FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Gold Update: Technical Weakness Ahead of the Fed

Futures are little changed this morning as investors weigh dovish central bank developments against in-line inflation data in Europe as focus turns to U.S. data and the Fed.

The RBA minutes revealed policy makers are open to extending QE beyond the current September deadline while CPI reports in Europe all met estimates.

This morning is lining up to be a busy one from a potential catalyst standpoint with a slew of economic data due to be released including: PPI (E: 0.6%), Retail Sales (E: -0.4%), Empire State Manufacturing Index (E: 22.0), Industrial Production (E: 0.6%), and Housing Market Index (E: 83).

The June FOMC Meeting also begins today which will likely initiate a sense of market paralysis ahead of tomorrow’s announcement and Powell’s press conference however a 20-Year Treasury Bond auction at 1:00 p.m. ET could move Treasuries and ultimately impact stocks in the early afternoon.

Four Assumptions for the Next Leg of the Rally

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What’s in Today’s Report:

  • Four Assumptions for the Next Leg of the Rally
  • Weekly Market Preview:  Will the Fed Acknowledge Tapering is Being Discussed?
  • Weekly Economic Cheat Sheet:  All About the Fed (But Notable Growth Data this Week Too)

Futures are slightly higher following a quiet weekend as markets look ahead to Wednesday’s FOMC decision.

The G-7 meeting in England produced a lot of headlines including broad agreement on a minimum corporate tax.  But there were little specifics of any new policies released and the meeting won’t impact markets.

Economic data was sparse as the only notable number was Eurozone Industrial Production which rose 0.8% vs. (E) 0.4%.

Today there are no economic reports and no Fed speak (the Fed meeting starts tomorrow so officials are in their “quiet period” ahead of the meeting) so for markets to extend last week’s rally we’ll need to get corporate commentary that confirms inflation pressures are “peaking.”  Absent that, I’d expect stocks to largely tread water ahead of Wednesday’s FOMC decision.

Tom Essaye Quoted in Yahoo Finance on June 9, 2021

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Market Recap: Wednesday, June 9

Stocks traded mixed on Wednesday as investors considered more mixed data on the…said Tom Essaye, founder and president of Sevens Report Research. Click here to read the full article.

Yahoo Finance logo

 

Tom Essaye Quoted in Yahoo Finance on June 10, 2021

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Stock market news live updates: Stocks rise, S&P 500 hits record despite hotter-than-expected inflation data

In the past two months, everything the market priced in has essentially happened. COVID is effectively over here in the United States, we’re not getting…Tom Essaye, president of Sevens Report Research, told Yahoo Finance on Wednesday. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 9, 2021

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Colgate-Palmolive Rises, Wendy’s Falls, and Stocks Aren’t Doing Much

A sense of trader paralysis grips global markets ahead of key catalysts due in…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Why Treasury Yields Keep Falling

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What’s in Today’s Report:

  • Why Treasury Yields Keep Falling

Futures are slightly higher on some mild infrastructure optimism.

A group of 10 bipartisan Senators reached a compromise on an infrastructure bill worth about $1T total that includes $600 billion of new spending over 5-8 years and contains no corporate tax hikes.   But, this compromise is still very unlikely to ever become law, mainly because the spending is paid for via an increase in the gas tax, which Democrats have previously been against.

Economic data underwhelmed as UK Industrial Production (1.3% vs. (E) 1.2%) and UK GDP both missed estimates.

Today focus will be on Consumer Sentiment (E: 84.0) and specifically inflation expectations, and if we see a big rise in the one and five year inflation expectations that could cause a rally in Treasury yields, which would pressure stocks.  However, barring that event, the path of least resistance for markets right now is higher.

Infrastructure Outlook: Good/Bad/Ugly

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What’s in Today’s Report:

  • Infrastructure Outlook:  Good/Bad/Ugly
  • Oil Update & EIA Analysis (Can the Rally Keep Going?)

Futures are little changed following a quiet night and ahead of the week’s two big events, the ECB decision and U.S. May CPI report.

Economic data was sparse although Japanese PPI rose more than expected at 4.9% vs. (E) 3.8% yoy.  But, investors expect high inflation readings this month so it’s not moving markets.

Today the two key events are the ECB Rate Decision (E: No Change) and U.S. CPI (E: 0.4% m/m, 4.6% y/y).  Generally speaking, if the ECB is specific on tapering and core CPI runs close to 4.0% yoy (expectations are for 3.4% yoy in Core CPI) then we should expect volatility as the data will imply less central bank accommodation and more inflation. Conversely, if the ECB is vague on tapering and inflation largely meets expectations, then stocks can extend the rally.

The other notable event this morning is Jobless Claims (E: 369K) but given the issues with the labor market are supply driven (people not wanting to work) the market isn’t as focused on jobless claims any longer.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on June 8, 2021

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Oil futures climb back to more than 2-year highs, with U.S. prices above $70 a barrel

The market just had a strong feel to it once things stabilized after an early session washout to the downside. It’s almost as if the overnight run to… said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 8, 2021

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Wendy’s Joins the Meme Stocks, Marvell Is Rising, and Tech Stocks Are Gaining

Stock futures are wavering between gains and losses this morning as traders digest mixed economic data and look ahead..writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in TheStar on June 7, 2021

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AMC drama exposes risks in index world

For index investing, the appeal is that human decision-making, human emotions are taken out of it. That works all well and good until a stock that is supposed to be…said Tom Essaye, a former Merrill Lynch trader who founded “the Sevens Report” newsletter. Click here to read the full article.