Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart

Stock futures are trading at record highs this morning as mostly underwhelming economic data overnight bolsters the case for more monetary and fiscal stimulus.

Economically, inflation data out of China and Germany narrowly missed estimates while French Industrial Production was disappointing, all of which supports the case for more stimulus to support the global economic recovery.

This morning, market focus will be on the CPI report (E: 0.3%) before the bell, and then attention will shift to Fed Chair Powell’s virtual speech in the early afternoon (2:00 p.m. ET).

Aside from those two key events, there is a 10-Yr Treasury Note Auction at 1:00 p.m. ET, which again has the potential to impact the yield curve (a big enough spike in the 10-year yield would act as a headwind on stocks).

Finally, earnings season continues with a few notable companies releasing Q4 results today: KO ($0.41), GM ($1.62), UBER (-$0.53).

Bottom line, as long as CPI does not run “hot,” Powell maintains a rather dovish tone, and there are no negative developments regarding the stimulus bill, the path of least resistance will remain higher for stocks in the near term.

Sevens Report Quoted in MarketWatch on February 9, 2021

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“With supply dynamics of the global oil market as clear and steady as they have been in years, trader focus has turned to demand in recent sessions, and with the continued vaccine…” analysts at Sevens Report Research wrote in a Tuesday newsletter. Click here to read the full article.

Market Multiple Table: February Update

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What’s in Today’s Report:

  • Market Multiple Table: February Update

Stock futures are trading modestly lower this morning after a mostly quiet night of news as the recent run to fresh record highs is digested.

Economically, the NFIB Small Business Optimism Index was 95.0 in January vs. (E) 98.0. The headline “miss” is slightly weighing on risk assets in pre-market trading this morning.

Today, there is one economic report to watch: December JOLTS (E: 6.40M) and one Fed official scheduled to speak: Bullard (12:00 p.m. ET), however the market will remain primarily focused on any new developments with the latest stimulus package.

There is also a 3-Yr Treasury Note Auction at 1:00 p.m. ET and given the recent sharp steepening move across the curve, the results could move Treasuries, and in turn, impact equities (further steepening will eventually become a headwind for stocks as the 10 year yield continues to rise).

Finally, there are a few notable earnings releases after the close: TWTR ($0.29), CSCO ($0.75), LYFT (-$0.72).

Too Much of a Good Thing?

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What’s in Today’s Report:

  • Can There Be Too Much Of A Good Thing in Markets?
  • Weekly Market Preview:  Stimulus Expectations and Vaccine Optimism Remain the Two Drivers of Stocks
  • Weekly Economic Cheat Sheet:  Inflation

Futures are modestly higher following a quiet weekend of news as global markets rose on momentum from last week’s rally.

The stimulus process continued as Democrats passed procedural votes on Friday and a $1.5-$1.9 trillion stimulus bill is expected to become law sometime in the next 4-6 weeks (this expectation remains the single biggest driver of the stock rally).

Economically, the only notable report was German Industrial Production, which slightly missed estimates (but that’s not moving markets).

Today there are no economic reports and only one Fed speaker, Mester at 12:00 PM ET, so markets will continue to be driven by stimulus headlines and vaccine optimism, and as long as there aren’t any material disappointments on either front, the path of least resistance for stocks remains higher.

Yield Curve Update (Getting Closer to a Danger Zone)

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What’s in Today’s Report:

  • Yield Curve Update (Getting Closer to a Danger Zone)
  • Jobs Day

Futures are modestly higher as the Senate moved forward on stimulus, so the positive market narrative of more stimulus and more vaccine continued overnight.

The Senate voted 51-50 (VP Harris breaking the tie) to move forward with the reconciliation process on a stimulus bill, meaning a $1.5T-$1.9T bill should pass in mid-March.

On the vaccine front, the FDA scheduled a Feb. 26th hearing to approve the JNJ single dose vaccine, so by March 1st there will be three COVID vaccines in the market.

