How Far Can Stocks Run (New Technical Targets)

/in , /by

What’s in Today’s Report:

  • How Far Can Stocks Run? (New Technical Targets)
  • Why Did the Dollar and Treasury Yields Fall So Hard?

Futures are modestly higher on continued momentum from Thursday’s CPI report and as Chinese officials further signaled changes to their “Zero COVID” policy.

China made more than 20 changes to COVID policies overnight, all of which relaxed COVID rules and further signaled a departure from “Zero COVID.”

Economic data was mixed as German CPI met expectations at 10.4%, while UK GDP and Industrial Production were slightly better than expected.

Today the only notable number is Consumer Sentiment (E: 59.6) and specifically the Five-Year Inflation Expectations Index.  If that number falls further away from 3.0% (and drops to or below 2.7%) that will further fuel the idea that inflation pressures are receding, and stocks should extend the rally.

Sevens Report Analysts Quoted in ZeroHedge on November 8th, 2022

/in , /by

WTI Extends Losses After API Reports Large Unexpected Crude Build

“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research. Click here to read the full article.

Sevens Report Analysts Quoted in Market Watch on November 8th, 2022

/in , /by

Oil prices log back-to-back losses as investors assess China demand outlook

“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research. Click here to read the full article.

Market Multiple Levels: S&P 500 Chart

/in , /by

What’s in Today’s Report:

  • Market Multiple Levels – S&P 500 Chart
  • What the Midterms Mean for Markets

Stock futures have stabilized after yesterday’s midterm-induced declines and Treasury yields are modestly lower this morning as the focus turns to today’s all-important CPI data.

It was a quiet night of news and there were no market-moving economic reports overseas.

Today, trader focus will be on the October CPI report (E: 0.7%) due out at 8:30 a.m. ET. We will also get Jobless Claims (E: 221K) before the opening.

The Fed speaker circuit picks up as well today with Harker (9:00 a.m. ET), Logan (9:35 a.m. ET), George (1:30 p.m. ET), and Williams (6:35 p.m. ET) all scheduled to speak today.

Bottom line, today’s CPI report is likely to make or break the latest attempt at a broad-based relief rally. If the data is hot and Treasuries decline (yields rise) in a hawkish manner, expect further pressure on equities. Conversely, if CPI is “cooler” than expected and Fed speak is on the dovish side, the S&P 500 could retest recent highs near 3,900.

Market Multiple Table: November Update

/in , /by

What’s in Today’s Report:

  • Market Multiple Table – November Update
  • Chart – Value Stocks Down Just 5% YTD vs. More than 33% for Growth Stocks

Futures are lower while bond yields and the dollar are edging higher after Republicans likely took control of the House but disappointed versus expectations in the Senate races. The result is still seen as being some form of a split Congress, however, which is historically favorable for markets.

Economically, Chinese CPI fell to 2.1% vs. (E) 2.4% Y/Y and PPI was -1.3% vs. (E) -1.6% but the data did not move markets overnight as the focus in China is on reopening plans and not inflation pressures.

Looking into today’s session, there are no market-moving economic reports which will leave the focus on the midterm election results, and if Democrats do end up keeping the House (which is possible, but unlikely) expect a mild reversal of the WTD gains.

Outside of the election news, there are two Fed officials speaking today: Barkin (11:00 a.m. ET) and Kashkari (1:00 p.m. ET) and a 10-Yr Treasury Note auction at 1:00 p.m. ET. Any meaningful dovish commentary or a strong auction could support a near-term equity rally but moves should be limited ahead of tomorrow’s CPI report.

Election Preview

/in , /by

What’s in Today’s Report:

  • Election Preview
  • Chart: Technicals Dominate S&P 500 Price Action – Key Levels to Watch

Stock futures are slightly higher and Treasury yields are largely steady ahead of today’s midterm elections.

Economically, the U.S. NFIB Small Business Optimism Index came in at 91.3 vs. (E) 91.8 while Eurozone Retail Sales met estimates at 0.4% but neither release is materially impacting markets this morning.

There are no additional economic reports today and no Fed officials are scheduled to speak.

In Monday’s Sevens Report we incorrectly said CPI was to be released on Wednesday but the report is due out on Thursday. We apologize for any confusion this may have caused.

