9%), Business Inventories (E: -0.5%), and the Housing Market Index (E: 44.0) all due out before the open or shortly after the bell.

From there, attention will shift to Fed Chair Powell’s semiannual testimony before Congress which will begin at 10:00 a.m. ET as investors look for further clues regarding current stimulus programs and the Fed’s outlook for the economy in the coming quarters.

Tom Essaye Quoted in Forbes on June 11, 2020

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“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality,” Tom Essaye, founder of the Sevens Report, told CNBC. Click here to read the full article.

Tom Essaye Quoted in CNBC on June 11, 2020

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Tom Essaye, founder of the Sevens Report, on what triggered the sell-off

“Fed chair Powell yesterday really reminded investors that there’s a huge, huge gap between the economic reality and the market reality. Just that reminder combined with a lot of the second wave…” Essaye told CNBC. —Li 

Click here to read the full article.