What If It Is Peak Earnings? (Market Outlook)

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What’s in Today’s Report:

  • What If It Is Peak Earnings? (It Hasn’t Been That Bad in the Past)

Futures are bouncing from yesterday’s carnage following good earnings reports overnight.

MSFT, F, V, XLNX, TSLA and WHR all posted solid earnings and that is helping stocks to bounce moderately.

Economic data was sparse as German IFO Business Expectations was the only report and it slightly missed estimates.

Today there are actually multiple macro events including an ECB Decision (No Change is expected to rates or QE but we’ll be watching to see if Draghi notes equity market volatility), Durable Goods Orders (E: -1.4%), Jobless Claims (E: 212K) and Pending Home Sales (E: 0.0%) plus there are two Fed speakers:  Clarida (12:15 p.m. ET), Mester (7:00 p.m. ET).

But, despite that busy calendar, barring dovish commentary from the ECB or Fed speakers (which isn’t expected) focus will remain on earnings, and this market needs more solid results to break the current negative feedback loop.

Four Steps to a Bottom

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What’s in Today’s Report:

  • Technical Update
  • Four Steps to a Bottom

US futures are in the red again this morning although there is again no clear reason why while overseas shares traded mostly “ok” overnight amid mixed economic data.

Japanese PMI Manufacturing Flash beat (53.1 vs. E: 52.6) helping the Nikkei rally but EU data was on the soft side.

As far as US economic data goes today, there are two reports on the housing market this morning: FHFA House Price Index (E: 0.3%) and New Home Sales (E: 625K) while the more important release to watch will be the PMI Composite Flash (E: 54.1) due out shortly after the open.

The Fed speaker circuit also remains busy with Bostic (10:00 a.m. ET, 2:00 p.m. ET), Bullard (11:30 a.m. ET), and Mester (12:30 p.m. ET) all speaking during the Wall Street session today.

Lastly, and likely most importantly for stocks right now, there are a slew of earnings reports today. A few notables include: BA ($3.51) and T ($0.93) ahead of the open and MSFT ($0.96) and V ($1.20) after the close.

Tom Essaye’s Sevens Report CNBC Asia Interview on October 23rd 2018

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Tom Essaye’s Sevens Report CNBC Asia Interview on October 23rd 2018. Watch the full video here.

Sevens Report’s Tom Essaye quoted in Yahoo Finance on October 22, 2018

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Sevens Report’s Tom Essaye quoted in Yahoo Finance on October 22, 2018. Watch the full video here.

Technical Update

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What’s in Today’s Report:

  • Market Technical Update (Three Support Levels for the S&P 500 and a Line in the Sand for the VIX)

Futures are slightly higher thanks to a rally in Asian markets following mixed Chinese economic data.

Chinese Fixed Asset Investment (5.4% vs. (E) 5.3%) and Retail Sales (9.2% vs. (E) 9.1%) beat estimates, while GDP (6.5% vs. (E) 6.6%) and Industrial Production (5.8% vs. (E) 6.0%)  missed.  But, commentary from Chinese officials raised hopes of more economic stimulus and Chinese markets rallied more than 1%.

Today there is one economic report, Existing Home Sales (E: 5.30M) and two Fed speakers: Bostic (12:00 p.m. ET) and Kaplan (12:45 p.m. ET), but focus will remain on earnings (which were “ok” overnight and this morning as AXP, PYPL and HON beat) and Italy.  If there’s further deterioration in the Italy/EU situation, stocks will come under pressure once again.

An Overlooked (But Important) Earnings Report

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What’s in Today’s Report:

  • An Overlooked (But Important) Earnings Report
  • EIA Analysis & Oil Update

Futures are modestly lower thanks to disappointing economic data and ahead of a busy day of earnings.

Economically, Japanese exports missed estimates (-1.2% vs. (E) 2.0%) as did U.K. retail sales (-0.8% vs. (E) 0.3%).

There were no new political or geo-political events overnight.

Today will be a busy day as we get an important economic report, Philadelphia Fed Business Outlook Survey (E: 20.0) and two Fed speakers (Bullard (9:00 a.m. ET), Quarles (12:15 p.m. ET)) who could add to the growing “hawkish” narrative.

But, the real key to trading today will be earnings as markets need more proof that overseas revenues aren’t at risk, and margins aren’t compressing. If that’s the case, then stocks can continue the rebound. Some reports we’ll be watching include:  PM ($1.27), AXP ($1.78), BX ($0.73).

Sevens Report’s Tom Essaye quoted in CNBC on October 17, 2018

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Sevens Report’s Tom Essaye quoted on CNBC on October 17, 2018. Read the full article here.

Buy the Dip or Fade the Bounce?

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What’s in Today’s Report:

  • Buy the Dip or Fade the Bounce?

US stock futures are down roughly 10 points this morning as yesterday’s big rally and notable post-market gains thanks to strong NFLX earnings are digested and investors look ahead to the Fed Minutes today.

Economically, EU HICP (their CPI equivalent) was in-line with expectations at 2.1% yoy but the core figure was soft, slipping to 0.9% from 1.0% which is mildly dovish for ECB policy outlook.

Looking into today’s session, there is just one economic report due out: Housing Starts (E: 1.221M) which will leave investors primarily focused on the FOMC Minutes due out at 2:00 p.m. ET. Earnings season takes a breather today as there are no major releases.

On that note, the huge beat by NFLX after the close yesterday should help tech shares continue to trade well this morning which could see this rebound extend higher into the Fed release this afternoon.

What’s Wrong With Bank Stocks?

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What’s in Today’s Report:

  • What’s Wrong With Bank Stocks?
  • Monday’s Economic Data Analysis
  • Natural Gas Fundamental Update

Futures are bouncing modestly this morning after international markets were mixed overnight as the recent volatility continues to be digested and focus turns to earnings.

Economically, Chinese inflation data met expectations overnight however the German ZEW Survey pretty badly missed expectations showing a sharp drop in confidence among financial professionals.

There is no shortage of potential catalysts today between economic data, earnings and politics/trade.

Economic releases to watch: Industrial Production (E: 0.2%), Housing Market Index (E: 67), and August JOLTS data (E: 6.905M) are all due out within 30 mins of the open.

Notable companies releasing earnings today include: GS ($5.42) and MS ($1.00) ahead of the open and later NFLX ($0.68) and IBM ($3.40) after the market close.

Lastly, traders and investors are showing more interest than normal in the US Treasury’s foreign exchange report as it may shed light on Chinese currency policies and if any manipulation violations were discovered which would again elevate tensions between the world’s two largest economies.

Tom Essaye on The Wall Street Journal – His Take on U.S. Stocks Rebounding, October 12, 2018

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U.S. Stocks Rebound After Two-Day Rout

“If next week’s data comes in firm and shows us that this economy isn’t losing momentum, then that will likely provide a big confidence boost to stocks, and could help support a rebound,” said Tom Essaye, president of the Sevens Report.

Read the full article here.