Looking forward to today, the key number is the Jobs Report and estimates are for Job Adds of 50K and Unemployment Rate of 6.7%.  Unless the number is very good (so over 400k jobs adds, UE rate sharply lower) or absolutely horrible (-100k job losses or more) it shouldn’t interrupt this week’s rally.

Tom Essaye Quoted in Courthouse News Service on February 2, 2021

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The run on silver, a notoriously volatile asset, could continue. “Looking ahead, the trend in silver is bullish…” wrote Tom Essaye of the Sevens Report in a Tuesday morning investor’s note, adding that it is not unreasonable to see silver reach $80 per ounce in a longer timeframe. Click here to read the full article.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA and Oil Market Analysis (Still Bullish)

Futures are slightly higher as markets continue to digest the week’s early rally following a quiet night of news.

Economic data underwhelmed as the UK Construction PMI and EuroZone Retail Sales both missed estimates, but neither number is moving markets this morning.

On the stimulus front, the Democrats continue to move forward with reconciliation and markets now expect a stimulus bill between $1.5-$1.9T sometime in March.

Today stimulus headlines will continue to drive markets and the real question now is whether the stimulus bill ends up more towards $1.9 trillion (more bullish for stocks, yields and inflation in the short term) or $1.5 trillion (less bullish for stocks, yields and inflation in the short term).

Away from stimulus expectations, the key number today is Jobless Claims (E: 835K) and markets will want to see a continued decline to show the labor market is not deteriorating further.  We also get two Fed speakers: Kaplan (1:00 p.m. ET) and Daly (2:00 p.m. ET), but neither should move markets.

Is the Silver Rally Sustainable?

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What’s in Today’s Report:

  • Is the Silver Rally Sustainable?
  • ISM Manufacturing PMI takeaways

Stock futures are solidly higher this morning as the rebound from last week’s declines continues amid renewed stimulus optimism and positioning into key earnings.

Moderate Senate Republicans presented President Biden with a $600B+ stimulus package yesterday raising hopes for a bipartisan deal sooner than previously expected.

Today, there is only one economic report due out this morning: Motor Vehicle Sales (16.2M), and two Fed speakers are scheduled for the early afternoon: Williams (2:00 p.m. ET), Mester (2:00 p.m. ET).

That will leave investor focus on any new stimulus developments out of Washington and another busy earnings release schedule today

Notable companies releasing their Q4 results today include: UPS ($2.10), BABA ($3.22), PFE ($0.45), and XOM ($0.01) before the open and AMZN ($7.05), GOOGL ($15.89), and CMG ($3.71) after the close.

A Potentially Bearish Technical Signal

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What’s in Today’s Report:

  • A Potentially Bearish Technical Signal
  • Updated Market Outlook (Factoring in GME)
  • Weekly Market Preview:  GME, Stimulus and Economic Data
  • Weekly Economic Cheat Sheet:  Jobs Week

Futures are sharply higher as markets bounce back from last weeks’ declines following a generally quiet weekend.

Stocks are seeing an oversold bounce and are recouping some of Friday’s losses as there was no notable news (positive or negative) on the GME situation, although the Reddit short squeeze crowd is now targeting silver – so they haven’t gone away.

Regarding stimulus, the process is continuing and at this point markets expect a stimulus bill in the coming weeks (likely somewhat smaller than $1.9 trillion but not that much smaller).

Economic data was mixed as the Jan. Chinese Manufacturing PMI missed estimates (51.3 vs. (E) 51.6) while the UK Mfg PMI beat estimates and the EU number was in-line with expectations, but none of those numbers are moving markets.

Today focus will be on the two near term market catalysts:  GME and stimulus.  Regarding GME, if there are any signs of contagion we should expect more volatility.  On stimulus, Biden is meeting with centrist Republicans today but the bottom line is the market expects a lot more stimulus in the coming weeks and anything that alters that view would be a negative.

Tom Essaye Quoted in Courthouse News Service on January 28, 2021

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“Stocks such as GameStop usually don’t move markets, but as is almost always the case, fears of contagion are starting to impact the broad market…” Tom Essaye of the Sevens Report wrote in an investor’s note early on Thursday. Click here to read the full article.