Fed Day

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What’s in Today’s Report:

  • FOMC Preview (Abbreviated Version)
  • Reserve Bank of Australia Decision
  • CME FedWatch Tool – Chart

Stock futures are little changed near record highs as a sense of Fed paralysis grips the markets ahead of the FOMC announcement today.

Economic data overnight was slightly better than expected (both the Chinese PMI Composite and Eurozone Unemployment rate beat) but the market reaction was limited with the Fed in focus.

This morning, there are several fairly important economic reports to watch as the ADP Employment Report (E: 400K) kicks off jobs week before the bell, and then we get both Factory Orders (E: 0.1%) and the ISM Services Index (E: 61.9) shortly after the open. Unless there are major surprises in any of the reports, however, the market impact should be limited with the Fed looming.

After the data is released, markets are likely to quiet down ahead of the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) which will be the session’s main events.

Finally, earnings will continue to roll out with CVS ($1.79), MAR ($0.97), and HUM ($4.61) releasing results before the open, and ROKU ($0.06), QCOM ($2.26), and MGM (-$0.04) reporting after the close.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • ISM Manufacturing Index – Takeaways

U.S. futures are trading slightly lower along with most overseas markets following mostly inline economic data and a less-hawkish-than-feared RBA meeting outcome.

The RBA struck a slightly dovish tone in their latest meeting announcement, especially with regard to inflation, which is pressuring bond yields this morning.

Today is lining up to be a fairly slow day with just one economic data point due out: Motor Vehicle Sales (E: 12.4M) while the focus will begin to shift to the November FOMC meeting which begins this morning.

There is a 52-Week Treasury Bill auction at 11:30 a.m. ET and while it is not typically a widely followed auction, the results could shed new light on investor expectations for rate hikes next year, and therefore could impact markets ahead of tomorrow’s Fed announcement.

Lastly, earnings season remains in full swing with several notable results due out today from: PFE ($1.08), UAA ($0.15), COP ($1.53), ZG ($0.16), TMUS ($0.54), LYFT (-$-0.04), PGR ( $1.09).

Tom Essaye Quoted in CNBC on October 28, 2021

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10-year Treasury yield moves higher despite disappointing GDP update

The last few weeks have seen the ‘hawkish’ global central banks making a lot of noise…Tom Essaye of the Sevens Report said in a note. Click here to read the full article.

 

Macro Clarity This Week?

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What’s in Today’s Report:

  • Can We Get Macro Clarity This Week?
  • Weekly Market Preview:  All About the Fed
  • Weekly Economic Cheat Sheet:  A Very Busy Week (Final Oct. PMIs, Fed Decision, Jobs Report)

Futures are modestly higher on tariff reduction and hopes Democrats will pass the spending bill early this week.

The US and EU eased steel tariffs this weekend and that is leading to hope that U.S./China tariffs could also be cut.

Democrats have coalesced around a $1.75 trillion spending bill with few tax increases that could be passed this week.

Economic data was mixed as the Oct. Chinese Manufacturing PMI missed estimates (49.2 vs. (E) 49.7) while the UK reading slightly beat (57.8 vs. (E) 57.7).

Today focus will be on the ISM Manufacturing PMI (E: 60.3) and markets will want to see stability in the data to show the recovery remains on solid ground.  Additionally, any further signals from Washington that the spending bill will be signed this week should be at least a mild tailwind on markets today.

ECB Decision Takeaways (Not as Dovish as Hoped)

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What’s in Today’s Report:

  • ECB Decision Takeaways (Not as Dovish as Hoped)

Futures are moderately lower following disappointing AAPL and AMZN earnings combined with hotter than expected headline inflation from Europe.

On earnings, AAPL and AMZN both underwhelmed investors and those stocks fell 3% and 5% after hours and the sheer weight of those names in the S&P 500 is weighing on the entire index.

On inflation, EU HICP rose to 4.1% vs. (E) 3.7%, a nearly 20-year high.

Focus today will be on inflation, as we get the Fed’s preferred inflation gauge via the Core PCE Price Index (E: 0.2%, 3.7%) and the Employment Cost Index (E: 0.9%).  Both numbers will be high, but markets will want to see hints of a plateau in inflation.  We also get Consumer Sentiment (E: 71.4) and the inflation expectations component will also be closely monitored.

On the earnings front, focus will be on the following results: XOM ($1.57), CVX ($2.21), CL ($0.79).

What’s Happening With the Yield Curve (Updated)

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What’s in Today’s Report:

  • What’s Happening With the Yield Curve (Updated)
  • Oil Market Update and EIA Analysis

Futures are marginally higher on solid earnings, supply chain optimism, and dovish central bank commentary.

Ford (F) posted solid earnings and importantly made positive comments about semi-conductor supply (which has been echoed by numerous companies this quarter).  If we see semiconductor supply improve that will be a large positive for the entire supply chain and take some pressure off inflation.

The Bank of Japan made dovish commentary and reminded markets that not all central banks are getting less dovish (and we may hear that sentiment echoed from the ECB later this morning).

Today the key macro event is the ECB Decision (7:45 a.m. ET) and while the market does not expect any changes to QE or rates, it does expect President Lagarde to reinforce the ECB isn’t going to tighten policy anytime soon.  We also get some notable economic data including Advanced Q3 GDP (E: 2.7%), Jobless Claims (E: 290K), and Pending Home Sales (E: 1.7%) although unless there is a major surprise those reports shouldn’t move markets.

Finally, on the earnings front, today is arguably the single most important day of earnings season as we have two of the biggest stocks in the market, AAPL ($1.24), AMZN ($9.10), reporting after the close.  Other reports we’re watching include: MA ($2.18), CAT ($2.26), MRK ($1.54), SBUX ($1.00), and X ($4.85).

A Warning Sign from One of the Best

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What’s in Today’s Report:

  • A (Kind Of) Warning Sign from One of the Best
  • What to Make of the Wealth Tax Chatter

Stock futures are little changed this morning as investors digest some mildly disappointing earnings from Europe and an uptick in tensions between the U.S. and China.

Asian shares underperformed overnight after the FCC banned China Telecom from doing business in the U.S., raising concerns about the political relationship between the world’s two largest economies.

Looking into today’s session there are two economic reports to watch: Durable Goods Orders (E: -0.9%) and International Trade in Goods (E: -$87.9B), both due out in the morning, while no Fed officials are scheduled to speak.

There is a 5-Yr Treasury auction at 1:00 p.m. ET that could move yields and ultimately impact equities, but bonds have been fairly quiet this week as focus shifts ahead to central bank decisions later this week and next.

Finally, we are in the heart of earnings season and there are several more big names reporting Q3 results today: BA (-$0.17), GM ($0.89), KO ($0.58), MCD ($2.46), HOG ($0.81), BMY ($1.91), F ($0.28), EBAY ($0.89).

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on October 25, 2021

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Gold futures top $1,800 to post highest finish in nearly 6 weeks

Real interest rates are as low as they have been since the beginning of the pandemic, which is supportive of gold…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Tom Essaye quoted in WPTV Channel 5 on October 25, 2021

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‘Working homeless’ increase with Florida rental costs

Housing prices continued to skyrocket and now you have people who actually are employed…Sevens Report Research founder and economist Tom Essaye said. Click here to read the full article.

 

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on October 25, 2021

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Gold futures mark highest finish in almost 6 weeks

The precious metal’s relatively quiet price action may wind up being the calm before the storm of a…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.