Inflation Expectations Dashboard

What’s in Today’s Report:

  • Introducing the Sevens Report Inflation Expectations Dashboard

Futures are modestly lower on disappointing economic data and despite continued strong earnings (AMZN was the latest tech company to post blow out numbers).

China’s April Manufacturing PMI surprisingly dropped to 51.1 vs. (E) 51.7 while German flash Q1 GDP also missed estimates, falling –1.7% vs. (E) 1.5%.  Those two numbers imply the global economic recovery may have lost some positive momentum, and that’s why futures are lower this morning.

Today focus will be on inflation via the Core PCE Price Index (1.8%) and the inflation component of the Michigan Consumer Sentiment Index (E: 87.1).  But, because the Fed is so committed to inflation being transitory, the numbers will have to be very high (well above 2% in the Core PCE Price Index) to further pressure stocks.  We also get one Fed speaker, Kaplan (9:45 a.m. ET), but he shouldn’t move markets.

Finally, earnings season continues and some notable reports today include:  XOM ($0.59), ABBV ($2.85), CLX ($1.47), CVX ($0.92), CL ($0.80%).

 

What the Fed Decision Means for Markets

What’s in Today’s Report:

  • What the Fed Decision Means for Markets
  • EIA Takeaways and Oil Market Update

Futures are moderately higher thanks to strong earnings from AAPL and FB combined with the market digesting the Fed’s still dovish message from yesterday. Economic data was sparse overnight as German Unemployment met expectations at 6.0% and isn’t moving markets.

Today focus will be on important earnings and economic data.  Economically, the key report will be weekly Jobless Claims (E: 558K) and markets will want to see that number keep most of the gains of the past two weeks.  We also get Advanced Q1 GDP (E: 6.5%) and that will generate a lot of headlines, but remember it’s an “old” number by now (it measures activity from Jan-Mar).  Pending Home Sales (E: 3.8%) will also be released and there are two Fed speakers: Quarles (11:00 a.m. ET) and Williams (2:00 p.m. ET), but they shouldn’t move markets.

Regarding earnings, there are several important reports today including AMZN ($9.75) after the close.  Other reports we’re watching today include:  MCD ($1.81), RCL ($-4.54), MA ($1.55), CAT ($1.93), and TWTR ($0.14).

Why Does It Matter When the Fed Tapers QE?

What’s in Today’s Report:

  • Why Does It Matter When the Fed Tapers QE?
  • A Strong Rebound in Consumer Confidence
  • Chart: Copper Hits Near-Decade Highs

U.S. stock futures are little changed this morning as a sense of “Fed paralysis” continues to grip the markets ahead of today’s FOMC announcement.

Investors are also awaiting details of Biden’s “American Families” plan and earnings from several big tech companies.

This morning, investors will be watching one economic release: International Trade in Goods (E: -$87.5B) but the report should not materially move markets given focus will largely be on the afternoon Fed events: FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET).

Although the Fed will be the main driver of markets today, there are several notable companies reporting earnings that could impact individual stock and sector trade including BA (-$1.17), GD ($2.31), and YUM ($0.85) before the open and heavyweights AAPL ($0.99), FB ($2.36), QCOM ($1.67), and F ($0.16) after the closing bell.

FOMC Preview

What’s in Today’s Report:

  • FOMC Preview
  • Chart: Nasdaq Composite Emerges from Correction

Stock futures are little changed this morning as yesterday’s record close is digested while investors look ahead to a very busy day of earnings and the start of the Fed meeting.

There are a slew of potential market catalysts today. Starting with economic data, there are two housing market reports: Case-Shiller Home Price Index (E: 1.1%), FHFA House Price Index (E: 0.9%), before Consumer Confidence (E: 112.0) will be released (the latter will be most important to watch).

Additionally, the April FOMC Meeting Begins however that will not impact markets until tomorrow’s announcement and Powell’s press conference in the afternoon.

