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.

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

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S&P 500, Dow Notch Record Highs Ahead of Tech Earnings

Companies have cited margin issues and supply chain disruptions, but so far managements have…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Valuation Update

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What’s in Today’s Report:

  • Valuation Update
  • Gold Market Update: Breakout or Breakdown?

Futures are indicating an open at fresh record highs and international markets traded higher overnight as earnings continue to top expectations and economic concerns fade.

There were no notable economic reports or market-moving headlines overnight outside of more mostly upbeat earnings.

Looking into today’s session, there are several reports on the housing market due out early: Case-Shiller Home Price Index (E: 1.3%), FHFA House Price Index (E: 1.3%), and New Home Sales (E: 760K), but the most important economic release to watch today is Consumer Confidence (E: 109.0) as a disappointing print could weigh on consumer spending expectations into year-end.

There are no Fed officials scheduled to speak today however the Treasury will hold a 2-Yr Note Auction at 1:00 p.m. ET. The risk to equities is a soft outcome as that could rekindle the hawkish policy concerns that weighed on risk assets this past Friday.

Finally, earnings remain the main focus of the market right now and several big companies are due to report today including: UPS ($2.52), GE ($0.41), and SHW ($2.07) before the open, and AMD ($0.67), MSFT ($2.06), GOOGL ($23.13), V ($1.53) after the close.

Earnings and Tax Clarity but Fed Uncertainty?

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What’s in Today’s Report:

  • Earnings and Tax Clarity but Fed Uncertainty?
  • Weekly Economic Cheat Sheet:  Key Inflation Data on Friday
  • Weekly Market Preview:  The Most Important Week for Earnings

Futures are slightly higher following a quiet weekend and ahead of the most important week of earnings season.

Regarding Fed tapering, Powell’s comments on Friday were taken as slightly hawkish, but the consensus outlook remains a November taper at $15 bln/month.

There was no notable news/progress from Washington over the weekend on the debt ceiling/spending bill.

Today there are no notable economic reports or Fed speakers (they’re entering the “quiet period” ahead of next week’s meeting).  So, focus will be on any updates from Washington on whether or not we get tax hikes and on earnings, although the vast majority of the biggest companies report later in the week.  Some reports to watch today include  FB ($3.20), LOGI ($1.14), OTIS ($0.73), and KMB ($1.66).