Optimism about omicron continues to help drive risk assets higher as markets continue to believe…said the president of the firm Seven Reports, Tom Essaye, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher despite negative COVID headlines and a mixed outlook for China’s economy.
New COVID cases topped 1 million and set a record for a second day Tuesday as the highly contagious, but less severe Omicron variant continues to rip through hot spots around the globe. But for now, few nations have implemented new lockdowns allowing investors to look past the latest surge in cases.
According to Bloomberg Economics, China’s economy grew this month but property sector risks remain a key concern and that weighed on Asian shares overnight.
Today, there are two economic reports due out: International Trade in Goods (E: -$86.0B), and Pending Home Sales (E: 0.6%) but once again, neither should move markets as they should not shift the outlook for monetary policy.
There are no Fed speakers today but there is a 7-Year Treasury Note auction at 1:00 p.m. ET. If the auction is weak and yields rise materially, that could add pressure to higher valuation sectors of the market like tech/Nasdaq and drag the broader equity markets lower in thin holiday trading today. Otherwise, the Santa Claus rally remains in effect and the path of least resistance does still remain higher given the recent records in the S&P 500.
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What’s in Today’s Report:
S&P 500 futures are trading at a fresh record high as investors shrug off rising COVID cases while global markets rallied following fresh monetary stimulus from China.
The PBOC injected 200B yuan to help meet end-of-year demand for cash, the largest injection since October which is easing liquidity and adding to risk-on money flows.
Japanese Industrial Production surged 7.2% vs. (E) 1.8% in November, bolstering hopes that the economic recovery is regaining momentum.
This morning, there are two reports on the housing market due to be released: Case-Shiller Home Price Index (E: 1.0%), FHFA House Price Index (E: 0.7%) but neither should move markets.
There are no Fed speakers today but there is a 5-Year Treasury Note auction at 1:00 p.m. ET that could impact that bond markets and potentially equities but with the calendar otherwise pretty clear, a continued “Santa Claus rally” appears to be the path of least resistance for equities this week.
What’s in Today’s Report:
Futures are slightly higher on continued momentum from last week’s rally following a quiet holiday weekend.
Omicron optimism continued to help push risk assets higher as markets continued to adopt the idea that while COVID cases will soar, hospitalizations will remain low and as such there won’t be any major lockdowns.
There were no economic reports overnight and the global economic calendar for the week is pretty empty (as is usually the case for this week).
Today there are no notable economic reports and no Fed speakers, so we’d expect generally quiet trading that will be driven by Omicron headlines and year-end positioning (that’s likely to be the case all week). Any stories that further confirm Omicron COVID is not as severe as the previous COVID will help stocks extend the rally into year-end, while any headlines about lockdowns will be a headwind.
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What’s in Today’s Report:
Futures are marginally higher as studies and articles continue to be released that confirm that the Omicron variant results in much fewer severe COVID cases.
Over the past 48 hours, studies from South Africa, Denmark, and England and numerous articles (Washington Post, Bloomberg, WSJ) have all generated the same conclusion, that Omicron results in substantially fewer severe
COVID cases and that confirmation is easing COVID anxiety.
Today there is a lot of economic data but the most important report is the Core PCE Price Index (E: 0.4% m/m, 4.5% y/y). As long as it’s not materially worse than feared, it likely won’t hit markets. And, if the data comes in better than expected, that will add to the idea that inflation pressures have peaked, and we could easily see an extension of this week’s rally.
Other data today includes Durable Goods (E: 1.5%), Jobless Claims (E: 205k), New Home Sales (E: 770k), and Consumer Sentiment (E: 70.4), but barring a major surprise those numbers shouldn’t move markets.
What’s in Today’s Report:
Futures are little changed following a quiet night as investors digest the recent volatility and look ahead to the holiday at the end of the week.
Economic data was sparse overnight and the only notable report was UK GDP which slightly missed estimates (1.1% vs. (E ) 1.3%) although that’s not moving markets.
The Omicron outlook remained unchanged, as cases continued to surge but hospitalizations remain low, and as long as that’s the case market fallout will be limited.
Today we get three economic reports including Final Q3 GDP (E: 2.1%), Consumer Confidence (E: 110.7) and Existing Home Sales (E: 6.510M) but unless they provide a major surprise they won’t move markets. So, with the holiday quickly approaching and tomorrow’s Core PCE Price Index the only remaining “big” report of the week, and we’d expect both liquidity and activity to begin to decline into the weekend starting today.
Annual Discounts on Sevens Report, Alpha and Quarterly Letter
We’ve continued to be contacted by advisor subscribers who want to use the remainder of their 2021 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free), or add a new product (Alpha or Quarterly Letter).
If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email: info@sevensreport.com.
What’s in Today’s Report:
U.S. futures are rebounding with global shares after the U.K. decided against new lockdown measures due to Omicron while there is renewed hope for Biden’s spending bill.
Reports of a late Sunday call between Biden and Manchin, after Manchin announced that he would not support the bill on live TV, have revived hopes for the potential passage of Build Back Better in the weeks ahead.
The German GfK Consumer Climate Index fell to -6.8 vs. (E) -2.5 for January which points to a further deterioration in consumers’ outlook for income and spending in Europe’s largest economy.
There are no economic reports and no Fed officials speak today which will leave traders focused on the political drama surrounding Build Back Better and any new developments about Omicron and subsequent economic lockdown measures.
The one potential catalyst on the calendar is a 20-Yr Treasury Bond auction at 1:00 p.m. ET. A weak auction could send yields higher which could add renewed pressure on high multiple tech names and cause the major indexes to roll over.
What’s in Today’s Report:
U.S. equity futures are sharply lower with global shares amid negative COVID headlines and surprise political drama in D.C.
Democratic Senator Joe Manchin unexpectedly rejected President Biden’s Build Back Better plan over the weekend, greatly reducing the odds of its passage which saw GS revise their Q1 growth outlook from 3% to 2%.
Meanwhile, in Europe, lockdown risks are on the rise as the spread of the Omicron variant of COVID-19 accelerates.
Looking into today’s session, it appears we are going to open deep in the red amid the combination of a deteriorating political landscape and surging Omicron fears.
There are no economic reports or Fed speakers on the calendar today however there is a 6-Month Treasury Bill auction at 11:30 a.m. ET, which is not something we typically monitor, but if we see a weak outcome, then short duration yields could spike higher, compounding last week’s fears of rate hikes beginning sooner than later which would weigh on stocks, potentially in a big way. Outside of that auction, markets will be focused on the Build Back Better headlines and the new prospects of tighter COVID restrictions, particularly in Europe as that would further weigh on the outlook for economic growth.
What’s in Today’s Report:
U.S. stock futures are trading lower along with most global equity markets today as investors digest the hawkish shift by most global central banks this week while concerns about the health of the economy rebound continue.
Economically, Eurozone HICP (their CPI equivalent) rose 0.4% vs. (E) 0.5% in November, easing some of the recent inflation concerns while the latest German Ifo Survey missed estimates on both current and future business expectations metrics which weighed on the regional growth outlook.
Today, there are no economic reports due out in the U.S. however there are two Fed speakers to watch: Daly (1:00 p.m. ET) and Waller (1:00 p.m. ET). The market will want to see Fed chatter echo Powell’s mostly dovish tone from the press conference on Wednesday and any hints at a more aggressive or sooner rate hiking cycle will cause more volatility today.
Finally, today is quadruple witching options expiration so expect very high trading volumes along with the threat of amplified moves as traders continue to digest this week’s hawkish pivot amid year-end rebalancing.