Bottom line, focus will be on the midterms today which will likely result in a mostly quiet session, however, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET that could cause a move in yields and ultimately impact trading in equities.

What Falls First, Treasury Yields or Earnings?

/in , /by

What’s in Today’s Report:

  • Key Market Question:  What Falls First, Treasury Yields or Earnings?
  • Weekly Market Preview:  All About Inflation
  • Weekly Economic Cheat Sheet:  CPI on Thursday is the Key Report

Futures are modestly higher mostly on momentum from Friday’s rally and despite negative COVID news from China and an APPL warning on I-Phone production.

Reports over the weekend pushed back on Chinese authorities abandoning the “Zero COVID” policy, although markets still expect some relaxing of restrictions.

APPL warned that COVID restrictions in China will impact IPhone production, although demand remains strong (so the news isn’t materially impacting the stock).

Today there are no notable economic reports but there are three Fed speakers: Mester (3:40 p.m. ET), Collins (3:40 p.m. ET) and Barkin (6:00 p.m. ET).  If they even slightly push back on the idea that “Terminal” Fed Funds will be higher than expected in September, as Evans did on Friday, then stocks can extend this rebound.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview

Futures are moderately higher on solid economic data and rising hope China could relax its “Zero COVID” policies.

The EU Composite PMI (47.3 vs. (E) 47.1) and UK Construction PMI (53.2 vs. (E) 50.5) both beat estimates, implying economic activity in Europe isn’t collapsing.

In China, an article in the South China Morning Post stated “big and substantive” changes looming for COVID policies.

Today focus will be on the Jobs Report and estimates are as follows:  Job Adds: 210K, UE Rate: 3.6%, Wages: 0.3% m/m, 4.7% y/y.  If markets can get an underwhelming number (say the low 100’s) that will be the first material sign the labor market is starting to deteriorate, and it could spark a rally in stocks as the Fed needs better balance in the labor market before they can “pivot.”

Away from the jobs report, we also have one Fed speaker, Collins at 10:00 a.m. ET but she shouldn’t move markets.

What the Fed Decision Means for Markets (Not a Bearish Gamechanger)

/in , /by

What’s in Today’s Report:

  • What the Fed Decision Means for Markets (Not a Bearish Gamechanger)
  • EIA Analysis and Oil Update

Futures are lower on underwhelming earnings and further digestions of Powell’s hawkish press conference.

Earnings results have turned more negative this week and that included last night as ATUS and CF both posted disappointing results (among others).

Today’s focus will be on the Bank of England Rate Decision (E: 75 bps hike) and economic data, as we get Jobless Claims (E: 222K), Unit Labor Costs (E: 4.0%) and the ISM Services Index (E: 55.4).  Especially in light of Powell’s comments, markets will want to see data that shows resilient economic activity and falling inflation/deteriorating labor markets.

On the earnings front, the season largely wraps up at the end of the week but there are still some important reports to watch today including:  COP ($3.41), RCL ($0.23), MAR ($1.69), PYPL ($0.96) and SBUX ($0.73).

Fed Wildcard to Watch: Dual Risks

/in , /by

What’s in Today’s Report:

  • Fed Wildcard to Watch: Dual Risks
  • Economic Data Takeaways: A Hot JOLTS Report Offsets a Favorable ISM Release
  • Chart – The Fed Could Make or Break the Gold Market Today

Futures are higher ahead of today’s Fed announcement amid continued China reopening hopes and good earnings.

AMD is up more than 4% after good earnings yesterday evening which is bolstering tech shares this morning.

Today, the focus will be on economic data early with the ADP Employment Report (E: 200K) due out ahead of the bell. The market will want to see some headline weakness to help offset yesterday’s JOLTS data in order for stocks to rebound into the Fed. Motor Vehicle Sales (E: 14.2M) will also be released over the course of the morning.

Then focus will turn to the Fed with the FOMC Announcement at 2:00 p.m. ET followed by Powell’s Press Conference at 2:30 p.m. ET. A dovish release could trigger a sharp and squeezy rally while a hawkish decision would almost certainly result in investor pain.

Earnings will be on the backburner today but there are still a few notable releases to watch: CVS ($1.99), PGR ($1.48), CHRW ($2.15), QCOM ($3.14), EBAY ($0.93).