There is also a 7-Yr Treasury Note Auction at 1:00 p.m. ET and while the March auction was generally orderly, the February 7-Yr auction caused double-digit basis-point swings across the curve so any bond market volatility in the wake of the auction could influence equity trading.

Finally, it is a very busy day on the earnings front with UPS ($1.63), GE ($0.01), MMM ($2.25), BP ($0.43), SHW ($1.65), and SYF ($1.50) reporting before the open and AMD ($0.44), MSFT ($1.76), GOOGL ($15.50), V ($1.27), and COF ($4.17) releasing quarterly results after the closing bell.

Tom Essaye Quoted in Barron’s on April 22, 2021

Central Banks May Have Already Begun Lifting Bond Yields. What That Means for Stocks.

Some have speculated that while the Federal Reserve has reiterated it is sticking with current policy for now, fast-recovering inflation could force it to reduce support. “Yesterday is likely the day that central banks began the long trip back…” wrote Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.

Rising Headline Risk But Fundamentals Still Solid

What’s in Today’s Report:

  • Market Outlook:  Rising Headline Risk But Fundamentals Remain Solid
  • Weekly Market Preview:  A Key Week for Earnings and the Fed Outlook
  • Weekly Economic Cheat Sheet:  Will the Fed Hint at Tapering on Wednesday?

Futures are slightly lower ahead of a busy week and following a generally quiet weekend.

On the vaccine front, the FDA re-approved use of the single-dose JNJ vaccine on Friday, but this was widely expected and as such isn’t an incremental positive.

On infrastructure spending, Dem. Senator Manchin said he doesn’t support passing infrastructure via a reconciliation, which further complicates getting a plan ultimately passed.  But, it’s still very early in the legislative process, and as such, the market will mostly ignore infrastructure headlines for the next several weeks.   If there’s no progress on a compromise by Memorial Day-ish (with actual passage expected around Labor Day-ish), then the market will begin to react to infrastructure headlines.

Today focus will be on Durable Goods (E: 2.0%) and also earnings after hours, with the two key reports being TSLA ($0.78) and NXPI ($2.21).

Tom Essaye Interviewed with TD Ameritrade Network on April 21, 2021

Tom Essaye Talks Airline Stocks

Tom Essaye takes a look at some of the travel stocks as the market is getting a little bit of a dose of reality being too optimistic about the end of the pandemic. The cruise lines are weak due to CDC guidelines against sailing in 80% of pre pandemic regions. United airlines gave disappointing 2021 guidance after missing…Click here to watch the full video.

Are Higher Taxes a Risk to the Rally?

What’s in Today’s Report:

  • What the Capital Gains Tax Headline Means for Markets

WatFutures are modestly higher thanks to better than expected global economic data.

Economic data was good overnight as global flash manufacturing PMIs beat estimates in Japan (53.3 vs. (E) 52.7), the EU (63.3 vs. (E) 62.3) and the UK (60.7 vs. (E) 59.1).  Additionally, UK Retail Sales also beat expectations (7.2% vs. (E) 4.2%), and in sum the data implies the global economic recovery is gaining momentum (which is a positive).

Today the key report will be the April Flash Composite PMI (E: 59.5), but markets will also be looking for more clarity on proposed tax increases from the Biden administration.  We also get New Home Sales (E: 887K) but that shouldn’t move markets.

On the earnings front, some reports we’re watching today include:  AXP ($1.68), SLB ($0.19), HON ($1.80).

Tom Essaye Quoted in CNBC on April 19, 2021

Dow closes 250 points lower for back-to-back losses, reopening plays lead decline

“By now, we are all used to companies beating analyst estimates,” said Tom Essaye, founder of Sevens Report. “The key …” Click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on April 16, 2021

Tom Essaye, Founder and President of Sevens Report Research, joins Yahoo Finance’s Kristin Myers and Alexis Christoforous to discuss market outlook, bank earnings, and the latest economic data and more…Click here to read the full article.