Super-cap tech has been well bid on the expectation of ‘forever’ low rates and support…said Sevens Report founder Tom Essaye. Click here to read the full article.
That’s a set up where stocks can continue to rally, although I think we all need…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.
What’s in Today’s Report:
U.S. stock futures are tracking global equity markets higher amid easing Omicron fears and good economic data.
GlaxoSmithKline reported overnight that their antibody treatment is effective against the heavily mutated Omicron variant which is helping further ease fears about the new strain.
Economically, Chinese Imports rose 31.7% vs. (E) 21.5% y/y and Exports rose 22.0% vs. (E) 20.3% y/y in November pointing to a still-healthy economic recovery and that is supporting risk on money flows this morning.
Today, there are two lesser followed economic reports due out: International Trade in Goods and Services (E: -$66.8B), Productivity and Costs (E: -4.9%, 8.3%) but neither is likely to materially move markets while there are no Fed officials speaking today.
There is a 3-year Treasury Note auction at 1:00 p.m. ET that could impact yields and the broader curve and if we see a sharp enough flattening move (weak demand for shorter maturities amid rate hike fears) stocks could come under pressure, but to be clear, the tone is very risk on this morning as dip-buyers step into the market, chasing this bounce higher.
What’s in Today’s Report:
Futures slightly higher following generally positive comments on Omicron over the weekend.
There were multiple articles and commentary from public health officials suggesting the Omicron variant is more contagious but produces mild symptoms. Also, existing vaccines appear to give protection against severe illness, although markets are waiting for official word from both PFE and MRNA.
Economic data was mixed as German Manufacturers Orders fell –6.9% vs. (E) -0.5% while the UK Construction PMI rose to 55.5 vs. (E) 52.0 but the numbers aren’t moving markets.
Today there are no economic reports and no Fed speakers. Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week. If Nasdaq can stabilize, the broad market can bounce.
What’s in Today’s Report:
Futures are slightly lower as markets digest Thursday’s rally ahead of the jobs report.
In Washington, the Senate passed a bill to avoid a government shutdown, removing a potential risk from markets.
The Omicron variant has been detected in five states now but symptoms so far appear mild.
Economically, EU and UK Composite PMIs generally met expectations.
Today focus will be on the Job Report and expectations are as follows: Job Adds 543K, UE Rate 4.5%, and Wages 5.0% y/y. As long as the jobs report is around expectations (so not above 700k but still showing solid job additions with wages not spiking) then markets will expect a mild acceleration of tapering and the rally can continue. We also get the ISM Services PMI (E: 65.0) and markets will be looking for a similarly “Just Right” number to show solid growth but nothing so strong it would encourage the Fed to substantially accelerate tapering of QE.
Omicron is causing significant volatility in the energy complex as the impact on demand is not yet known…analysts at Sevens Report Research wrote in Wednesday’s newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are solidly positive as markets bounce from Wednesday’s sell-off following a quiet night of news.
There are no definitive results yet, but the chatter on Omicron is that vaccines do still provide protection from severe illness, and that is slightly easing anxiety about the variant.
Economic data was sparse but showed continued inflation pressures as Euro Zone PPI rose 5.4% vs. (E) 3.2%.
Today the key report is Jobless Claims (E: 245K) and we expect a solid bounce back from last week’s very low numbers, but clearly, trends in the labor market continue to improve. We also get numerous Fed speakers including: Bostic (8:30 & 11:30 a.m. ET), Quarles (11:00 a.m. ET), Daly (11:30 a.m. ET), and Barkin (11:30 a.m. ET).
Bottom line, the market is dealing with three separate headwinds (ranked in order of importance): Omicron uncertainty, Fed tapering acceleration, and Washington dysfunction (possible shutdown). Positive headlines on any of them will help stocks bounce, while further negative headlines (like yesterday with a possible government shutdown) will cause another decline.
Tom Essaye, founder of the Sevens Report, discusses how futures are reversing Monday’s gains. He also talks about the market impact of the Omicron variant…Click here to watch to the full interview.
What’s in Today’s Report:
U.S. equity futures are rebounding with European stocks and other risk assets such as oil this morning as Omicron fears continue to ebb and flow while some of the hawkish money flows from yesterday are unwound.
Powell’s comments yesterday were hawkish regarding tapering however the market’s outlook for rate hikes remains largely unchanged which is helping stocks stabilize.
Economically, Final Manufacturing PMIs were largely in line with expectations overnight and did not materially move markets.
Looking into today’s session, there are a few key economic reports to watch starting with the first look at November jobs data via the ADP Employment Report (E: 525K), followed by the ISM Manufacturing Index (E: 61.1) and Construction Spending (E: 0.6%).
Finally, Powell will continue his CARES Act testimony at 10:00 a.m. ET today and the market will be listening closely for any further hints about taper plans, rate hike timelines, and the potential impact of the Omicron variant.
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What’s in Today’s Report:
Stock futures are down more than 1%, tracking global equities lower while the 10-year yield is down more than 10 basis points on renewed omicron variant concerns.
In an interview with the FT, MRNA’s CEO said the scientists he had spoken with expect a material decline in the efficacy of current vaccines against the new omicron variant of the coronavirus due to the high number of mutations and that is weighing heavily on risk assets this morning.
Today, there are a few economic reports due out: Case-Shiller Home Price Index (E: 1.1%), FHFA House Price Index (E: 1.0%), and Consumer Confidence (E: 110.7), but all of the data was gathered well before the omicron news emerged and therefore will not have a major impact on markets given the keen focus on COVID in recent days.
Fed Chair Powell will join Treasury Secretary Yellen in testifying before the Senate this morning at 10:00 a.m. ET and any indication that the Fed may change course regarding policy plans as a result of omicron could move markets. There is one other Fed speaker today: Williams (10:30 a.m. ET).
Bottom line, this is once again a COVID-driven market and any negative headlines about vaccine effectiveness or the severity of omicron infections could cause more risk off money flows as the odds of new lockdowns in parts of the world would rise as a result.