Tom Essaye Quoted in Seeking Alpha on September 17, 2019
The consensus expects a 25 basis-point rate cut from the Fed today, but “the drama is centered on just how…” says Tom Essaye of The Sevens Report. Click here to read the full article.
Tom Essaye Quoted in ETF Trends on September 17, 2019
“Going forward, the main driver of prices will be time, specifically how long the Saudi…” said Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.
What the Fed Rate Cut Means for Markets
What’s in Today’s Report:
- FOMC Takeaways (Resistance at 3000 in the S&P 500 Getting Stronger)
- Oil Market Update (Inventories and latest from Saudi Arabia)
Futures are slightly lower as markets digest a “not as dovish as wanted” Fed decision after a generally quiet night.
The market’s reaction to the Fed meeting is one of mild disappointment as the FOMC did not guarantee more rate cuts, although they signaled they will come if needed.
Economic data was sparse overnight as British Retail Sales met expectations and that number’s not moving markets.
Today there are several notable economic reports, including (in order of importance): Philly Fed (E: 11.3), Jobless Claims (E: 214K), Existing Home Sales (E: 5.375M) and Leading Indicators (E: 0.1%). The Bank of England is also out with a rate decision this morning but no change is expected.
But, the most important event of the day is the start of the lower level U.S./China trade talks, and any positive “chatter” from these meetings should help stocks offset mild Fed disappointment.
Fed Meeting Preview and Saudi Oil Update
What’s in Today’s Report:
- FOMC Preview
- Two Sectors that Will Benefit from the Saudi Oil Attacks
- What the Attacks on Saudi Oil Infrastructure Mean for Oil
Futures are suffering mild losses this morning while international markets were little changed overnight as oil prices are stabilizing, economic data was mixed, and investor focus is shifting to the Fed.
Economically, the German ZEW Survey showed the Current Conditions index fell to –19.9 vs. (E) -15.0 but the Business Expectations figure was encouragingly –22.5 vs. (E) -38.0, easing concerns about the future outlook for the EU economy.
The PBOC left rates unchanged overnight, disappointing some investors looking for a cut after a recent string of soft economic data which weighed on Asian markets.
Looking into today’s session, there are two economic reports to watch: Industrial Production (E: 0.1%) and the Housing Market Index (E: 66) but a sense of “Fed paralysis” is already falling over the markets as focus turns to tomorrow’s announcement and press conference.
Lastly, after oil’s huge moves yesterday, the energy complex will continue to get attention and with the geopolitical situation still very fluid, oil prices and U.S.-Iran tensions could affect trading in stocks today.
Tom Essaye Quoted in MarketWatch on September 12, 2019
“The S&P 500 has now fully retraced the August pullback, and in doing so has priced in a lasting U.S.-China trade truce and aggressive [global] central bank easing…” wrote Tom Essaye, president of the Sevens Report in a Thursday note to clients. Click here to read the full article.
Can A Trade Truce Sustain New Highs?
What’s in Today’s Report:
- Can a Trade Truce Sustain New Highs in Stocks?
- What the Saudi Oil Attacks Mean for Oil Prices
- Weekly Market Preview (All About the Fed)
- Weekly Economic Cheat Sheet
Futures are modestly lower following attacks on Saudi oil infrastructure over the weekend.
Oil surged 10% overnight after half of Saudi oil production was taken offline following attacks this weekend, as higher oil prices and increased geo-political tensions (the U.S. & Saudi are blaming Iran) are pressuring futures.
Meanwhile, Chinese economic data was universally disappointing as Fixed Asset Investment, Retail Sales, and Industrial Production all missed estimates. This is being somewhat ignored given the oil markets, but there remains little actual proof the Chinese economic has stabilized (and with the S&P 500 at 3000, that’s priced in).
Today focus will be on geo-politics and any further escalation in tensions between the U.S. and Iran will weigh on stocks. Beyond the short term, barring a U.S./Iran conflict (which is still very unlikely) the net impact of this weekend’s news will be to strengthen the valuation “ceiling” at 17X 2020 S&P 500 EPS (so 3,026 in the S&P 500), as it’s hard to justify stocks above that level given elevated geo-political risks.
Economically, there’s only one notable number today, the September Empire Manufacturing Survey (E: 4.9), and any evidence of stabilization in manufacturing will help stabilize stocks.
Tom Essaye Quoted in Yahoo Finance on September 13, 2019
“SmileDirectClub is a show me the money story,” Invesco global market strategist Brian Levitt said on Yahoo Finance’s The First Trade. Sevens Report Research founder Tom Essaye echoed Levitt’s sentiment, adding the stock could stay under pressure near-term as investors grow comfortable with the thesis…Click here to read the full article.
Technical Updates (S&P 500, 10 Year, Copper)
What’s in Today’s Report:
- ECB Decision Takeaways (Not As Dovish As Expected)
- Why ECB QE Infinity Might Not Work
- Should We Buy European ETFs?
Futures are slightly higher as “chatter” about an interim U.S./China trade deal continues to build. Otherwise, it was a quiet night.
Nothing official has been released or confirmed, but based on multiple press reports the market now expects: 1) No more tariff increases and 2) Large agricultural purchases by China (which is essentially where we were back in June, although now we have more actual tariffs).
Economically, EU trade balance met expectations.
Today the focus will be on Retail Sales (E: 0.3%) and for stocks to continue this rally, we need to see a “Goldilocks” number (better than expectations but not too strong). If that happens, then the S&P 500 will hit new all time highs, likely led by cyclical sectors (XLY/XLF/XLB/XLI).
Tyler Richey Quoted in MarketWatch on September 11, 2019
“Bolton is a known foreign policy hawk and, apparently, he and President Trump’s views began to diverge over time. Part of that very well could be that Trump’s keenly…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Is the Tariff Delay Bullish?
Today’s Report is attached as a PDF.
What’s in Today’s Report:
- Why Isn’t the Tariff Delay Causing a Bigger Rally?
- Bond Market Update: Not Confirming 3000 in the S&P 500
Futures are marginally higher ahead of the ECB decision and following a short tariff delay by President Trump.
Trump announced that the October 1 tariff increases (25% to 30% on 250 bln of imports) will be delayed till October 15th as a gesture of “goodwill.”
Economic data was again soft as German Industrial Production dropped –0.4% vs. (E) -0.1%, continuing the trend of disappointing EU manufacturing data.
Today the key event is the ECB Meeting. The decision is at 7:45 a.m. and the Press Conference will be held at 8:30 a.m. For the ECB to meet expectations we need to see 1) A rate cut, 2) More QE and 3) A “Tiered” deposit system. Outside of the ECB we also get two important economic reports, CPI (E: 0.1%) and Jobless Claims (E: 215K) and they could move markets if they are surprises (especially is CPI runs hot).