Market Multiple Table (Deterioration from May)

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What’s in Today’s Report:

  • June Market Multiple Table (Deterioration from May)
  • ISM Manufacturing PMI: Why It Wasn’t As Good As It Seemed

Futures are little changed following a generally quiet night of news as markets await the first employment report of the week.

Economic data was sparse but disappointing, as German Retail Sales fell –5.5% vs. (E) -2.6% while Euro Zone PPI rose 7.6% yoy vs. (E) 7.3% and those disappointing numbers are weighing slightly on European indices.

Today’s focus will be on the ADP Employment Report (E: 627k) and if it’s much weaker than expected, or there’s some specific mention about labor shortage issues, expect that to be a headwind on stocks.  There are also three Fed speakers today, Evans (12:00 p.m. ET), Harker (12:00 p.m. ET), and Kaplan (6:05 p.m. ET) but we don’t expect them to move markets.

What Can Go Right and What Can Go Wrong?

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What’s in Today’s Report:

  • What Can Go Right and What Can Go Wrong?
  • Weekly Economic Preview:  More Tapering Talk?
  • Weekly Economic Cheat Sheet:  All About Friday’s Jobs Report.

Futures are modestly higher thanks to more solid economic data combined with generally in-line inflation metrics.

The Chinese, EU, and UK final May manufacturing PMIs all largely met expectations and confirmed the global economic recovery is continuing (and importantly not deteriorating).

EU HICP (their CPI) rose 2.0% vs. (E) 1.9%, but the core reading was in line with expectations at 0.9% and as such not spiking inflation fears.

Focus today will be on the ISM Manufacturing PMI (E: 60.9) and the market will want to see a “Goldilocks” number that shows the economic rebound is continuing, but that activity isn’t so hot that it increases inflation fears.  If we get that “Goldilocks” number stocks can extend the early rally.

Summer Market Events Part 2: The Fed

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What’s in Today’s Report:

  • Key Summer Market Events for the Fed

Futures are drifting modestly higher following a generally quiet night of news.

Economic data was solid as European Commission Economic Sentiment beat estimates (114.5 vs. (E) 112.1) while the Japanese unemployment rate was in-line with expectations.  But, neither number is moving markets.

Earnings overnight were very strong (especially in the retailers like COST) but questions remain about the sustainability of the results so they aren’t causing a big rally.

Today focus will be on the Core PCE Price Index (E: 0.7% m/m, 3.0% y/y). The market expects and has priced in a strong number, so something slightly above estimates should not cause a hawkish reaction (yields higher/stocks lower).  But, if we see the Core PCE Price Index print close to 4% yoy, that would likely be a headwind on stocks (and push the 10 year yield towards 1.70%).

 

Key Summer Market Events (Inflation Today, Fed Tomorrow)

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What’s in Today’s Report:

  • Key Summer Market Events Part 1:  Inflation
  • EIA Analysis and Oil Market Update

Futures are slightly lower following a generally quiet night of news, although on the margin markets are seeing global central banks get less dovish.

On Wednesday, the Reserve Bank of New Zealand had hawkish commentary, while overnight the Bank of Korea hinted at a rate hike before year-end.  Neither the Reserve Bank of New Zealand nor the Bank of Korea will move markets, but the bottom line is we are seeing a global rising tide of “less dovish” central bank policy, and that’s likely to cause volatility as we move forward throughout the year.

There was no market moving economic data overnight.

Today we get several notable economic reports including (in order of importance): Jobless Claims (E: 450K), Durable Goods (E: 0.7%), Revised Q2 GDP (6.5%), and Pending Home Sales (E: 2.0%).  Bottom line, markets will want to see solid, but not “Too Hot” economic data, and if we get that result the data should help stocks rally today.

Tom Essaye Quoted in Unseen Opportunity on May 25, 2021

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Consumer Confidence Sinks, Calling Bull Market Into Question

The market is basically in a holding pattern until the next big event, which is the Fed’s tapering schedule (or not tapering schedule), until we have more clarity on Fed tapering and the longer-term…wrote Tom Essaye, founder of Sevens Report, in a note. Click here to read the full article.

Tom Essaye Quoted in Via News on May 23, 2021

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Ark (ARK-USD) Cryptocurrency Is 17% Up In The Last 6 Hours

This is an evolution a bit — Ark accepting it’s a large fund-family now, while the number of companies in which Ark holds more than…said Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter.  Click here to read the full article.

Tom Essaye Quoted in Barron’s on May 25, 2021

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Apple and the Rest of Big Tech Might Be Ready to Rally. Here’s Why.

Considering the pace at which AAPL/AMZN/NFLX/GOOGL and MSFT are growing earnings and the long-term prospects for these companies, valuations are reasonable…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Barron’s on May 25, 2021

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Shake Shack Pops, Domino’s Drops, and the Stock Market Is Rising

U.S. stock futures are extending yesterday’s gains this morning as easing inflation concerns…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in CNBC on May 25, 2021

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S&P 500 erases gains and ends day slightly lower as market rally stalls

The market is basically in a holding pattern until the next big event, which is the Fed’s tapering schedule (or not tapering schedule), until we have more…said Tom Essaye, founder of Sevens Report. Click here to read the full article.

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Why Tech Is Outperforming Again

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What’s in Today’s Report:

  • Why Tech Is Outperforming Again
  • A Correction to the “Is FAANGM Now GARP?” Section
  • Consumer Confidence – Chart

Stock futures are trading modestly higher this morning while international markets are mixed as inflation and taper fears continue to ease ahead of key economic data due later in the week.

The only economic report overnight was the French Business Climate Indicator which came in at 107 vs. (E) 105 but the release did not materially move markets.

Today, there are no economic reports due to be released and just one Fed official is scheduled to speak: Quarles (10:00 a.m. and 3:00 p.m. ET).

There is a 5-Yr Treasury Note Auction at 1:00 p.m. ET and as has been the case for most of this year, any significant surprises in the results could move both stock and bond markets significantly, but that is less likely today given focus is on Friday’s inflation data.