Are Investors Too Complacent?

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What’s in Today’s Report:

  • Are Investors Too Complacent Right Now?
  • Weekly Market Preview:  Stimulus and an Important Fed Meeting
  • Weekly Economic Cheat Sheet:  Is the Recovery Slowing?

Futures are modestly higher following reports that the stimulus bill might be broken up into two parts (with the larger part passing before year-end).

Congress is going to try and pass two stimulus bills, the first a $750 billion-ish relief bill, and after that, a 200 billion-ish bill that deals with stickier issues of state funding and COVID liability.  The market is rallying on this news because it increases the chances of near-term stimulus (although even if this happens, and it’s not a done deal, it’s already priced into stocks).

Economic data was sparse as EU Industrial Production was in-line with estimates at 2.1% vs. (E) 2.0%.

Today there are no economic reports and no Fed speakers so stimulus headlines will drive trading.  The key will be Pelosi as she’s not been in favor of a two-part bill before, so her support (or not) will be critical to the chances of stimulus actually happening.  Bottom line, if she’s for it, expect a further rally.  If she’s not, expect stocks to turn negative on the news.

December Economic Breaker Panel (Stronger Than Expected)

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What’s in Today’s Report:

  • Economic Breaker Panel
  • Why Stocks Dropped on Wednesday
  • EIA and Oil Analysis

Futures are slightly higher following Wednesday’s tech-driven declines as markets wait for the ECB decision and more clarity on stimulus and Brexit trade negotiations.

Economic data was sparse overnight, as the only notable report was UK Industrial Production which beat estimates (1.3% vs. (E) 0.3%).

There was no notable news or progress on stimulus (still no deal) or Brexit (still no trade deal) overnight, although the “deadlines” for both events were either moved, or about to be moved, implying that negotiations on both stimulus and Brexit will continue for the coming days (this is what the market expected and already priced in).

Today could be a sneakily busy day with the ECB Announcement (E: € 500 bln Increase in QE), CPI (E: 0.1%/1.1%) and Jobless Claims (E: 724K) all coming today.

Regarding the ECB, the risk here is of a “not dovish enough” outcome as they’ve allowed expectations to get pretty high, and if that happens look for mild stock losses and higher yields global bond yields (including Treasuries).

CPI should stay tame at this point, but we’ll be watching this closely going forward.  Finally, weekly jobless claims are “noisy” right now because of the Thanksgiving holiday, but the bottom line is markets want to see claims moving lower, and a break below 700k would be a tailwind on stocks.

Tom Essaye Quoted in Fintech Zoom on December 2, 2020

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“We proceed to suppose the rotation to value must be centered on making a extra balanced value/development portfolio, and never abandoning…,” stated Tom Essaye, editor of The Sevens Report investing publication, in a report Tuesday. Click here to read the full report.

Tom Essaye Quoted in Fox40 on December 1, 2020

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“We continue to think the rotation to value should be focused on creating a more balanced value/growth portfolio, and not…” said Tom Essaye, editor of The Sevens Report investing newsletter, in a report Tuesday. Click here to read the full article.

Tom Essaye Quoted in Erie News Now on December 1, 2020

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“We continue to think the rotation to value should be focused on creating a more balanced value/growth portfolio…” said Tom Essaye, editor of The Sevens Report investing newsletter, in a report Tuesday. Click here to read the full article.

Tom Essaye Interviewed with BNN Bloomberg on November 30, 2020

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Sevens Research Report Founder and President Tom Essaye interviewed with BNN Bloomberg, says the clarity in the Biden administration and on vaccine development that took place in November is giving investors…Click here to watch the full interview.

Tom Essaye Quoted in Courthouse News Service on November 13, 2020q

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The residual rancor from the presidential election nevertheless has bled into hopes for a fourth stimulus package, according to Tom Essaye of the Sevens Report. He added that “the looming Georgia [Senate] runoffs complicate…” Click here to read the full article.

Tom Essaye Quoted in Axios on November 4, 2020

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Stock investors may be in something of a “post-election fog” or a “drunken euphoria” about an apparent quick conclusion to the presidential race but may also be repricing expectations for economic growth, says Tom Essaye, director of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Courthouse News Service on November 3, 2020

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“If the race is decided by the verdict in a single state … and the margin is close (less than 1%), then both the Biden and Trump campaigns will send lawyers…” wrote Tom Essaye, president of The Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Deal Breaker on November 3, 2020

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“Ultimately, the markets want clarity, and the main threat to risk assets this week is the emergence of a contested election, so if races are tight enough for campaigns…” Tom Essaye, founder of The Sevens Report, wrote in a note. Click here to read the full article.